Fun-Damental was a novelty company that sold a bank shaped
like a toilet. Gemmy was a novelty company that sold a cheaper bank
shaped like a toilet. Fun-Damental sued Gemmy for copyright infringement.
Fundamental argued that Gemmy's vice president learned
about the product and then directed his Chinese factory to make a
knock-off.
At trial, Fun-Damental attempted to introduce testimony
from their sales manager who testified that retail customers told him that
they confused the two products and thought that Fun-Damental was selling
the same product at two different prices.
Confusion is an essential element of a copyright
infringement claim.
Gemmy argued that the sales manager's statements were
inadmissible as hearsay.
The Trial Court allowed the testimony.
The Trial Court found for Fun-Damental and issued an
injunction for Gemmy to stop marketing their toilet bank. Gemmy appealed.
The Appellate Court affirmed.
The Appellate Court found that the testimony was
admissible because it was being used to establish that retailers were
confused. It was not being used to establish that Gemmy's product was
cheaper.
Basically, the specific statements made to the sales
manager were not important, it was just their confusion that was
important.
FRE 803 allows statements that would otherwise be
excluded as hearsay to be admissible to show someone's state of
mind.
