Page:Gund v. Swank.pdf/4

 goes to the toy trade. It has not been advertised recently.

From 1982 to the present, the wholesale value of Roarry lion products sold by Gund has been in excess of $1,000,000. From 1982 to the present, more than 100,000 Roarry units, in all of its forms, have been sold. The present wholesale price of Roarry, Style No. 2700 is $5.50, and the wholesale price of the larger Roarry, Style No. 2705, is $11.00.

In about March of 1987, Diane Hutchinson, a fashion coordinator at Swank who joined Swank approximately nine months ago, called Gund at its showroom with the approval of Swank management in connection with a Swank Christmas 1987 promotion which would include a stuffed plush toy lion. It was proposed that Anne Klein earrings portraying a lion’s head be accompanied by a small plush lion as a promotional gift. Swank had utilized plush toy products for its 1985 and 1986 promotions.

Diane Hutchinson, accompanied by Gene Greenberg, the Swank salesman who proposed the promotion, indicated to Gund that Swank was interested in purchasing some 100,000 to 200,000 Roarrys. Roarry was physically present during the meeting, on the table before the three people who were having this conversation, and a Gund catalog was also given to Ms. Hutchinson before she left. At the end of the meeting, Mary Jane Emmert, the Gund representative, undertook to determine the price at which Gund would offer Roarry to Swank for use in the promotion and get back to Swank.

Several weeks later, Emmert advised Hutchinson that Gund’s price for Roarry would be in excess of $4.00. Since Hutchinson had indicated at the initial meeting that the budget for the promotion called for a toy costing in the neighborhood of $3.00, the discussions between the parties terminated.

Swank then contacted a number of manufacturers of plush toy animals, including Steven Smith/Stuffed Animals, Inc., a New York corporation (“Smith”). At the offices of Smith at 916 East 92nd Street, Brooklyn, New York 11236, on April 20 or thereabouts, Hutchinson requested sample toy lions which would sit on a counter, have outstretched arms and stand about six inches high. It was agreed that one of the samples would be similar to Roarry.

Smith then sent Hutchinson three samples, the first being similar to Roarry. Various revisions were made to the toy. At one point Hutchinson submitted photographs of real lions to Smith and requested that Smith change the face of the toy lion sample. The Smith lions were manufactured in Korea. Swank sought no legal advice in connection with its promotion and the use of the plush lion resembling Roarry. The initial Roarry is no longer in the possession of Smith, Hutchinson or Swank. The only significant changes in Swank’s final production version from its original copy of Roarry is the addition of a white plush area on the muzzle or chin of the lion, but the Swank lion still closely simulates both the Roarry lion’s head and body.

Swank purchased a total of 39,000 toy lions from Smith for $3.00 each which, when sold with the Anne Klein earrings, retail for $20.00. The earrings sell separately at retail for $18.00.

Swank issued a promotional brochure on the earring lion promotion in early May, 1987 and by July 27, 1987 Swank terminated the promotion because it was oversold. Approximately 39,000 units were manufactured by Smith and in September, 1987 delivered to Swank. These units have been distributed and are not identified on Swank’s sales records by a particular category. To locate the units in the hands of retailers would require a review of all orders during the relevant period.

While Gund provided the pattern used for creating Roarry, Swank presented no evidence from the Korean manufacturer of its lion. Gund did, however, provide a comparison of its pattern with that created by taking apart the Swank lion. From the comparison of the patterns, the notches (the portions of the pattern used to assist in the sewing), the minor differentiations between the patterns, other than the