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December 18, 1992

ROBIN WOODS, INC., a Pennsylvania corporation, Plaintiff,
ROBIN F. WOODS, an individual; and the ALEXANDER DOLL COMPANY, a New York corporation, Defendants.

The opinion of the court was delivered by: DONALD J. LEE

 December 18, 1992

 The principal issues addressed herein are whether defendants have violated this Court's preliminary injunction of February 7, 1992, and are therefore in contempt of Court, and if so, the appropriate sanctions for such contempt.


 1. The facts relevant to the Order of February 7, 1992, entering the preliminary injunction, are set forth in the 48 Findings of Fact contained in the Memorandum Opinion accompanying the Order, *fn1" and will not be repeated here except as is necessary to an understanding of the issues now before the Court.

 2. Upon consideration of Chief Magistrate Judge Ila Jeanne Sensenich's Recommendation for Disposition of Plaintiff's Motion for Preliminary Injunction, the parties' Objections to that Recommendation, and oral argument, this Court entered a multi-faceted injunction enjoining the defendants, Mrs. Robin F. woods ("Mrs. Woods") and the Alexander Doll Company ("Alexander") from a variety of activities, a summary of which is as follows:

 1. Defendants are enjoined from "characterizing, promoting or advertising" that "any dolls, manufactured by Alexander . . . for which [Mrs.] Woods provided any services: (a) are "collectible" . . .; (b) may or will increase in value; (c) are part of a "collection" . . .; (d) are part of a limited production run . . .; (e) are serialized or numbered . . .; (f) are accompanied by . . . a certificate of authenticity or similar documentation; (g) are signed or otherwise identified with Robin F. Woods; or (h) are only available from an exclusive source at retail or a limited number of sources at retail."

 2-6. Defendants are enjoined from promoting the "collection of any dolls . . . for which [Mrs.] Woods provided any services"; from "submitting any doll for which [Mrs.] Woods provided any services for any award under any 'collectible' category"; from applying or signing "Robin Woods' name or signature . . . to any dolls . . ."; from "designating or identifying any specific dolls . . . for which [Mrs.] Woods provided services"; and Mrs. Woods is prohibited from accepting any awards on behalf of Alexander.

 7. Defendants are prohibited from "manufacturing, marketing and selling dolls that are substantially similar to those [specifically named collectible dolls or collections of collectible dolls listed] in Paragraph 12 of this Court's Memorandum Opinion . . ."

 B. "Defendants, Robin F. Woods and the Alexander Doll Company, are enjoined from identifying Robin F. Woods as having provided any services for any dolls manufactured by any company, including but not limited to the Alexander Doll Company, such as on the product, product tag, box or literature that accompanies the doll or in connection with any advertising or promotion of the doll."

 9, 11. Mrs. Woods was also prohibited from attending or appearing at the February 1992 International Toy Fair in New York City, and is prohibited from disclosing customer information which is protected by the Non-Disclosure/Non-Competition Agreement.

 10. Defendants are further enjoined from "manufacturing, promoting or selling any dolls . . . by reference to the following trademarks of [plaintiff] Robin Woods, Inc.:

 (i) the name "Robin Woods";

 (ii) the cursive signature "Robin Woods";

 (iii) the slogan "A Playmate Today, A Treasure Tomorrow"; and

 (iv) the logo with the tree, swing and name Robin Woods.

 3. The preliminary injunction is premised upon two separate (but in this case related) legal predicates. The first is the restrictive covenant against competition agreed to between Mrs. Woods and the Company (see paragraph 9 of the February 7th Memorandum Order) as part of the consideration for the substantial investment in the Company made by the Pittsburgh Seed Fund, which covenant provides that Mrs. Woods "shall not directly or indirectly provide or render services to . . . any other . . . organization in connection with products, services and technology which compete, directly or indirectly, with the products and services of the Company (the "Company's Business"). . . . The "Company's Business" is explicitly defined in this agreement as: the "business of manufacturing, marketing and selling collectible dolls."

 The second predicate arises from the Convertible Term Note Purchase Agreement in which the Company and its principal shareholders, including Mrs. Woods, made certain warranties and representations to the Seed Fund, including that "the Company has all right, title and interest in and to all intangible property . . ., including, without limitation, all patents, trademarks, servicemarks, trade names, copyrights, trade secrets, and licenses . . .." (See paragraph 6 of February 7th Memorandum Opinion). Because the personal name "Robin Woods" has acquired a secondary meaning within the doll industry and to the doll buying public, and because at the time of the injunction there was a great likelihood of confusion within the industry and the public as to the source of "Robin Woods" dolls, that trade name and the other trademarks (all unregistered) were entitled to protection under the Lanham Act, 15 U.S.C. § 1125. *fn2"

 5. Following argument on this motion, the Court denied modification of the injunction or stay pending appeal, stating: "Under the present state of the record, this Court does not believe a modification . . . is appropriate. . . . Robin Woods, Inc. is entitled to protection of its collectible doll market, and a modification or stay of the Order would dilute that protection." (Memorandum Order, February 11, 1992).

 6. Defendants then filed an emergency application for stay or modification of preliminary injunction pending appeal with the United States Court of Appeals for the Third Circuit. This emergency application was denied initially by a Circuit Judge, and that denial was affirmed by a panel of the Circuit court. Defendants also filed a timely appeal from this Court's February 7th Order, entering the preliminary injunction which a panel of the Third Circuit Court of Appeals affirmed on August 31, 1992.

 The Motion for Contempt

 7. On June 11, 1992, plaintiff filed the matter currently before this Court, *fn3" its motion for contempt, counsel fees, expenses, damages and other sanctions. (Document No. 57). Plaintiff's motion for contempt, etc., claims defendants wilfully violated this Court's February 7th Order, by their conduct in promoting and advertising a new 1992 line of dolls for Alexander, "Let's Play Dolls," a line designed by Mrs. Woods and promoted under her nom de plume "Alice Darling." *fn4" The motion for contempt alleges that Mrs. Woods had already appeared and is further scheduled to appear as "Alice Darling" at trade shows, retail shows and other events promoting the "Let's Play Dolls" line for Alexander, and that defendants' promotional campaign includes photographs, literature and advertisements announcing that "Mrs. Robin F. Woods is exclusively associated with the 'Let's Play Dolls' division" of Alexander and "will be creating dolls for play under the name 'Alice Darling.'" The promotional material included advertisements in the July 1992 issues of Doll Reader (Plaintiff's Exhibit 10) and Dolls - The Collector's Magazine (Plaintiff's Exhibit 9) which featured Mrs. Woods' photograph and stated, in part, that Mrs. Woods resigned from the company in December 1991, that a federal court "preliminarily ruled that [the company] owns the trade name Robin Woods, and that Mrs. Woods may not use her name to identify any dolls which she designs. Accordingly, Mrs. Woods has assumed a new trade name, Alice Darling, to identify the dolls she designs for the Alexander Doll Company." (This advertisement, which also was reproduced as a poster at trade shows in March and April 1992, has been reproduced and is attached to this Memorandum Opinion as an Appendix.) Plaintiff asserts that defendants' conduct "advised and continues to advise the retailers and collectors and the entire world that Mrs. Woods" is designing the "Let's Play Dolls" line as "Alice Darling" for Alexander, in violation of this Court's preliminary injunction. (Motion for Contempt, etc., paragraph 10).

 8. Additionally, plaintiff asserts that the "Let's Play Dolls" line of dolls is "identical to or substantially similar" to its line of collectible dolls, and that defendants are therefore in contempt of court for violating those portions of the preliminary injunction prohibiting Mrs. Woods from designing, and both defendants from promoting, advertising or encouraging collection of, collectible dolls, and otherwise competing against the Company in the collectible doll market.

 9. Plaintiff seeks a wide-range of relief, including that Mrs. Woods be prohibited from working for or being paid by Alexander for any services, that defendants be prohibited from distributing any additional literature or advertising about "Let's Play Dolls," and be required to recall all such previously distributed material along with the entire line of dolls, and that defendants be fined and reimburse plaintiff for a variety of asserted damages.

 10. The parties have submitted proposed Findings of Fact and conclusions of Law. *fn5" (Document Nos. 125, 127, 129, 130)


 The following findings of fact have been demonstrated by clear and convincing evidence of record by way of documentary and testimonial evidence produced in these contempt proceedings.


 11. Mrs. Woods attended the Toy Fair in New York City in February 1992 on behalf of Alexander, and was present at their "Let's Play Dolls" booth, but only until plaintiff posted a bond pursuant to Fed.R.Civ.P. 65 on or about February 11, 1992. At that point, Mrs. Woods left the Toy Fair and did not return.

 12. At the Toy Fair, Mrs. Woods discussed the fact she had resigned from the Company and was designing the "Let's Play Dolls" line for Alexander. However, there is no evidence or indication that she disparaged the Company or its product and, in fact, she encouraged at least one dissatisfied Company customer to keep her appointment with the Company's representatives and to order its product if she (the customer) liked what she saw. *fn6"

 13. The "Let's Play Dolls" line consists of twenty-eight dolls grouped into six play themes, "Sing Me A Song," "Let's Pretend," "Thank Heaven For Little Girls," "Day By Day," "Tell Me A Story," and "Best Friends." The "Let's Play Dolls" catalogue explains this line represents "a new concept in dolls for children. . . . Designed to encourage imaginative play . . . these dolls embody the magic of that special bond between a little girl and her doll." (Plaintiff's Contempt Exhibit 11; Defendants' Exhibit L). A major feature of this line of dolls is the separately sold, interchangeable outfits (e.g., Day By Day Fashions) and accessories (e.g., trunks and hat box). The suggested retail price range of these "Alice Darling" dolls is $ 79.95 - $ 149.95. Id.

 14. Mrs. Woods was "emotionally devastated" by this Court's February 7th Order prohibiting her from using her own name in the doll industry, and she conferred with Mr. Ira Smith, Alexander's President and consulted with their attorneys regarding how she could remain in the doll market as a designer of play dolls and continue to use her evident talent and her substantial personal reputation without violating the injunction. (Deposition of Mr. John H. Bingler, Jr., Esquire, October 26, 1992 (Document No. 123). *fn7"

 15. Initially, the "Let's Play Dolls" promotional campaign featured personal appearances by Mrs. Woods at trade shows (in Dallas, Texas, in March 1992 and Pomona, California, in early April 1992) and at various regional "trunk shows" for retailers throughout the country in April, May and June, 1992; at these appearances, promotional material was displayed or distributed, which included the photograph of Mrs. Woods as "Alice Darling" and the excerpted text set forth in Paragraph 7 herein. (See Appendix).

 16. There is no evidence of record that Mrs. Woods' completed or scheduled personal appearances involved or will involve any use or application of the cursive signature "Robin Woods," the slogan, "A Playmate Today, A Treasure Tomorrow," or the logo with the tree, swing and the name, "Robin Woods." Further, there is no evidence that she used the name "Robin Woods" at these appearances, that she identified the name "Robin Woods" with any Alexander dolls, that she signed any dolls, or that she promoted or sold "Let's Play Dolls" as anyone other than "Alice Darling," except to the extent that retailers were informed by a variety of promotional literature (retailer-directed press kits, doll magazine advertisements and posters) that Mrs. Woods was no longer employed by the Company and was designing "Let's Play Dolls" for Alexander as "Alice Darling." That promotional campaign did identify Mrs. Woods with the "Let's Play Dolls" line as its designer.

 17. Defendants' promotional campaign has been successful in that "everybody" in the doll industry is aware that "Alice Darling" is Mrs. Robin F. Woods. (Testimony of Mr. A. Glenn Mandeville, defendants' expert witness, October 21, 1992.) Not all retail customers are aware that "Alice Darling" is Mrs. Woods.

 18. Alexander has submitted certain "Let's Play Dolls" dolls for "DOTY" (Doll of the Year) awards, namely "Libby" in the "premium price baby toddler doll category," and "Alice, Darling Alice" and "Lassie" in the "premium price fashion doll category." To be nominated in these categories, dolls must satisfy all nominating criteria as determined by a panel of doll experts. The principal criterion for these "play" categories for which "Let's Play Dolls" dolls were nominated is that the dolls be marketed primarily for children.

 19. As this Court found in its February 7th Memorandum Opinion, many premium priced dolls share elements of "play" dolls and elements of "collectible" dolls, and it is the purchaser who ultimately determines whether her or his purchase of a doll is for collection or for play. (See Memorandum Opinion, paragraphs 10, 12, 23, 40, 43). Like beauty, doll collectibility is a quality very much in the eye of the beholder.

 20. Nevertheless, it is clear from all of the credible evidence offered at the contempt hearing, (including that of Mrs. Woods; Mr. A. Glenn Mandeville, a preeminent historian, author, editor and expert in the doll industry, whose testimony this Court finds quite illuminating and impressive; Mrs. Glenda Jackson, owner of a retail specialty doll shop selling both collectible and play dolls in Alabama; Mr. William Davidson, senior buyer of toy merchandise for Walt Disney Attractions, Inc., in Orlando, Florida; Ms. Carol Moody, owner of a retail specialty doll shop selling both collectible and play dolls in Arlington, Texas; and Ms. Kay Hyatt, owner of a retail specialty play and collectible doll shop in Pennsylvania), that the "Alice Darling - Let's Play Dolls" line is in fact being promoted, marketed and advertised exclusively as play dolls that are suitable and appropriate for play by children. Nothing in the promotion of "Let's Play Dolls" is targeted or designed to appeal to or attract collectors. Additionally, there is clear and convincing record evidence that the dolls of the "Let's Play Dolls" line are, in fact, being purchased primarily by mothers and grandmothers for their daughters and granddaughters to play with, and plaintiff offered no competent evidence that "Let's Play Dolls" dolls were being purchased and used by collectors.

 23. Defendants' expert and fact witnesses testified, however, as to numerous substantial and significant differences between the two lines of dolls, and the Court finds numerous differences exist, chief among them being as follows:

 (A) Unlike the Company's collectible dolls, the dolls of the "Let's Play Dolls" line feature fully jointed, more flexible and movable arms and legs that are much easier to pose and bend into a variety of positions; this flexibility allows a child to dress and undress these dolls much more easily than the Company's dolls and encourages play;

 (B) The plastic used in the "Let's Play Dolls" line is softer and more supple than the material used for the bodies and faces of the Company's dolls, again encouraging and fostering play;

 (C) The hands of the "Let's Play Dolls" dolls are shaped differently than those of the Company's dolls, and can be more readily positioned to hold garments and accessories and to "hold" children's hands;

 (D) Underwear is a critical item in determining the collectibility of dolls; a doll's underwear is one of the first things that a collector looks at in selecting a doll, and the more elaborate the undergarments, the more collectible; "Let's Play Dolls" underwear is less elaborate than the underwear placed on the Company's dolls;

 (E) The themes for the groupings of the Company's dolls tended to be historical and literary themes (such as the Alcott Collection and the Camelot Collection), while the themes embodied in groups of "Let's Play Dolls" are divided into "several natural themes of early ...

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