Lego A/S v. Best-Lock Construction Toys, Inc. (874 F. Supp. 2d 75, 2012)

RULING ON DEFENDANT’S MOTION FOR PRELIMINARY INJUNCTION

HAIGHT, Senior District Judge:

I. Introduction

Plaintiffs Lego A/S and Lego Systems, Inc. (collectively “Lego”) have manufactured toys called “minifigures” since 1978. Lego’s minifigures depict people, all having the same shape but varying two-dimensional representations of facial features and clothing styles on the head and torso respectively. They are designed so that the user can disassemble them and attach them to other figures and studded blocks. Each minifigure has a cylindrical head, a cylindrical neck, a trapezoidal torso, bent arms, hooked hands and square block-like feet. In 1994, Lego registered with the Copyright Office two copyrights for the minifigures: VA 655-104 and VA 655-230 (the “Minifigure Copyrights”).

Defendant Best-Lock Construction Toys, Inc. (“Best-Lock”) has been selling its own minifigures in the United States since 1998. These minifigures can also be attached to studded blocks. Best-Lock’s minifigures are the same size as Lego’s, and also have cylindrical heads, cylindrical necks, trapezoidal torsos, bent arms, hooked hands and square block-like feet, while differing in color and the two-dimensional representations of facial features and clothing. These minifigures have been successful; by Best-Lock’s account, since 1998 it has sold, in the U.S. alone, over five million product sets containing eighteen million minifigures and exceeding $50 million in revenues. Declaration of Torsten Geller in Support of Defendant’s Motion for Preliminary Injunction (“Geller Deck”) ¶ 12. Other companies, such as Hasbro, Inc. and Mega Brands, Inc., sell similar minifigures.

On or about July 14, 2011, U.S. Customs and Border Protection (CBP) carried out the first of a series of seizures of shipments from abroad of Best-Lock’s toy blocks and minifigures. CBP sent Best-Lock’s counsel a letter dated August 17, 2011, in which it asserted that it is carrying out these seizures because the minifigures infringe the '104 copyright. Best-Lock petitioned CBP to cease the seizures, and demanded that Lego assist it in doing so, but without success.

On October 14, 2011, Lego filed the present action, alleging infringement of the Minifigure Copyrights. In the Complaint, as amended on February 13, 2012, Lego makes claims for (1) infringement of the Minifigure Copyrights under 17 U.S.C. § 101, et seq.; (2) defamation; and (3) violation of the Connecticut Unfair Trade Practices Act (CUTPA), Conn. GemStat. § 42-110a, et seq. Lego prays for a preliminary and permanent injunction, restraining Best-Lock from manufacturing or selling its accused minifigures. Lego also claims its “actual damages” caused by Best-Lock’s infringement, and Best-Lock’s profits generated thereby. Amended Complaint [Doc. 40] at 10-11.

On January 5, 2012, Best-Lock filed its Answer, together with counterclaims seeking declarations that the Minifigure Copyrights are invalid and that Best-Lock’s minifigures do not infringe them, as well as damages and an injunction based on the seizures of Best-Lock’s products by CBP.

Best-Lock filed the present Motion for Preliminary Injunction [Doc. 37] (the “Motion”) on February 6, 2012. Best-Lock requests an injunction under Rule 65(a) of the Federal Rules of Civil Procedure (1) restraining and enjoining Lego from asserting the Minifigure Copyrights against Best-Lock before the CBP; (2) ordering Lego to inform CBP that it consents to the past and future importation and delivery to Best-Lock and its customers of products of Best-Lock’s seized or detained by CBP based on the alleged infringement; and (3) ordering Lego to immediately withdraw recordation of Copyright VA 655-104 with the CBP. In essence, Best-Lock’s Motion asserts that the Minifigure Copyrights are invalid, that Lego is estopped from asserting them, and that Best-Lock is suffering continuing and irreparable harm as a result of CBP’s seizures of its products. Lego, of course, opposes the Motion on the grounds that BesWLock has been infringing the Minifigure Copyrights, and that Lego will likely succeed on the merits of its Complaint.

A hearing on Best-Lock’s Motion for a Preliminary Injunction (the “Hearing”) was held before the Court on March 8, 2012. At the Hearing, the parties presented their arguments on the Motion, and also submitted as evidence certain toys, which were marked as Court Exhibits One through Seven. See Exhibit and Witness List [Doc. 61]. These toys include samples of Lego’s and BesL-Lock’s minifigures as well as samples of minifigures manufactured by Hasbro, Inc. and Mega Brands, Inc.

The parties have also fully briefed the Motion. Best-Lock filed a Memorandum of Law in support of the Motion (“Supp. Memo.”) on February 6, 2012. It filed therewith three declarations with attached exhibits: the declarations of Torsten Geller, its CEO (“Geller Decl.”), Frank Desiderio, one of its attorneys (“Desiderio Deck”), and Stephen Quigley, another of its attorneys (“Quigley Deck”). Lego filed an Opposition to the Motion (“Opp. Memo.”) on February 21, 2012. It filed therewith two declarations with attached exhibits: the declarations of Michael McNally, the Brand Relations Director for LEGO Systems, Inc., (“McNally Deck”) and Linda Pollard, a legal assistant at LEGO Systems, Inc. (“Pollard Deck”). On February 28, 2012, Best-Lock filed a Reply Memorandum (“Reply Memo.”), along with an additional declaration from Geller (“Reply Deck”) with exhibits.

The Court, having reviewed these briefs and documents, entered an Order [Doc. 74] directing further briefing on whether Lego’s claim of copyright infringement by Best-Lock “is barred by laches.” The Court raised the question of laches sua sponte because the parties had not discussed it in the prior briefs. In obedience to that Order, counsel have filed supplemental briefs [Docs. 75 and 76], which the Court has also considered.

II. Standard for Preliminary Injunction

The Second Circuit has recently held that the test for the grant of preliminary injunctions based on alleged copyright infringement is the four-factor test set forth by the Supreme Court in eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006), while intimating that the eBay formulation applies to all applications for preliminary injunctions. Salinger v. Colting, 607 F.3d 68, 77, 78 n. 7 (2d Cir.2010) (“we see no reason that eBay would not apply with equal force to an injunction in any type of case”). Thus, while Salinger involved a request for an injunction by the party alleging infringement, the four-factor test applies likewise to the present request for a preliminary injunction by the alleged infringer. The distinction is significant because the eBay/Salinger test is not identical to the test most commonly cited.

Under the eBay test as developed in Salinger, the court must consider four factors. First, the party requesting the injunction must demonstrate either (a) a likelihood of success on the merits, or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the movant’s favor. Salinger at 79. Second, the movant must show that it is likely to suffer irreparable injury in the absence of an injunction, paying particular attention to the question of whether the remedies available at law, such as monetary damages, are inadequate to compensate for that injury. Id. at 80. Third, the court must consider the balance of hardships between the parties and grant the injunction only if that balance tips in the movant’s favor. Id. Fourth, the court must ensure that the “public interest would not be disserved” by the issuance of a preliminary injunction. Id., quoting eBay at 391,126 S.Ct. 1837.

III. Likelihood of Success on the Merits

Best-Lock argued initially that it is likely to succeed on the merits in this action for four reasons: (1) Lego is equitably estopped from enforcing its rights under the Minifigure Copyrights, Supp. Memo, at 10-17; (2) the Minifigure Copyrights are invalid because the allegedly protected elements are functional and because Lego committed a fraud on the Copyright Office, id. at 17-19, 23-27; (3) Besb-Lock has not infringed the Minifigure Copyrights, id. at 19-23; and (4) Lego’s CUTPA claim is wholly unsupported, id. at 27.

Prompted or perhaps inspired by the Court’s sua sponte introduction of the subject of laches into the case, Best-Lock now makes the additional argument that laches bars all of Lego’s claims against it—equitable and legal.

Lego disagrees with all these contentions. If the Court accepts one or more of Besb-Lock’s arguments, such a ruling would obviously have a material effect upon the Salinger factors, to which the Court must look in determining whether Best-Lock is entitled to the cross-injunction for which it prays in the present Motion.

I discuss each of these issues in the order stated, except that the discussion of laches immediately follows the discussion of equitable estoppel.

A. Equitable Estoppel

Best-Lock argues that Lego is es-topped from enforcing its rights under the Minifigure Copyrights by the doctrine of equitable estoppel. A copyright defendant invoking equitable estoppel must show that (1) the plaintiff had knowledge of the defendant’s infringing acts, (2) the plaintiff either intended that the defendant rely on his acts or omissions or failed to act in such a manner that the defendant had a right to believe that it was intended to rely on the plaintiffs conduct, (3) the defendant was ignorant of the true facts, and (4) the defendant relied on the plaintiffs conduct to its detriment. Dallal v. New York Times Co., No. 05-2924, 2006 WL 463386, at *1 (2d Cir. Feb. 17, 2006) (“Dallal II”). Besb-Lock argues that Lego failed to assert its copyrights during the period between 1998, when Besb-Lock began to sell its figures, until the filing of this action in 2011, and induced Best-Lock’s reasonable reliance on its inaction. Supp. Memo, at 10-16.

1. Lego’s Knowledge

The first element of equitable estoppel in the copyright context is the plaintiffs knowledge of the allegedly infringing acts. Best-Lock asserts that it sold minifigures from 1998 onwards, and argues that Lego could not have been unaware that it was doing so. Supp. Memo, at 12. Lego argues that Best-Lock provides no evidence that they were aware of “continuous, long-term” infringement, conceding that BesbLock sold minifigures from 1998 onwards but asserting that it has not shown that the minifigures sold in the past were similar to the ones at issue in this action. Opp. Memo, at 26-28.

Besb-Lock asserts, and Lego does not dispute, that from 1998 onwards Best-Lock’s minifigures have been sold in more than 50,000 stores throughout the United States, including WalMart, Sears, Target, Toys R Us, FAO Schwartz, Amazon, Walgreens, Family Dollar, and K-Mart, and that many of these retailers simultaneously sold Lego’s figures in the same departments or sales areas and often on the same or adjacent shelves. Geller Decl. ¶¶ 3, 8. Best-Lock presents photographs of examples of the minifigures it sold from 1998 to the present, which show that throughout that period the minifigures have been of very similar, though not identical, shape and appearance. Reply Decl. Exhibits AD. Besl^Lock further presents evidence that it has throughout that period widely promoted the minifigures through catalogues, advertisements and its website. Geller Decl. Exhibits C-l through C-13. In one of these advertisements, the mini-figures are shown at roughly real size, Exhibit C-4 (2001), and in others they are quite small, but their overall appearance is visible on close inspection. Exhibits C-3 (2000), C-5 (2002), C-6 (2003), C-7 (2004), C-8 (2005), C-9 (2006), and C-10 (2007). BeslALock asserts, and Lego does not dispute, that since 1998 it has sold over 18 million minifigures, and has exhibited its figures at trade shows where Lego also exhibited its own figures. Geller Decl.- ¶¶ 12,14.

BesWLock’s evidence establishes that while its minifigures have changed over the years, they have consistently had an appearance very similar to that of Lego’s minifigures. For example, the minifigures sold between 1998 and 2005, as shown in photographs in Reply Decl. Ex. A, had cylindrical heads, hooked hands, bent elbows, trapezoidal torsos, straight legs, square feet, and painted-on facial features, and were similar in size to the figures sold at present. These are essentially the characteristics that, in Lego’s view, infringe its copyrights. Opp. Memo, at 8. Lego, moreover, is a large company which presumably has a marketing staff who are aware of relevant facts about the market for its toys.

Taking these facts together, it strains credulity to imagine that during this 13-year period (1998 to 2011), Lego was blissfully unaware of the activities of Best-Lock, a significant competitor in this specialized toy market. However, the precise question of knowledge posed by the first equitable estoppel element is more narrow. That question is whether, at a particular time, Best-Lock was selling a minifigure which Lego believed infringed upon its copyrights. Lego invokes that question when, in its supplemental brief on the related but discrete subject of laches, it taxes Best-Lock for failing to show that “it was selling the figurine actually accused by the LEGO Group (rather than an earlier and different version of its figurine) for an extended period of time (or even outside the limitations period).” [Doc. 75] at 7.

These questions of timing are also relevant to Best-Lock’s newly asserted defense of laches. I discuss the subject of laches, including the timing element, in Part III.B., infra. Principally for the reasons stated in that Part, it is not possible to make a finding on this record on the subject of Lego’s knowledge of Best-Lock’s alleged infringement, that being the first element in equitable estoppel analysis.

2. Lego’s Inaction

The second element of the estoppel test in copyright cases, as lately set forth by the Second Circuit, is that “the plaintiff either intended that defendant rely on his acts or omissions or acted or failed to act in such a manner that defendant had a right to believe that it was intended to rely on plaintiffs conduct.” Dallal II, 2006 WL 463386, at *1. Best-Lock argues that this element is met by Lego’s failure to assert its copyrights over the period from 1998 to 2011. Supp. Memo, at 13-14. Lego does not dispute Best-Lock’s account, but argues that as a matter of law inaction cannot support equitable estoppel. Opp. Memo, at 28-30.

Lego provides a photograph, in the text of its brief, showing that at least some of its blocks have displayed copyright notices. Opp. Memo, at 32. Lego’s Brand Relations Director has stated, in his declaration, that since 1978 Lego sets containing the minifigures have continuously included a copyright notice. McNally Deck ¶¶ 7-8. Best-Lock’s CEO, in response, asserts only that he does not remember seeing a copyright notice on Lego’s minifigures, and that he did not locate a copyright notice on two specific minifigures, a photograph of which he attaches to his declaration. Reply Deck Ex. E. The Court finds that Lego’s evidence establishes that at least some of their minifigures displayed, copyright notices.

It is established in this circuit that in some circumstances a copyright holder’s silence or inaction can support estoppel. The Second Circuit, in the only decision which has directly addressed equitable estoppel in the copyright infringement context, referred to the conduct at issue as including the plaintiffs “omissions” or “failures] to act.” Dallal II, at *1. However, as the Second Circuit formulated the test, such omissions or failures support estoppel only if the plaintiff either intended that the defendant rely on them, or the defendant had a right to believe that the plaintiff intended the defendant to rely on them. Id. In the case at bar, the question is whether Best-Lock had a right to believe that Lego intended BesNLock to rely upon Lego’s inaction in enforcing its copyrights by litigation, given the relevant circumstances, which included Lego’s affixation of copyright notices on some of its minifigures. (Best-Lock does not deny that it was aware of Lego’s minifigures).

The Dallal case did not resolve the question of whether inaction, standing alone, supports estoppel where a copyright notice was affixed to the plaintiffs products, but it did provide some guidance, albeit in dictum. The district court, granting summary judgment to the defendant, found estoppel because the copyright holder had “display[ed] inaction in pursuing a claim for copyright infringement.” Dallal v. New York Times Co., 386 F.Supp.2d 319, 323 (S.D.N.Y.2005) (“Dallal I”). The plaintiff was a freelance photographer who received a fixed sum for assignments from the New York Times. He reserved the right to copyright and sell the photographs that he submitted. From 1998 to 2002, he included in his invoices language that stated that all rights not specifically granted in writing, including copyright, remained his property. In various oral conversations with Times employees, he objected to the newspaper’s “unauthorized” use of the photographs in its internet edition. He registered copyrights on his photographs between May 2002 and January 2003. He informed the Times of his copyrights in November 2002, and it immediately stopped using them. The court held that the photographer’s inaction until November 2002 met the second element of estoppel, based in part on its finding that the Times was unaware of the copyright.

The Second Circuit reversed, but it did not hold that the photographer’s inaction could not support estoppel; rather, it held that the evidence did not permit resolution of that issue on a motion for summary judgment. Dallal II at *1-2. Although the court of appeals found that the Times presented a “viable estoppel claim,” it noted the warning language on the plaintiffs invoices to the Times and his oral objections to the internet use of his photographs. That conduct, according to the court, was sufficient to raise questions of fact as to whether the plaintiffs action was estopped. Dallal II at *2.

The Second Circuit then described, with apparent approval, a decision of the Ninth Circuit in which the presence of a visible copyright notice defeated an estoppel claim based on the plaintiffs inaction. Dallal II at *2, citing Hampton v. Paramount Pictures Corp., 279 F.2d 100, 104 (9th Cir.1960). In Hampton, the plaintiffs assertion of copyright was printed on the film in question. The Ninth Circuit held that the defendant was not entitled to equitable estoppel because he “fail[ed] to use the means at hand to ascertain the extent of the interest asserted.” Id. This position has been endorsed by a well-known treatise on copyright law: “The mere affixation of the copyright notice on copies of the work, if seen by the defendant, has been held to constitute a sufficient assertion of the plaintiffs right so as to counter an estoppel based upon a passive holding out.” 4 Nimmer on Copyrights § 13.07 at 13-276 (1993).

That principle, or principles that are virtually the same, has been endorsed by some district courts within this circuit. One court, citing the sentence from Nimmer quoted above, held that the defendant’s admission that it was aware of the copyright was enough to defeat equitable estoppel. Penguin Books U.S.A., Inc. v. New Christian Church of Full Endeavor, Ltd., No. 96 Civ. 4126, 2000 WL 1028634, at *17 (S.D.N.Y. July 25, 2000). Another court held, in dictum, that the party asserting estoppel must have used due care and not failed to inquire as to its rights where that would have been the prudent course of conduct. Keane Dealer Servs., Inc. v. Harts, 968 F.Supp. 944, 947-48 (S.D.N.Y.1997). Another court held that inaction does not support estoppel “when the defendant is in a position to ascertain the extent of a competing claim.” Merchant v. Lymon, 828 F.Supp. 1048, 1064-65 (S.D.N.Y.1993); see also DeCarlo v. Archie Comic Pubs., Inc., 127 F.Supp.2d 497, 510 (S.D.N.Y.2001) (citing Merchant for this proposition in dictum).

Some district courts have taken a stronger position, holding that inaction alone can never support estoppel without some duty or relationship between the parties or some responsibility of the plaintiff for the infringement. One court held that application of equitable estoppel in the copyright context requires “at least partial responsibility of the party seeking recovery for the alleged infringement.” Broadcast Music, Inc. v. Hearst/ABC Viacom Ent. Servs., 746 F.Supp. 320, 329 (S.D.N.Y. 1990). See also Steinberg v. Columbia Pictures Indus., Inc., 663 F.Supp. 706, 715-16 (S.D.N.Y.1987) (no estoppel by inaction without a duty or relationship). Another court, denying an estoppel claim, quoted Nimmer on Copyrights for the proposition that “[t]he plaintiffs acquiescence in the defendant’s infringing acts may, if continued for a sufficient period of time and if manifested by overt acts, result in an abandonment of copyright.” Basic Books, Inc. v. Kinko’s Graphics Corp., 758 F.Supp. 1522, 1540 (S.D.N.Y.1991) (emphasis added). That decision, however, is arguably inconsistent with Dallal II. In a decision in this district granting equitable estoppel against a copyright claim, such a relationship was present (the plaintiff had been the defendant’s employee during the relevant period and had been active in updating the infringing material), although the court did not establish if that fact was necessary for its holding. Lab. Corp. of Am. v. Schumann, No. 3:06-cv-1566, 2009 WL 275859, at *6 (D.Conn. Feb. 4, 2009).

No court in this Circuit has thus far taken the opposite position, i.e., that estoppel was proper based on inaction despite an affixed copyright notice. On two occasions, a court made a statement that might be taken as holding that inaction alone over a sufficient period of time is enough to establish estoppel. Encyclopedia Brown Prods., Ltd. v. Home Box Office, Inc., No. 91 Civ. 4092, 1998 WL 734355, at *14 (S.D.N.Y. Oct. 15, 1998) (asserting in dictum that consent, whether express or implied from long acquiescence with knowledge of the infringement, will prevent relief in equity on the principle of estoppel); Dallal I at 323 (the principles of estoppel are most often applied to situations involving implied consent arising from inaction over a long period of time). But neither addressed the significance of an affixed copyright notice.

Thus, while the Second Circuit has not decided the matter, its discussion of Hampton and formulation of the test in Dallal II, together with the weight of authority among the district courts, suggests that pure inaction does not create estoppel in the face of an affixed copyright notice. The gravamen of many of the decisions cited above is that a defendant that knows that it is infringing a copyright must take reasonable steps to ascertain the copyright holder’s position.

Lego, as noted above, provides evidence that copyright notices were affixed to at least some of its minifigures during the relevant period. McNally Decl. § 7; Opp. Memo, at 32. Best-Lock has not effectively rebutted that evidence. BestALock has not asserted that it was unaware of Lego’s copyrights. Nor has Best-Lock asserted that its estoppel is based on any conduct of Lego’s other than inaction. For that reason, BestALock has not met the second element of equitable estoppel.

3. Best-Lock’s Ignorance of the True Facts

The third element of the test for equitable estoppel requires the defendant to show that it was “ignorant of the true facts.” Dallal II at *1. Lego argues that “the true facts” means the existence of the Minifigure Copyrights. Opp. Memo, at 30-34. Best-Lock provides a different definition of what the “true facts” were: “The ‘true facts’ are not whether Best-Lock was aware that Lego’s minifigures were copyright protected, but that Lego, after years of silence, would actually take action against BesALock’s figures.” Reply Memo, at 4.

The Second Circuit has not established whether the “true facts” are the existence of the copyrights or the plaintiffs intent to enforce the copyrights. At least one district court has definitely endorsed the position that the “true facts” consist of knowledge of the copyright. “[T]here is nothing before the Court to indicate that Defendants were not aware of the true facts. Indeed, Defendants admitted that they were fully aware that [the infringed material] was protected by a registered copyright.” Penguin Books U.S.A., Inc. v. New Christian Church of Full Endeavor, Ltd., No. 96 Civ. 4126, 2000 WL 1028634, at *17 (S.D.N.Y. July 25, 2000). The Dallal I court appears to have adopted the same position when it found that the third element was not satisfied because, although the defendant New York Times acknowledged complaints from the plaintiff photographer during the relevant period, “these acknowledgments do not constitute an awareness of copyright infringement.” Dallal I at 323.

Best-Lock cites one decision from this district that arguably takes the opposite position. In Laboratory Corporation of America v. Schumann, No. 3:06-cv-1566, 2009 WL 275859, at *6 (D.Conn. Feb. 4, 2009), the court found the third element satisfied with the following explanation: “Because [the copyright holder] did not object to the updating of his manual, the [alleged infringers] had no reason to know that he would later oppose the updating.” However, the court did not find that the alleged infringers were aware of the subject copyrights, or decide whether their awareness of the copyrights would have defeated estoppel.

Although this issue is not settled in this Circuit, the weight of authority suggests that a defendant who was aware of the subject copyright knew the “true facts.” This holding is consistent with this Court’s holding in Part III.A.2. supra that copyright affixation defeats a claim of estoppel based on pure inaction. For that reason, Best-Lock has not met the third element.

4. Detrimental Reliance

The fourth element of the estoppel test is that the defendant relied on the plaintiffs conduct to its detriment. Dallal II at *1. BesALock asserts that “[d]uring the past 14 years, BesALock has made substantial investments in creating and expanding its U.S. business including but not limited to developing and manufacturing molds and machinery to produce its figures.” Reply Decl. ¶ 34. “Best-Lock has also substantially invested in its offices and workforce and training for its employees.” Id. Lego does not dispute those assertions, but asserts that expansion and development of business, even if substantial, are insufficient to establish detrimental reliance. Opp. Memo, at 34. Lego cites for that proposition Basic Books, Inc. v. Kinko’s Graphics Corp., 758 F.Supp. 1522, 1540 (S.D.N.Y.1991). In that case, the court observed that the defendant “convincingly asserts that it has expended much time and energy in its Professor Publishing business and has continued to expand its educational photocopying ... over the years in line with its [own] policies and procedures ... However, this does not reach the level of detrimental reliance.” Id.

Basic Books supports Lego’s position. However, Basic Books is not binding authority for this Court. It seems only logical to suppose that an investment of money in developing a line of products can constitute the necessary detrimental reliance. If a party invests money in a line of products and then loses the right to sell those products, it has lost at least a portion of its money. For that reason, the Court finds that Best-Lock has satisfied the fourth element.

BesALock must satisfy all four elements of the test for equitable estoppel to establish that Lego is estopped from enforcing its copyrights in this action. While Best-Lock has satisfied the fourth element, and the first element cannot be decided on the present record, it is clear that Best-Lock has failed to satisfy the second and third elements. It follows that BesALock is not entitled to prevail on the ground of equitable estoppel.

B. The Equitable Doctrine of Laches

Because the subjects, while separate, overlap to some degree, I depart from the order of briefing and follow the discussion of equitable estoppel with a consideration of laches. Best-Lock now asserts both equitable estoppel and laches as bars to Lego’s claims against it.

Laches, a traditional principle of equity pleading and practice, is a less complicated concept than that of equitable estoppel. To sustain a laches defense, only two elements need appear: the plaintiff delayed an unreasonable amount of time in filing suit against the defendant; and the defendant suffered prejudice as the result of that delay. See, e.g., Barios v. Victory Carriers, 316 F.2d 63 (2d Cir.1963) (Friendly, J.). A defendant may fail to demonstrate all the elements of equitable estoppel, and still make out the defense of laches.

A number of questions arise from the Court’s Order directing supplemental briefing on the doctrine of laches [Doc. 74]; the briefs of counsel filed in obedience to that Order; and the appellate and district court cases cited in the Order and the briefs. Those questions include:

(1) Does the equitable doctrine of laches apply at all to an action for copyright infringement, such as the one at bar?

(2) Assuming that laches is applicable in principle to this case of copyright infringement, and assuming further that Lego has been guilty of laches, what is the effect in practice of laches upon (a) Lego’s equitable claim for an injunction, and (b) its claims at law for damages caused by Best-Lock’s infringements?

Besb-Lock pled laches as an affirmative defense to the action for copyright infringement Lego filed against Best-Lock on October 14, 2011. With respect to the first question posed above, and as a general proposition, laches is clearly available to Best-Lock under the law of this circuit. The court of appeals made that plain over 100 years ago, in West Pub. Co. v. Edward Thompson Co., 176 F. 833 (2d Cir.1910). Plaintiff West was then and is now the publisher, known to generations of the nation’s lawyers and judges, of reports of cases and legal digests, which “began with the year 1879 the publication of weekly reporters” containing court decisions. “Each weekly number of Reporters was copyrighted. Then several such numbers were aggregated into a volume which was copyrighted.” 176 F. at 834. Defendant Thompson “from the year 1887 was the publisher of encyclopedias composed of articles alphabetically arranged intended to cover the whole body of the law, ... comprising in all 78 volumes.” Id. at 835. In April 1903, the plaintiff filed a “bill” (as the pleading was called in those days) against the defendant, alleging that the defendant’s publications infringed the plaintiffs copyrights. “The bill asks for an injunction and for damages as well as for an accounting.” Id. at 839. The district court held that the defendant’s infringement was proven, but rejected the plaintiffs request for an injunction. The Second Circuit, affirming on that point, said at 176 F. at 838:

The complainant knew at least as early as 1893 that its syllabi were being paraphrased or copied by the defendant’s writers, or some of them. Its conduct shows that it must have considered this to have been a fair use of its publications because it did not begin this action until the defendant, after 16 years of labor and immense outlay of money, had published almost its entire work. The laches of the complainant and the hardship upon the defendant are such that we think the trial judge, “according to the course and principles of courts of equity,” was right in refusing an injunction and accounting of profits.

The Second Circuit cited and followed West when it arrived at a comparable conclusion in the more contemporaneous case of New Era Publications International, ApS v. Henry Holt and Company, Inc., 873 F.2d 576 (2d Cir.1989). Plaintiff New Era, holder by license of certain copyrights bequeathed by the controversial L. Ron Hubbard to the Church of Scientology, sued to enjoin defendant Holt from publishing in this country a book titled Bare-Faced Messiah: The True Story of L. Ron Hubbard, an unflattering biography of Hubbard. New Era did not sue for equitable relief until after Holt had run off and shipped out the first printing of the biography. District Judge Leval (as he then was) found that, to some degree, the accused biography breached copyright by infringing copyrighted or unpublished material, but refused to grant the permanent injunction prayed for by plaintiff. Affirming that refusal, the Second Circuit referred to the district court’s “rejection of the fair use defense and its finding of infringement,” and went on to say:

Nevertheless, equitable considerations dictate denial of injunctive relief in this action. The prejudice suffered by Holt as the result of New Era’s unreasonable and inexcusable delay in bringing the action invokes the bar of laches. In initially denying a temporary restraining order, the district court found that New Era had been aware since 1986 that the book would be published in the United States. Despite this knowledge, and despite lawsuits commenced in 1987 to enjoin publication in England, Canada and Australia, New Era failed to compare Holt’s book with the books published abroad; failed to inquire of Holt as to the planned date of publication in this country; and failed to take any steps to enjoin publication of the book until it sought a restraining order in May of 1988.... If New Era promptly had sought an adjudication of its rights, the book might have been changed at minimal cost while there was still an opportunity to do so. At this point, however, it appears that a permanent injunction would result in the total destruction of the work since it is not economically feasible to reprint the book after deletion of the offending material. Such severe prejudice, coupled with the unconscionable delay already described, mandates denial of the injunction for laches and relegation of New Era to its damages remedy.

873 F.2d at 584-85 (citations omitted).

West and New Era both address the first of the two questions posited above, and hold that the doctrine of laches may in principle be applied to actions for copyright infringement. I have emphasized the last phrase in this quotation from New Era because that language addresses the second of those two questions. To restate that inquiry: May a copyright plaintiff be barred by the equitable doctrine of laches from enjoining a demonstrated infringement, yet still be able to recover money damages at law caused by that infringement? The emphasized observation, taken from Judge Miner’s majority opinion for the New Era court, clearly answers that question in the affirmative. Chief Judge Oakes wrote a concurring opinion in New Era because he did not accept some of the majority’s reasoning in applying laches to bar an injunction, but on the availability of damages at law he was in entire agreement, concluding his opinion by saying: “Applying traditional equitable principles, then, I would hold that Judge Leval did not abuse his discretion in declining to issue an injunction against publication of Messiah, leaving New Era a damages claim as to the very little, insignificant material unfairly used." 873 F.2d at 597-98 (emphasis added).

The sole Second Circuit case Judge Miner cited for the phrase “relegation of New Era to its damages remedy” was West, with a page citation to “176 F. 833, 838.” At page 838, the West court held the trial judge “was right in refusing an injunction and accounting of profits,” and then began a discussion that it is instructive to quote at some length:

But we also think that the court can give damages in this case by way of compensation. Because Rev. Stat. U.S. Sec. 4921 entitles complainants in equity suits arising out of patents “to recover in addition to the profits to be accounted for by the defendant the damages the complaint [sic] has sustained” by the infringement, and there is no similar provision as to equity suits arising out of copyrights, it is sometimes said that damages cannot be awarded in the latter. We think this a misunderstanding of the statute. It applies to all patent cases without distinction and permits damages to be assessed when equitable relief is granted in addition to profits. This should not be construed to impair the power of courts of equity to do justice by allowing the complainant compensation in damages when equitable relief, though it might be given, is for some satisfactory reason withheld.

In such a case, the damages are not given in addition to profits as provided by section 4921. It does not seem to us right to turn the complainant over to a court of law.... The bill asks for an injunction and for damages as well as for an accounting. This court, having obtained jurisdiction of the cause and having the power to grant an injunction, has the right to do justice between the parties and to dispose of it finally, even if this involves withholding injunctive relief and awarding damages.

The decree of the Circuit Court, therefore, will be modified by the direction to refer the cause to a master for the purpose of determining what damages the complainant has sustained, or at the option of the complainant the decree may be affirmed, with hosts of this court, without prejudice to its right to proceed at law.

176 F. at 838-39 (citations omitted).

When the Second Circuit’s opinions in West and New Era are read together, as New Era clearly intends, we see that the law of this Circuit establishes these propositions: Where a plaintiffs copyrighted work has been infringed by a defendant, the equitable doctrine of laches may, depending on the circumstances of the case, bar the plaintiff from the equitable relief of enjoining the infringement, but may also leave intact the plaintiffs right to recover at law money damages caused by the infringement.

Given the clarity and force of the opinions in West and New Era, one cannot accept BesULock’s characterization of Neiv Era as “denying injunctive relief based on laches while stating in dicta that damages may be available.” Best-Lock’s Supplemental Memorandum in Support of its Motion for Preliminary Injunction [Doc. 76] at 14. There is no whiff of dicta in the Second’s Circuit’s decision mandating “relegation of New Era to its damages remedy.” The case clearly holds that denying New Era an injunction did not automatically disentitle it from recovering damages at law. West is to the same effect: That a copyright plaintiff may recover damages at law, even if barred by laches from obtaining an injunction, is powerfully articulated by the court of appeals as a matter of policy.

There is one issue squarely presented by the case at bar which the cited decisions do not resolve. Whether laches may in any circumstances bar a legal claim for damages in a copyright infringement case is complicated by the statute of limitations in the Copyright Act, 17 U.S.C. § 507(b), which provides: “No civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued.” For limitations purposes, “each act of infringement is a distinct harm giving rise to an independent claim for relief, although recovery is allowed only for those acts within three years of suit.” Eyal R.D. Corp. v. Jewelex New York, Ltd., 576 F.Supp.2d 626, 644 (S.D.N.Y.2008) (citation and internal quotation marks omitted). In the case at bar, Best-Lock asserts in its supplemental brief [Doc. 76] at 2: “The Best-Lock toy figures accused of infringement in this action have been sold continuously in the United States in their present form since 1998,” a date I accept only for the sake of this discussion. Lego filed its complaint on October 14, 2011. Applying the Act’s three-year statute of limitations, Lego’s action for damages is timely for any act of infringement occurring between October 14, 2008 and October 14, 2011, and future actions for infringements occurring after October 14, 2011 will be timely if filed within three years of accrual of the claims.

May the equitable doctrine of laches operate to bar an action for copyright damages that was timely filed under the Copyright Act? Best-Lock appears to argue that laches can have that effect, and should do so in this case. Case law on this question is divided. Judge Cedarbaum’s comprehensive opinion in Legislator 1357 Limited v. Metro-Goldwym-Mayer, Inc., 452 F.Supp.2d 382 (S.D.N.Y.2006), collects some of the conflicting decisions. She observed: “The courts of appeals that have addressed the application of laches to copyright infringement claims have reached different conclusions. The Ninth Circuit allows laches to bar copyright infringement claims whether the relief sought is legal or equitable. The Fourth Circuit has ruled that the doctrine of laches never bars a timely infringement claim. The Tenth Circuit takes a third approach, ruling that laches is available to bar a timely infringement claim in ‘rare cases.’ The Second Circuit has not decided the issue.” 452 F.Supp.2d at 392 (citations and some internal quotation marks omitted). The following year, in Price v. Fox Entertainment Group, Inc., No. 05 Civ. 5259, 2007 WL 241387 (S.D.N.Y. Jan. 26, 2007), at *2, Judge Scheindlin noted the same split in authority: “The parties dispute whether laches is available as a defense in copyright infringement actions that are timely filed under the Copyright Act’s express three-year statute of limitations. The circuits are split on this issue and the Second Circuit’s silence has led to some confusion within this district as well.” (citations omitted).

If the Second Circuit’s decisions offer no guidance on the question, I suppose I am free to do what I think is right in a case such as this one, namely: It is assumed that Lego delayed unreasonably in seeking to enjoin Best-Lock’s infringing conduct (also assumed); and Best-Lock’s conduct occurred both after and before the running of the three-year limitations period for a suit at law for damages. An appealing solution to this puzzle is suggested by Judge Friendly’s opinion in Larios v. Victory Carriers, Inc., 316 F.2d 63 (2d Cir. 1963). The plaintiff was a seaman, injured as the result of a high-seas collision between his vessel and another. Plaintiff sued the owners of both vessels in the district court for the Southern District of New York, purportedly on the “law” side of the court. He filed his action more than three years after the claim arose, a significant period of time because three years was the period of limitation provided by New York law for personal injuries due to negligence. The district court dismissed the action on the ground that the statute of limitations had run.

On appeal, the Second Circuit vacated the dismissal and remanded the case for an evidentiary hearing. Judge Friendly noted that since the plaintiffs claim against the shipowners “was for an injury on the high seas, the applicable principle with respect to his delay in bringing suit is laches and not the statute of limitations,” 316 F.2d at 65, although Supreme Court decisions made it plain that “the analogous state statute of limitations is still relevant to the determination of laches in suits on maritime claims,” id. at 66. Larios was a case, then, where in assessing the timeliness of the action, the district court was required to consider the inter-relationship between the equitable doctrine of laches and the analogous legal statute of limitations. Judge Friendly instructed district judges about how to do that:

When the suit has been brought after the expiration of the state limitation period, a court applying maritime law asks why the case should be allowed to proceed; when the suit, although perhaps long delayed, has nevertheless been brought within the state limitation period, the court asks why it should not be.

316 F.2d at 66.

The clear import of the second hypothetical is that an action may be filed within the analogous limitations period, but still be dismissed on the basis of laches, if the plaintiffs delay was unreasonable and the resulting prejudice to the defendant severe. Those two factors, Judge Friendly added, “are not to be viewed independently. A weak excuse may suffice if there has been no prejudice;, an exceedingly good one might still do even when there has been some.” Id. at 67. This was said within the context of a plaintiff “who has delayed bringing suit beyond the analogous state period,” id., but the soundness of the analysis commends itself equally to a case “although perhaps long delayed, but nevertheless brought within the limitations period.” In Larios, the Second Circuit concluded that the injured seaman showed sufficient excuse for his delay in suing “that it ought to have been weighed against evidence the defendants might proffer to show prejudice from the delay, through the loss or impairment of evidence as to the collision or as to the release or otherwise. We therefore vacate the judgment dismissing the complaint and remand for the taking of further proof on the issue of laches.” Id. In

If the protocol articulated in Larios were applied to the case at bar, the three-year limitations period for copyright infringement actions would be viewed in conjunction with the equitable doctrine of laches, also applicable to infringement actions under the holdings of New Era and West. Conceptually, if a copyright owner waited an extended and unreasonable amount of time before suing a defendant for infringement, and plaintiffs delay would cause severe prejudice if the suit was allowed to proceed, laches could bar the action, even if it was filed within the three-year limitations period. That is the second of the two hypotheses articulated by Larios in the passage I have quoted, and in such a case Judge Friendly instructs district courts to ask why “it should not be” allowed to continue. The Second Circuit would not have posed that question if it were not possible for a defendant to answer it: to say that in these particular circumstances, and on the ground of laches, the case should not be allowed to proceed, even though commenced within the limitations period.

While the regimen set forth in Larios has a powerful appeal, its conceptual applicability to the case at bar may be questioned. Larios held that the doctrine of laches governing a maritime claim could trump a state statute of limitations which applied only by analogy. In the case at bar, Congress included the three-year statute of limitations in the Copyright Act itself, the statute upon which Lego asserts its claim of infringement by BesWLock. To say that laches bars a claim for infringement damages that is timely filed under the Act raises the equitable doctrine to a new level, for which there is no present Second Circuit authority directly in point. Nonetheless, in filing its action, Lego’s prayer for an injunction invokes the power of the Chancellor in Equity, whose traditional responsibility is to do what is fair (“equitable”) in the circumstances of a particular case.

One of the appellate cases Judge Cedarbaum cited in Legislator as illustrative of the split among the circuits on the point is Jacobsen v. Deseret Book Co., 287 F.3d 936 (10th Cir.2002), a copyright infringement action, where the Tenth Circuit said: “Rather than deciding copyright cases on the issue of laches, courts should generally defer to the three-year statute of limitations, 17 U.S.C. § 507(b), provided by the Copyright Act,” but then added: “Although it is possible, in rare cases, that a statute of limitations can be cut short by the doctrine of laches, we see no reason to supplant the statute of limitations in this case.” 287 F.3d at 950-51 (citations and internal quotation marks omitted). The Tenth Circuit reached that conclusion only after examining the underlying facts: “It does not seem unreasonable to allow Dr. Jacobsen three years from the time he should have known of his claim to evaluate the viability of instituting a law-suit or pursue out-of-court remedies.... When viewing the record in the light most favorable to Dr. Jacobsen, we conclude his delay in filing suit was reasonable.” Id. at 951.

In the case at bar, and in the absence of Second Circuit authority compelling a contrary conclusion, I am not prepared to hold that laches can never be a bar to a copyright infringement claim for damages filed within the Act’s three-year limitations period. The existence of laches vel non depends upon the facts of each case. There must be a further factual inquiry in this case.

The need for that inquiry results in large measure from Lego’s uninformative briefs on the questions presented. Whether a claimant unreasonably delayed its infringement action depends principally upon when it learned of the infringement. Lego argues in its Supplemental Memorandum of Law in Opposition to Best-Lock’s Motion for Preliminary Injunction [Doc. 75] at 10 n. 6 that “Best-Lock has produced no evidence that the LEGO Group knew of its Infringing Figurines prior to 2011,” the year suit was filed. There is a considerable body of evidence from which Lego’s familiarity with Best-Lock’s competing products could fairly be inferred, but the existence and extent of particular knowledge Lego acquired at a particular time about particular products of Best-Lock are best known to Lego, not Best-Lock.

It is consistently held in copyright and patent infringement cases that a party’s knowledge on such issues is a fair subject of discovery. See, e.g., Gary Friedrich Enterprises, LLC v. Marvel Enterprises, Inc., No. 08 Civ. 1533, 2011 WL 2623458 (S.D.N.Y. June 21, 2011); DR Systems, Inc. v. Eastman Kodak Co., No. 08cv669, 2009 WL 2973008 (S.D.Cal. Sept. 14, 2009); Intervet, Inc. v. Merial Ltd., 256 F.R.D. 229 (D.D.C.2009).

In Gary Friedrich, an action for copyright infringement alleging that the defendants’ movie infringed the plaintiffs’ characters and story elements, the defendants raised defenses based on the statute of limitations and laches, and moved “to compel the production of time records showing work performed by attorneys for the plaintiffs prior to April 4, 2007, the date that this lawsuit was commenced.” 2011 WL 2623458, at *2. The magistrate judge granted that discovery as germane to those defenses, reasoning that “any contention that Mr. Friedrich [plaintiff] had reason to know of his potential claims only shortly before filing the complaint would be undermined by a showing that he had long before engaged in extensive consultations with counsel about his rights.” Id. at *3.

In DR Systems, plaintiff DR sought declarations that defendant Kodak’s “'811 patent” was invalid, and that DR did not infringe it by selling certain “Accused Products.” DR, asserting that Kodak’s enforcement of the '811 patent against DR was barred by laches, noticed a Rule 30(b)(6) deposition of Kodak and included, among the topics on which the deponent must be prepared to testify, some related to its laches argument: “the date when Kodak first learned of the Accused Products ... [and] the facts and circumstances relating to Kodak’s first knowledge of the Accused Products.” The initial deponent designated by Kodak was unable to answer those questions, and DR sought to depose a higher-level executive who could do so. The magistrate judge, rejecting Kodak’s motion to quash that second deposition notice, held that DR was entitled to depose a Kodak executive about his knowledge concerning those particular topics.

In Intervet, the case arose on objections to pre-trial interrogatories. Plaintiff Intervet sought a declaration that it did not infringe defendant Merial’s '601 patent on a vaccine, and that the patent was invalid. Merial had alleged that “Intervet willfully infringed the patent, and that Intervet induced others to infringe as well.” 256 F.R.D. at 232. As the magistrate judge observed: “These both require proof of intent to infringe, which necessarily requires that Intervet be familiar with the patent.” Id. Merial filed an interrogatory asking Intervet to “identify the date(s) on which Intervet first became aware of the '601 patent, identify the person(s) who became aware of the '601 patent, and explain the circumstances under which the '601 patent came to Intervet’s attention.” 256 F.R.D. at 231. The magistrate judge held that Intervet must respond fully to that interrogatory, amending it solely to require Intervet to “identify the person(s) who became aware of the patent when Intervet first became aware of the patent.” Id. at 232. The magistrate judge held that “information about how and when Intervet discovered Merial’s patent, and what happened thereafter is highly relevant to the issues in this case.” 256 F.R.D. at 232. The judge reasoned that “to establish willful infringement, a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent,” and in consequence: “Everything hinges on when Intervet knew about Merial’s patent rights and what it did after it found out.” Id. The court concluded that Merial was entitled to discovery into these issues, by interrogatories and depositions.

The cited circuit and district court cases, while not binding on this Court, are instructive when this Court comes to consider the present posture of the case at bar. Lego claims that Best-Lock’s figures infringe Lego’s copyrighted figures. On October 14, 2011, Lego filed this action against BesNLoek for the purpose, inter alia, of enjoining that perceived infringement. The present record does not reveal when Lego first learned of the existence of a Best-Lock figure or figures that Lego accuses as infringing. The governing principles of equity did not require that Lego, a purported victim of infringement, seek an injunction on the same day it learned of Besb-Lock’s perceived copyright violation. Some delay is inherent in the realities of life: factual inquiries, consultations with counsel, and the like. However, the doctrine of laches requires Lego to show that any delay “in filing suit was reasonable,” Jacobsen, 287 F.3d at 951. To paraphrase Intervet, 256 F.R.D. at 232: “Everything hinges on when Lego knew about Best-Lock’s infringement and what it did after it found out.”

In the case at bar, and focusing upon the first of the two laches elements (unreasonable delay on the part of Lego in suing for copyright infringement), the strongest case for BesWLock in establishing the defense would be made out if Besb-Lock’s allegedly infringing figures first appeared in domestic commerce in 1998; during the succeeding years were marketed in competition with and close proximity to Lego’s copyrighted figures; and Lego’s officers and employees were aware of the BesbLock figures in the marketplace from the time of their first appearance. In those circumstances, Lego’s waiting until 2011 to sue to enjoin the Best-Lock figures would be problematic, and unfair prejudice to BesL-Lock in being enjoined would seem plausible.

By way of contrast, if Best-Lock did not introduce and market the allegedly infringing figures until 2011, and Lego’s suit was filed within the three-year limitations period in the Copyright Act, a Best-Lock defense against being enjoined based on laches, while arguably still possible, would be more difficult. In that circumstance, the Court would ask, as did Judge Friendly in Larios: Why should the case not be allowed to proceed? Assuming for the sake of discussion that Besb-Lock first introduced the accused figures in mid-January 2011 and Lego promptly became aware of them, Lego filed suit to enjoin infringement nine months later—the sort of delay condemned by laches as unreasonable is usually made of sterner stuff than this.

The problem is that the present record does not reveal with sufficient clarity when Best-Lock first introduced into commerce the allegedly infringing figures, or when Lego first became aware of them. Surely, Lego’s artful and studied briefs shed little light on these crucial facts; Lego’s contention, distilled to its essence, is that BesbLock has not proved what Lego knew and when it knew it. The eases cited sivpra make it plain that these are factual areas where discovery of Lego by Best-Lock is both appropriate and necessary, as indeed is discovery of Besb-Lock by Lego on other questions related to that one. Until that discovery has been completed, the Court will not be in a position to adjudicate the question of whether Lego delayed unreasonably in filing its action against Best-Lock.

If the time elapsing between Lego’s awareness of Best-Lock’s accused conduct and Lego’s filing suit was reasonable in duration, the first element of laches cannot be shown, and the defense fails. If Lego delayed unreasonably between learning of Besb-Lock’s perceived infringement and suing to enjoin it, the first element of laches is established, and the second element arises: whether Best-Lock was unfairly prejudiced by the delay. The Chancellor in Equity must consider all these issues. Discovery is necessary to explicate them.

C. Validity of the Minifigure Copyrights

1. The Test for Functionality

Best-Lock argues that the Minifigure Copyrights are invalid because the elements in question are “functional” rather than “sculptural.” Supp. Memo, at 17-18. The Copyright Act establishes that “pictorial, graphic or sculptural works” are eligible for copyright protection. 17 U.S.C. § 102(a)(5). Such works include “works of artistic craftsmanship insofar as their form but not their mechanical or utilitarian aspects are concerned.” 17 U.S.C. § 101. “The Act, however, excludes any ‘useful article’—defined as ‘an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information’—from copyright eligibility.” Chosun, 413 F.3d at 327 (citing § 101). Id. The design of a useful article is considered a pictorial, graphic or sculptural work “only if, and to the extent that, such design incorporates pictorial, graphic or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.” § 101.

The Second Circuit has established that toys can be “pictorial, graphic or sculptural works.” Hasbro Bradley, Inc. v. Sparkle Toys, Inc., 780 F.2d 189, 192 (2d Cir.1985). In Hasbro Bradley, “changeable robotic action figures” were held to be “pictorial, graphic or sculptural.” Id. at 191-92. That court has also held that design elements can be protected if they are either physically or conceptually separable from the underlying product. See, e.g., Brandir Int’l, Inc. v. Cascade Pacific Lumber Co., 834 F.2d 1142, 1145 (2d Cir.1987); Chosun Int’l, Inc. v. Chrisha Creations, Ltd., 413 F.3d 324 (2d Cir.2005). Because Lego does not assert physical separability in support of the claim that its figurines contain copyrightable elements, the case turns upon conceptual separability.

The Second Circuit’s formulation of “conceptual separability” in the copyright context has given rise to some criticism and disagreement in other quarters. An earlier explication of “conceptual separability” appears in Brandir, where the Second Circuit held that a bicycle rack made of bent tubing was not copyrightable. During its analysis, the court of appeals said that “if design elements reflect a merger of aesthetic and functional considerations, the artistic aspects of a work cannot be said to be conceptually separable from the utilitarian elements. Conversely, where design elements can be iden