author: SAND, District Judge.

text:
    TOWLE MANUFACTURING COMPANY and Galway Crystal, Ltd., Plaintiffs, v. GODINGER SILVER ART CO., LTD., Defendant.
    No. 85 Civ. 3153 (LBS).
    United States District Court, S.D. New York.
    July 2, 1985.

      Frankfurt, Garbus, Klein & Selz, New York City, for plaintiffs; Richard Kurnit, Edward H. Rosenthal, New York City, of counsel.
    Stiefel, Gross, Kurland & Pavane, New York City, for defendant; Martin B. Pa-vane, New York City, of counsel.
   OPINION

SAND, District Judge.

I. INTRODUCTION

Plaintiffs Towle Manufacturing Co. and its wholly-owned subsidiary, Galway Crystal, Ltd., (hereinafter “Galway” or “plaintiff”) are currently engaged in the manufacture and sale of glassware and crystal items; one of their products, a decorative mouthblown and hand-cut crystal baby bottle (“Galway baby bottle”), is the subject of this litigation. Defendant Godinger Silver Art Co., Ltd. (“Godinger”) manufactures and distributes items of glassware and silver, one of which is a pressed glass, machine-made decorative baby bottle (“Godinger baby bottle”). The plaintiff’s Complaint, filed on April 24, 1985, alleges that Godinger has infringed plaintiff’s copyright in the Galway baby bottle by its conscious copying and distribution of a baby bottle virtually indistinguishable from Galway’s; that Godinger has infringed plaintiff’s trademark “Shannon” by marketing its baby bottle in a dark green box similar to plaintiffs with the unauthorized use of the mark “Shannon” on it; and that Godinger has engaged in unfair competition and palming off under the Lanham Act, 15 U.S.C. § 1125(a) (1982) as well as under state law. The complaint, alleging that there is no adequate remedy at law, seeks to enjoin Godinger from further copyright and trademark infringement. The complaint also seeks an accounting for all of Godinger’s profits from the sale of its infringing goods, as well as punitive damages, the treble amount of plaintiff’s actual damages, and attorneys’ fees. Upon application of an order to show cause, the Court granted a temporary restraining order following a hearing on April 24, 1985. The Court held a combined hearing on the preliminary injunction and on the merits on April 26, 1985, pursuant to Fed.R.Civ.P. 65(a)(2), after which the temporary restraining order was lifted. The following constitutes the Court’s findings of fact and conclusions of law on the preliminary injunction and on the merits.

II. FACTS

In April of 1984, plaintiff Galway displayed its baby bottle, with copyright notice affixed, at a trade show; it subsequently began an extensive advertising campaign in August of 1984 to promote the sale of its bottle, and to date has spent approximately $75,000.00 to this end. Gal-way’s witnesses testified that the company has restricted its sales to “upmarket” department stores and giftware retailers, and has sought to promote a future market for its baby bottle by utilizing a sales technique in which demand outpaces supply. Galway products, including its baby bottle, are made in Ireland, and they enjoy a sustantial market in the United States. The first shipment of Galway baby bottles arrived on retail shelves in the United States in the fall of 1984, according to plaintiff’s testimony. Galway estimates that, to date, approximately 15,000 of its bottles have been shipped to the United States, with orders for approximately 10,000 additional bottles outstanding at the time of trial.

Although Galway and Towle, according to testimony, do not seek copyright or trademark protection for their crystal designs on a regular basis, they have made efforts at protecting some new designs since 1982, at which time Galway was taken over by Towle. In April of 1984, Towle’s in-house counsel wrote a memo to William Tobin, the managing director of Galway Crystal, Ltd. in Ireland, describing the importance of obtaining copyrights and trademarks for new designs, and urging Galway to provide Towle with the documentation required to protect its original designs slated for distribution in the United States.

Tobin testified that he asked Galway’s plant manager to order and affix labels to its baby bottle bearing the proper copyright designations near the words “Galway Irish Crystal.” However, in April of 1985, shortly after plaintiff became aware of the existence of Godinger’s baby bottle, Tobin discovered that the first shipment of Gal-way bottles had gone to the United States “through mistake and inadvertence” (Tobin Affidavit) without the proper labels bearing the circled C designation. He testified that he attempted to remedy this situation by making sure that subsequent shipments of the bottle to the United States contained the proper labels, and by contacting Towle’s trademark counsel. According to the latter’s testimony, Towle took prompt action upon discovery that defendant’s baby bottle was on the market. Its actions included filing a registration form for the Galway bottle’s design with the copyright office on April 10, 1985; sending telegrams and letters to Godinger on April 16, 1985, ordering it to cease and desist from further infringement of Galway’s rights in its bottle; and writing to salespeople in the United States on April 23,1985, enclosing labels bearing the circled C and requesting that these be affixed personally by Galway’s employees. Shortly thereafter, upon Godinger’s refusal to cease the manufacture and sale of its baby bottle, Galway and Towle filed the instant action. This Court has jurisdiction pursuant to 28 U.S.C. §§ 1331, 1338(a), (b) (1982) and 15 U.S.C. § 1121 (1982).

Arnold Godinger, the president and chief executive officer of Godinger, testified that he first observed silver-topped plain glass baby bottles at a trade show in Italy in 1983. He stated at trial that he spoke to the manufacturer of the bottle regarding the design and marketing of a more decorative bottle made of cut instead of plain glass and with a similar silver top. Samples of the Italian bottles arrived at his office in the United States in early 1984. Prior to his taking any further steps in designing or manufacturing a decorative bottle, Godinger testified that he saw an advertisement picturing the Galway bottle in a magazine in August of 1984. He sent this advertisement to manufacturers in Germany and Japan, instructing them to make “very similar” samples in pressed instead of hand-cut glass and of slightly larger size. Godinger purchased a Galway bottle in Chicago in November of 1984, which he later brought to the German manufacturer from whom he had previously requested samples. Godinger ultimately decided, however, to have its bottles manufactured in Japan.

Godinger described the particular cuts or designs on the Galway bottle as “traditional,” and introduced evidence that the same designs, in similar configurations, have been utilized by numerous glassware manufacturers on numerous items for a long time. Godinger’s testimony indicated that, given the popularity and prevalence of these patterns in crystalware, he felt “comfortable” utilizing the same combination of cuts on his own version of a decorative baby bottle. Accordingly, after he had seen Galway’s advertisement and the bottle itself, Godinger directed a Japanese company to manufacture a baby bottle from the sample it had made up earlier. The record does not indicate the precise date on which the Godinger bottles arrived in the United States and were shipped to retailers; nevertheless, it is uncontroverted that a major New York “upmarket” retailer sells Godinger bottles and has recently advertised them in its catalogue, and a number of Godinger bottles are currently on order for other retailers as well.

Plaintiff Galway contends that the sale of Godinger bottles in an “upmarket” retail store, combined with the close similarity in appearance and trade dress of the two bottles and the resulting likelihood of confusion of the products, should lead to the imposition of liability on Godinger. At trial, defendant’s president agreed to discontinue use of the green box and the name “Shannon,” and further agreed to place defendant’s name on the box in which the bottle is sold, thus eliminating the need for further consideration of the issue of trademark infringement. The issues remaining for resolution in this proceeding include plaintiff’s copyright infringement and unfair competition claims under federal and common law. For the reasons discussed below, this Court denies plaintiff’s requests for injunctive relief, damages and attorneys’ fees.

III. DISCUSSION

A. Copyrightability of Plaintiffs Design

At the outset, the Court must determine whether plaintiff’s design is entitled to copyright protection, since an action for copyright infringement such as plaintiff’s cannot be maintained in the absence of ownership of a valid copyright. American Greetings Corp. v. Easter Unlimited, Inc., 579 F.Supp. 607, 613 (S.D.N.Y.1983). Plaintiff does not, and indeed cannot, claim copyright protection for the idea of a decorative baby bottle. See Reyher v. Children’s Television Workshop, 533 F.2d 87, 90 (2d Cir.) (“It is an axiom of copyright law that the protection granted to a copyrightable work extends only to the particular expression of an idea and never to the idea itself.”), cert. denied, 429 U.S. 980, 97 S.Ct. 492, 50 L.Ed.2d 588 (1976). (Indeed, Waterford, another manufacturer of Irish hand-cut crystal, has a similar product on the market not challenged by plaintiff). Rather, plaintiff claims that its particular combination of design elements, consisting of five different styles of glassware cuttings on its bottle, is copyrightable. Plaintiff has characterized its bottle as an original work both in its copyright application and at trial. Defendant Godinger, however, contends that Galway, by utilizing a series of well-known cuttings that exist in the public domain, has designed a work that is not subject to copyright protection, so that Godinger would incur no liability by copying the design. As an alternative, Godinger states that, at most, plaintiff has designed a derivative work subject to limited copyright protection, and that by characterizing its work as original rather than derivative on its copyright application, it has committed fraud on the Copyright Office.

The general view in the case law is that “ ‘the one pervading element prerequisite to copyright protection regardless of the form of the work’ is the requirement of originality—that the work be the original product of the claimant.” L. Batlin & Son, Inc. v. Snyder, 536 F.2d 486, 489-90 (2d Cir.), cert. denied, 429 U.S. 857, 97 S.Ct. 156, 50 L.Ed.2d 135 (1976), quoting 1 M. Nimmer, Nimmer on Copyright § 10, at 32 (1975 ed.). The element of originality has also been described as the “sine qua non of copyrightability.” Durham Industries, Inc. v. Tomy Corp., 630 F.2d 905, 910 (2d Cir.1980). Although independent creation is necessary to establish originality, “there need not be invention in the sense of striking uniqueness, ingeniousness, or novelty,” Batlin, 536 F.2d at 490; the degree of originality required has been described as “modest”, “minimal”, and at a “low threshhold.” Durham, 630 F.2d at 910 (quoting Batlin, 536 F.2d at 490).

It is evident that plaintiff Galway, in designing its baby bottle with a particular arrangement of preexisting cutting designs in the public domain, has failed to meet even the modicum of originality necessary for copyrightability. The numerous exhibits presented at trial make it clear that each of the five glassware cuttings utilized by Galway in its baby bottle design is in common usage in the glassware and crystal industries, and each has apparently been so for a long period of time. Significantly, the box in which plaintiffs bottle is marketed bears the designation “Leah;” this may be viewed as a tacit acknowledgement by Galway that its bottle is patterned after the uncopyrighted and preexisting Leah style. Indeed, plaintiff concedes that the design of its bottle consists of several of the same patterns of cuttings as Leah line glassware, with the addition of a flattened oval pattern at the base of the bottle and a star design on the bottom. The exhibits presented at trial indicate that both the oval and star patterns are in common usage in the glass and crystalware markets as well.

Nevertheless, the mere borrowing of elements from previous works will not defeat copyrightability as long as the author has devised a new version of the work or has otherwise rearranged or transformed it so as to have made an original contribution. 1 M. Nimmer, Nimmer on Copyright § 3.01, at 3-10 (1985 ed.). Viewing plaintiff Galway’s design as a whole, however, this Court holds that Galway has not utilized preexisting design elements in a sufficiently original manner to warrant copyright protection. It has, instead, merely placed a number of common glassware cuttings on its bottle in an apparently common configuration without significant changes or additions. Thus, in the absence of original contribution by Galway, this Court holds that its baby bottle design does not warrant copyright protection. See Durham Industries, Inc. v. Tomy Corp., 630 F.2d 905, 910 (2d Cir.1980) (where there is “no independent creation, no distinguishable variation from preexisting works, [and] nothing recognizably the author’s own contributions,” copyrightability does not exist).

B. Copyright Infringement

The two essential elements of a copyright infringement action are (1) plaintiff’s ownership of a valid copyright, and (2) defendant’s copying of plaintiff’s work. American Greetings, 579 F.Supp. 607, 613 (S.D.N.Y.1983). Since the Court finds that plaintiff does not hold a valid copyright, the plaintiff is unable to prevail on a claim of copyright infringement. This is so in spite of Galway’s ample and essentially uncontroverted evidence and Godinger’s testimony that Godinger did copy its work.

A work such as plaintiff’s, which does not enjoy copyright protection, is “in the public domain and can be copied in every detail by whoever pleases.” Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 236, 84 S.Ct. 779, 781, 11 L.Ed.2d 669 (1964). Moreover, imitation such as defendant’s has been described as “the life blood of competition ... that permits the normal operation of supply and demand to yield the fair price society must pay for a given commodity.” Gemveto Jewelry Co., Inc. v. Jeff Cooper, Inc., 568 F.Supp. 319, 334 (S.D.N.Y.1983) quoting American Safety Table Corp. v. Schreiber, 269 F.2d 255, 271-72 (2d Cir.), cert. denied, 361 U.S. 915, 80 S.Ct. 259, 4 L.Ed.2d 185 (1959). Thus, even “slavish copying of a well-marketed product,” Gemveto, 568 F.Supp. at 334, is not actionable so long as plaintiff’s design is in the public domain. See also Sublime Products, Inc. v. Gerber Products, Inc., 579 F.Supp. 248, 251 (S.D.N.Y. 1984) (inequity of allowing defendant “to get a ‘free ride’ based on plaintiff’s efforts to develop a market for its product” is outweighed by federal policy encouraging competition).

C. Unfair Competition Claims

Plaintiff Galway contends that defendant Godinger has engaged in unfair competition, and is therefore liable to Galway under the Lanham Act § 43(a), 15 U.S.C. § 1125(a) (1982) as well as under common law. The Court concludes, however, that both contentions must fail. The Lanham Act, 15 U.S.C. § 1125(a), is primarily intended to protect consumers against deception and confusion regarding the origin of goods in the marketplace. Warner Bros., Inc. v. Gay Toys, Inc., 658 F.2d 76, 79 (2d Cir.1981) aff'd, 724 F.2d 327 (2d Cir.1983); American Footwear Corp. v. General Footwear Co., 609 F.2d 655, 662 (2d Cir.1979), cert. denied, 445 U.S. 951, 100 S.Ct. 1601, 63 L.Ed.2d 787 (1980); Bi-Rite Enterprises, Inc. v. Button Master, 555 F.Supp. 1188, 1193 (S.D.N.Y.1983). It prohibits “false designation of origin, of any false description or representation [of goods] including words or other symbols tending falsely to describe or represent the same....” 15 U.S.C. § 1125(a) (1982).

The two basic inquiries in a Lanham Act unfair competition claim are whether the ordinarily prudent purchaser is likely to be misled or confused as a result of the substantial similarity in appearance or trade dress of the two products, and whether the plaintiff’s product has acquired secondary meaning in the marketplace. See Industria Arredamenti Fratelli Saporiti v. Chas. Craig, Ltd., 725 F.2d 18 (2d Cir.1984); Warner Bros., Inc. v. Gay Toys, Inc., 658 F.2d 76, 79 (2d Cir.1981), aff'd 724 F.2d 327 (2d Cir.1983); Perfect Fit Industries, Inc. v. Acme Quilting Co., 618 F.2d 950 (2d Cir.1980), cert. denied, 459 U.S. 832, 103 S.Ct. 73, 74 L.Ed.2d 71 (1982); American Greetings Corp. v. Easter Unlimited, Inc., 579 F.Supp. 607, 616 (S.D.N.Y.1983).

The Court holds that plaintiff Galway has not met its burden in establishing that its baby bottle has acquired secondary meaning in the marketplace, and, therefore, the Court need not reach the issue of whether or not defendant’s product has created a likelihood of confusion amongst consumers in order to decide plaintiff’s Lanham Act claim.

Secondary meaning may be established by showing that there is “an affirmative link in the public mind to the particular producer.” Metro Kane Imports, Ltd. v. Rowoco, Inc., 595 F.Supp. 702, 706 (S.D.N.Y.1984). The plaintiff must show that the consumer has come to associate a particular product or its packaging with a specific manufacturer, so that copying by a competitor would lead to public confusion as to the origin of the product. Perfect Fit Industries, Inc. v. Acme Quilting Co., 618 F.2d 950, 953 (2d Cir.1980), cert. denied, 459 U.S. 832, 103 S.Ct. 73, 74 L.Ed.2d 71 (1982); Harlequin Enterprises Ltd. v. Gulf & Western Corp., 644 F.2d 946, 949 (2d Cir.1981). Proof that a product has acquired secondary meaning cannot be adduced from sales, advertising expenses, and popularity of the product alone. These factors are merely “demonstrative ... of an effort to establish secondary meaning, not success of the effort.” Metro Kane Imports, Ltd. v. Rowoco, Inc., 595 F.Supp. 702, 706 (S.D.N.Y.1984). In order to demonstrate the requisite association in the public mind, successful plaintiffs often present evidence regarding the results of consumer surveys, in addition to detailing sales and advertising figures. See, e.g., Warner Bros., Inc. v. Gay Toys, Inc., 658 F.2d 76, 78 (2d Cir.1981) (survey demonstrated that consumers associated defendant’s product with plaintiff’s based on copied decals and other decorations on defendant’s product), aff'd, 724 F.2d 327 (2d Cir.1983); Harlequin Enterprises Ltd. v. Gulf & Western Corp., 644 F.2d 946, 949-50 (2d Cir.1981) (plaintiff’s showing of extensive national advertising, tremendous sales success, and media coverage of popularity of its books, combined with the results of a consumer survey linking plaintiff’s style of book cover with plaintiff, taken together, established that plaintiff’s book covers had acquired secondary meaning in the market); RJR Foods, Inc. v. White Rock Corp., 603 F.2d 1058, 1060 (2d Cir.1979) (evidence of multimillion dollar advertising campaign over long period of time, sales success over period of many years, and research study confirming that consumers linked similar label design to plaintiff’s product, taken together, established that plaintiff’s label had acquired secondary meaning).

The Court recognizes that Gal-way’s burden is particularly difficult in this case, since the baby bottle, as a new product, lacks an extensive sales or marketing history. Cf. RJR Foods, Inc. v. White Rock Corp., 603 F.2d 1058 (1979) (plaintiff’s case strengthened by evidence of popularity of product over long period of time). Moreover, Galway’s use of a marketing technique limiting supply of the bottles makes assessment of popularity extremely difficult. Although Galway has demonstrated that it has spent considerable sums in advertising and promoting its bottle, its evidence, viewed as a whole, fails to show that consumers have come to associate the concept of a decorative baby bottle with the Galway product.

Galway’s claim of unfair competition under common law is similarly weak. This Circuit has held that where a defendant copies plaintiff’s trade dress and plaintiff makes an adequate showing of likelihood of confusion of the products as a result, plaintiff need not show secondary meaning in order to obtain relief under the New York State common law of unfair competition. Perfect Fit Industries, Inc. v. Acme Quilting Co., Inc., 618 F.2d 950, 953 (1980), cert. denied, 459 U.S. 832, 103 S.Ct. 73, 74 L.Ed.2d 71 (1982). See also Harlequin Enterprises Ltd. v. Gulf & Western Corp., 644 F.2d 946, 950 (1981) (even if plaintiff had been unable to show secondary meaning, thus failing in its Lanham Act claim, it would still be entitled to an injunction under New York common law based on defendant’s deliberate copying of its trade dress even in the absence of secondary meaning). This Court declines to extend the broad protection for trade dress to claims for copying of designs in the public domain such as plaintiff’s. See Sublime Products, Inc. v. Gerber Products, Inc., 579 F.Supp. 248, 251 n. 4 (S.D.N.Y. 1984) (court declined to extend standards applicable to copying of trade dress to instance of product simulation), Gemveto Jewelry Co., Inc. v. Jeff Cooper, Inc., 568 F.Supp. 319, 335 (1983) (“Under the common law of New York, deliberate use of a competitor’s non-functional marks or trade-dress is actionable” even where secondary meaning has not been shown).

In addition, state remedies for unfair competition are limited by the Copyright Act of 1976,17 U.S.C. § 301(a) (1982), which provides:

All legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright ... and come within the subject matter of copyright ..., whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statute of any State.

The statute, however, still permits states to afford common law remedies to “subject matter that does not come within the subject matter of copyright[.]” 17 U.S.C. § 301(b)(1) (1982).

The Second Circuit has “recognized the breadth of New York’s common law tort of unfair competition!]] ... so long as the cause of action [has] not [been] preempted by the Copyright Act____” Warner Bros. v. American Broadcasting Cos., Inc., 720 F.2d 231, 247 (2d Cir.1983). However, the Second Circuit has narrowed the scope of the state unfair competition tort in Warner Bros. v. American Broadcasting Cos., Inc., 720 F.2d 231, 247-48 (2d Cir.1983), in which it held that state claims relying on misappropriation are preempted by the Copyright Act. However, claims based on the tort of passing off or palming off have not been preempted to the extent that they go beyond or are not equivalent to rights protected by copyright. Warner Bros. v. American Broadcasting Co., Inc., 720 F.2d at 247.

Plaintiff Galway contends that Godinger has passed off a copy of the •Galway baby bottle, and asserts that Godinger is thus liable under state law. However, this claim must fail for several reasons. First, Godinger has agreed not only to cease the use of trade dress similar to plaintiff’s (use of green box and name “Shannon”), but has expressed its willingness to place its name prominently on its baby bottle box. Plaintiff’s fears that consumers will confuse its bottle with Godinger’s based on similarity of trade dress are thus unwarranted.

Plaintiff has also expressed concern that, since the bottles are often displayed or pictured in catalogues without boxes, there is a likelihood that confusion as to the origin of the product will result. This concern is unjustified in view of Godinger’s current practice of affixing two labels to the bottom of its bottle, one of which reads “Godinger Silver—Tarnish Resistant—Japan,” and the other of which reads “24% lead crystal—made in Japan.” Godinger’s labels are completely different in appearance from the labels on Galway’s product. The Galway label is of a different shape and color and reads “Galway Irish Crystal—over 24% lead crystal.” The differences between these labels preclude the possibility that consumers will mistake Godinger’s bottle for Irish crystal such as Galway’s. See Abraham Zion Corp. v. Lebow, 593 F.Supp. 551, 558 (S.D.N.Y.1984) (where labels in clothing marketed by defendant did not resemble labels in plaintiff's clothing, and defendant’s label clearly identified him as the designer, court did not find palming off or consumer confusion regarding origin of the goods). As the Second Circuit has stated in Bose Corp. v. Linear Design Labs, Inc., 467 F.2d 304, 309-10 (2d Cir.1972), “The presence of [defendant’s] name on the product goes far to eliminate confusion of origin ... [T]here is hardly likelihood of confusion or palming off when the name of the manufacturer is clearly displayed.” Even though Godinger’s labels will not be visible when its bottle is pictured in a catalogue or newspaper advertisement, Godinger cannot be expected, as a practical matter, to label its product more prominently or effectively. See American Rolex Watch Corp. v. Ricoh Time Corp., 491 F.2d 877, 878-79 (2d Cir.1974) (where defendant made no attempt to palm off its watch as that of plaintiff, and where as practical matter the appearance of defendant’s name on its watches could not be seen from a distance, court dismissed plaintiff’s false designation of origin claims). See also Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 237, 84 S.Ct. 779, 781, 11 L.Ed.2d 669 (1964) (clear labeling of product itself as well as box considered “considerable evidence of the care taken ... to prevent customer confusion____”).

The Supreme Court, in Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 237, 84 S.Ct. 779, 782, 11 L.Ed.2d 669 (1964), has made it clear that “when an article is unprotected by a patent or a copyright, state law may not forbid others to copy that article. To forbid copying would interfere with the federal policy ... of allowing free access to copy whatever the federal patent and copyright laws leave in the public domain.” Thus, in the absence of a showing of fraud or misrepresentation on the part of Godinger as to the origin of its bottle, plaintiff Galway “cannot achieve by an unfair competition claim what it failed to achieve under its [federal] copyright claim____” Durham Industries, Inc. v. Tomy Corp., 630 F.2d 905, 918 (1980).

Accordingly, the Court denies plaintiff’s request for a preliminary injunction, and further denies plaintiff’s claims of copyright infringement and unfair competition. This ruling is based on the defendant’s representation that it will continue to label its bottle as it does at present, so that product origin will be clear and confusion in the marketplace will be avoided.

SO ORDERED.

      . Defendant Godinger contends that, even if plaintiffs design were copyrightable, its registration with the Copyright Office is invalid because Galway fraudulently characterized its work as original rather than derivative on its application. However, since Godinger has shown that plaintiff's lack of originality of design has defeated copyrightability, the Court need not reach the issue of fraud on the Copyright Office as a basis for invalidating Galway's copyright registration.

      . Galway has made an additional claim based on its position that the bottle design is copyrightable. It states that although it failed through mistake and inadvertence to place labels bearing the circled C on its baby bottles, it cured this unintentionally defective notice by making reasonable efforts to correct within five years of first publication, as required under 17 U.S.C. § 405(a)(2) (1982). See Shapiro & Son Bedspread Corp. v. Royal Mills Associates, 764 F.2d 69, 73, 74-75 (2d Cir.1985) (where plaintiff made efforts to protect its design all along by including defective notice in its packaging, where omission of proper notice was inadvertent, and where plaintiff took prompt action to relabel goods in its inventory upon discovery of defect, court held plaintiff satisfied requirements of reasonable efforts under § 405(a)(2) ). Galway claims that since it has fulfilled the requirements under the statute, copyright protection for its design remains intact despite the appearance on retail shelves of bottles without copyright notice. However, the Court need not decide the issue of reasonableness of plaintiffs efforts to correct defective notice in light of its holding that plaintiffs design is in the public domain. See discussion of copyrightability at p. 6, supra.

      . "[C]opying may be proved circumstantially by showing that the defendant had access to the copyrighted work and that the two works are substantially similar ... The defendant may then rebut this showing by demonstrating independent creation of the challenged work.” American Greetings, 579 F.Supp. at 613. Gal-way contends, and Godinger does not deny, that the two baby bottles bear substantial similarity in appearance; at a distance of a few feet, as well as in photographs, they are virtually indistinguishable. In addition, Arnold Godinger testified that he mailed a copy of an advertisement of Galway’s bottle to Japan, with instructions to manufacture samples varying only slightly from the Galway bottle. This evidence of defendant’s intent to produce a bottle substantially similar to plaintiff’s has not been rebutted by evidence of Arnold Godinger’s inchoate inspiration regarding the manufacture of a decorative silver-topped baby bottle after viewing a silver-topped plain glass version in Italy in 1983; these facts do not justify a finding of independent creation by Godinger, as he contends.

      . Plaintiff’s claim of consumer confusion based on similarity of appearance is addressed under the analysis of its state law claims of unfair competition and palming off; see p. 994, infra.

      . Although the Court need not reach the issue of actual or probable confusion in the marketplace as evidence of a Lanham Act violation, it should be noted that plaintiff has presented evidence of only two incidents of confusion, one of which involves the use of its trademark Shannon. As noted previously, trademark issues are not before the Court in this proceeding. Also, evidence of one customer’s confusion can only be viewed as "an isolated episode, not indicative of either actual confusion or the likelihood thereof," American Greetings, 579 F.Supp. at 616, and certainly is not probative of secondary meaning.
      The absence of likelihood of confusion is discussed further at p. 995, infra, dealing with plaintiff’s state law unfair competition claim.
      The presence in the market of Waterford, another well known manufacturer of hand-cut lead crystal decorative baby bottles, is also relevant to this issue.

      . This policy is consistent with the objectives of 17 U.S.C. § 301 (1982), as expressed in H.R.Rep. No. 1476, 94th Cong., 2d Sess. 132, reprinted in 1976 U.S.Code Cong. & Ad.News 5659, 5748:
      Section 301 is not intended to preempt common law protections in cases involving activities such as false labeling, fraudulent representation, and passing off even where the subject matter involved comes within the scope of the copyright statute.... "Misappropriation” is not necessarily synonymous with copyright infringement, and thus ... [a misappropriation cause of action] is not preempted if it is ... based neither on a right within the general scope of copyright ... nor [the] equivalent thereto.

       Since plaintiff has failed to demonstrate sufficient actual confusion in the marketplace, the Court does not award monetary damages for the limited period of time in which defendant utilized trade dress that was alleged to be confusingly similar to plaintiffs. See Perfect Fit Industries, Inc. v. Acme Quilting Co., Inc., 618 F.2d 950, 955 (2d Cir.1980) (plaintiff not entitled to monetary relief in absence of proof that similarities in trade dress resulted in actual consumer confusion), cert. denied, 459 U.S. 832, 103 S.Ct. 73, 74 L.Ed.2d 71 (1982).


source: Caselaw Access Project

author: SPELLMAN, District Judge.

license: Public Domain

text:
    Jose Miguel ROJAS CANCANON and Elizabeth Ponce Luzardo, his wife, Plaintiffs, v. SMITH BARNEY, HARRIS UPHAM & CO., INC., Defendant.
    No. 85-0894-CIV.
    United States District Court, S.D. Florida, Miami Division.
    July 2, 1985.

      H. Mark Vieth, Miami, Fla., for plaintiffs.
    O’Bannon M. Cook, Miami, Fla., for defendant.
   MEMORANDUM OPINION AND ORDER GRANTING RENEWED MOTION TO COMPEL ARBITRATION AS TO COUNTS II, III, AND IV AND DENYING RENEWED MOTION AS TO COUNT I

SPELLMAN, District Judge.

Plaintiffs, Jose Miguel Rojas Cancanon and Elizabeth Ponce Luzardo, originally filed a three count complaint against the defendant, Smith Barney, Harris Upham & Co., Inc. (“Smith Barney”), in the Circuit Court of the Eleventh Judicial Circuit in and for Dade County Florida. On April 12, 1985, Plaintiffs’ state court action was removed to this Court, pursuant to a petition for removal filed by the defendant.

Plaintiffs’ original complaint alleged that Smith Barney was negligent and charged Smith Barney with civil theft by alleged misrepresentations and “churning” in connection with Plaintiffs’ stock brokerage account.

Plaintiffs then filed a four count amended complaint adding as Count I a claim under Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder and realleging the three state law claims from the original complaint (Counts II, III and IV).

Smith Barney has moved this Court for entry of an Order staying this action and compelling plaintiffs to submit their claims to arbitration in accordance with their contractual agreement with Smith Barney and pursuant to the mandate of the Federal Arbitration Act, 9 U.S.C. § 2. For the following reasons, said Motion is GRANTED as to the state law claims, Counts II, III, and IV, but DENIED as to the federal securities claim, Count I.

I

When plaintiffs opened a securities account with Smith Barney, they signed a written agreement in which they agreed to arbitrate “[a]ny controversy between Smith Barney and [the plaintiffs] arising out of or relating to this contract or the breach thbreof____” See Exhibit A to Motion to Compel Arbitration.

Title 9 of the United States Code, Section 2, the Federal Arbitration Act, provides in pertinent part:

A written provision in any maritime transaction or a contract evidencing a transaction.involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of the contract.

Plaintiffs’ agreement with Smith Barney plainly comes within the ambit of the Act. The securities account with Smith Barney “evidence[s] a transaction involving commerce.” See Parry v. Bache & Co., 125 F.2d 493, 495 (5th Cir.1942). Moreover, plaintiffs’ claims “aris[e] out of [the] contract” in that they all pertain to allegedly improper transactions in their account.

There can be no serious dispute as to whether the state law claims in Counts II, III and IV are subject to arbitration pursuant to plaintiffs’ agreement .with Smith Barney. Although plaintiffs contend that these claims are “intertwined” with their federal securities claim and that arbitration should therefore be denied, the Supreme Court in Dean Witter Reynolds, Inc. v. Byrd, — U.S. -, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985) unanimously rejected the “intertwining doctrine.” The Court held unequivocally that the Federal Arbitration Act requires district courts to compel arbitration of arbitrable claims upon proper motion filed by either party. Accordingly, defendant’s motion to compel arbitration is granted as to Counts II, III, and IV.

Whether Count I, the claim under Section 10(b) and Rule 10b-5 of the Securities and Exchange Act of 1934 (the “1934 Act”), is subject to arbitration, presents a somewhat more difficult question.

II

In Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168 (1953), the Supreme Court held that claims under § 12(2) of the Securities Act of 1933 (the “1933 Act”) were not subject to arbitration under an agreement otherwise enforceable under the Federal Arbitration Act, 9 U.S.C. § 1 et seq. In so ruling, the Court resolved a direct statutory conflict between the Federal Arbitration Act—which required arbitration—and § 14 of the 1933 Act, which declared “void” any “condition, stipulation or provision binding any person ... to waive compliance with any provision” of the 1933 Act.

Although the Supreme Court in Scherk v. Alberto Culver Co., 417 U.S. 506, 513-14, 94 S.Ct. 2449, 2454, 41 L.Ed.2d 270 (1974) questioned the applicability of Wilko to claims arising under the Securities Exchange Act of 1934 because of the differences between the two Acts, it did not rule on the issue. Notwithstanding the Court’s reservations in Scherk, many lower federal courts, including those in the Eleventh and former Fifth Circuit, have held that the Wilko exception to arbitration is also applicable to claims brought under the 1934 Act. See, e.g., Raiford v. Buslease, Inc., 745 F.2d 1419, 1421 (11th Cir.1984); Belke v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 693 F.2d 1023, 1025-26 (11th Cir.1982); Sibley v. Tandy Corp., 543 F.2d 540, 543 (5th Cir.1976), cert. denied, 434 U.S. 824, 98 S.Ct. 71, 54 L.Ed.2d 82 (1977). Indeed, the court in Sibley explicitly discussed the Supreme Court’s reservations, but still chose to “adhere to the view that the similarities between the 1933 Securities Act and the 1934 Exchange Act far outweigh the differences which might exist, and that the widely held view that Wilko is applicable to both the 1933 and 1934 Acts is still correct.” Id. at 543 & n. 3.

The defendant claims that the Supreme Court’s recent opinion in Dean Witter Reynolds, Inc. v. Byrd, — U.S.-, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985) places these decisions in serious doubt and urges this Court to hold that claims under § 10(b) are subject to arbitration. But the application of the Wilko doctrine to the 1934 Act was not before the Court in Byrd and the Court explicitly declined to rule on it. It merely noted that it had previously expressed doubts on the issue in Scherk but that the Wilko doctrine nonetheless “has retained considerable vitality in the lower federal courts.” Id. 105 S.Ct. at 1240 n. 1. Justice White, in his concurring opinion in Wilko, agreed that the question whether § 10(b) claims are arbitrable was not properly before the Court, but expressed his opinion that the applicability of Wilko to 1934 Act claims is “a matter of substantial doubt.” Id., 105 S.Ct. at 1244 (White, J., concurring). No other justices joined in this concurrence.

Thus, the Supreme Court in Byrd did not decide the issue and certainly did not overrule the pre-Byrd cases of the Eleventh and former Fifth Circuit which hold that claims under the 1934 are not subject to arbitration. These decisions are binding upon this Court until such time as they are overruled by the United States Supreme Court or the United States Court of Appeals for the Eleventh Circuit sitting en banc. See Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc). The motion to compel arbitration must therefore be denied as to Count I.

In light of the foregoing, Defendant’s Motion for Order Staying Discovery Pending Arbitration is DENIED. Discovery in this matter as to Count I shall proceed in accordance with the Federal Rules of Civil Procedure.


author: PEREZ-GIMENEZ, Chief Judge.

text:
    UNITED STATES of America v. Raymond CÁTALA FONFRÍAS, Eduardo Rodriguez Parrilla.
    Cr. No. 84-418(PG).
    United States District Court, D. Puerto Rico.
    July 2, 1985.
    As Amended July 31, 1985.

      Guillermo Gil and Dana Biehl, Asst. U.S. Attys., Washington, D.C., for U.S.
    Blas C. Herrero, Wilfredo FigueroaVélez, Hato Rey, P.R., Julio Morales-Sánchez, Santurce, P.R., and Rafael Castro-Lang, San Juan, P.R., for defendants.
   OPINION AND ORDER

PEREZ-GIMENEZ, Chief Judge.

Defendants Raymond Cátala Fonfrias and Eduardo Rodriguez Parrilla were found guilty on June 6 and June 7, 1985, respectively, after a sixteen-day trial on a two-count indictment charging them with violation of Title 18, U.S.C., §§ 241 and 242. After the verdicts were returned and pursuant to the provisions of 18 U.S.C. § 3143(a) the defendants were remitted to the custody of the U.S. Marshal. This statute provides categorically that “[t]he judicial officer shall order that a person who has been found guilty of an offense and who is awaiting imposition or execution of sentence be detained.”

On June 7, 1985, Mr. Cátala Fonfrias, and on June 10, 1985, Mr. Rodriguez Parrilla filed individual motions requesting that they be released on bail pending sentence. A consolidated hearing was held on June 14, 1985, wherein both defendants presented witnesses and so did the government. After considering the testimony of the witnesses, the documentary evidence submitted and the evidence which was admitted during the trial of the defendants, the Court finds that the defendants have not proven by clear and convincing evidence that they will not flee or pose a danger to the safety of any other person or the community. § 3143(a).

Although there is clearly no constitutional right to bail once a person has been convicted, prior to the enactment of the Comprehensive Crime Control Act of 1984, and more specifically Chapter I “Bail Reform Act of 1984”, there existed a presumption of releasability even after conviction. It was the expressed desire of the Committee on the Judiciary of the United States Senate to eliminate said presumption with the enactment of Section 3143. The Committee made two significant findings:

1. “Once guilt of a crime has been established in a court of law, there is no reason to favor release pending imposition of sentence or appeal. The conviction, in which the defendant’s guilty of a crime has been established beyond a reasonable doubt, is presumably correct in law.”
2. ... [Rjelease of a criminal defendant into the community after conviction may undermine the deterrent effect of the criminal law, especially in those situations where an appeal of the conviction may drag on for many months or even years.”

Under the present statutory scheme the only way that a convicted defendant can be released pending sentence is if he overcomes the newly established presumption in favor of detention. But the Committee took one step further in the same direction by providing that in overcoming the presumption in favor of detention the burden of proof rests with the defendants. Section 3143 provides that the release pending sentence must conform to the “clear and convincing” evidence test. Under this criterion, before a defendant awaiting sentence is released the judicial officer must find by clear and convincing evidence that the person is not likely to flee or pose a danger to the safety of any other person or the community. But the statute and the Committee Report are silent on the quantum of evidence needed to satisfy the test. The case law up to the present is nil as to this aspect of Section 3143.

Recent case law, nevertheless, has discussed an identical criteria established by Congress in 18 U.S.C. § 3142(f)(2)(B). This section also establishes a clear and convincing test with respect to a defendant’s danger to the community at the pretrial detention stage. In U.S. v. Chimurenga, supra, p. 405, the Second Circuit spoke of the test as meaning “something more than ‘preponderance of the evidence,’ and something less than ‘beyond a reasonable doubt.’ ” See, Addington v. Texas, 441 U.S. 418, 431, 99 S.Ct. 1804, 1812, 60 L.Ed.2d 323 (1979); U.S. v. Acevedo Ramos, supra, at 509. It is a high degree of certainty what lies at the core of this test.

We adopt this same interpretation of the “clear and convincing evidence” test found at Section 3143 for we cannot say that Congress intended the same exact language in two different sections, but within the same statutory scheme, to have two different meanings. Using this criteria as our guideline we next turn to the evidence addressed at the hearing.

THE CRIME

Griselle González Ortiz was a nineteen-year-old female at the time of her violent death. She had been the sole witness against co-defendant José L. Lebrón González in a murder case for which Mr. Lebrón is serving a life sentence. It just so happened that the man Mr. Lebrón killed was also the sole witness against him. For this reason “Jessica”, as Ms. González Ortiz was known, was afforded police protection. Around the month of February 1980, Mr. Lebrón, together with co-defendant Eduardo Rodriguez Parrilla and his own co-counsel, co-defendant Raymond Cátala Fonfrias, decided that Jessica had to be killed so she could not testify against Mr. Lebrón. Contact was made with co-defendant Ernesto Gil Arzola, then a supervisor at Bayamón, Puerto Rico, of the Criminal Investigations Bureau, Police of Puerto Rico. He was a corrupt police officer who was a member of the “La Torre” gang. Mr. Cátala Fonfrias knew of this fact because he performed legal services for said gang and as such participated in conversations where criminal activities of members of the gang were discussed.

The idea was for Mr. Gil Arzola to make contact with the detail in charge of Jessica’s security and offer a contract for her elimination. Mr. Gil Arzola called Emeterio Ortiz Ortiz, Chief of the Division of Crimes Against Persons and Property for the City of San Juan, at Police General Headquarters, who was responsible for Jessica’s protection. According to his own testimony during the Jessica trial, Mr. Ortiz was also a corrupt police officer since 1971.

A contract to kill Jessica was agreed upon between Mr. Gil Arzola and Mr. Lebrón González for the initial price of $15,000.00. Mr. Rodriguez Parrilla would deliver the monies from Mr. Lebrón to attorney Cátala Fonfrias, who in turn would make payments to the two policemen, Gil Arzola and Ortiz Ortiz. On the night of May 27, 1980, and after the third day of the murder trial against Mr. Lebrón had commenced in the Superior Court of Puerto Rico, San Juan Part, Messrs. Gil Arzola and Ortiz decided to put into effect their plan. Mr. Ortiz picked up Jessica in the afternoon after the day’s session had concluded and told her that he would escort her under his protection to her home in Arecibo. Little did she know that she would be killed by these two police officers, inside an official government vehicle, on a lonely and desolate road on the way from San Juan to Arecibo. As the evidence in the case showed, Mr. Gil Arzola fired two shots that killed Jessica while Mr. Ortiz Ortiz drove the car. Later her body was dumped by Mr. Ortiz in an abandoned farm.

RAYMOND CATALA FONFRIAS:

The evidence adduced at trial against Mr. Cátala was very strong. Not only did Mr. Ortiz single out Mr. Cátala as the payoff man in this conspiracy, but also recorded three conversations with him by means of a hidden body recorder where the murder of Jessica and the amounts paid for the contract were unequivocally discussed. Intercepted telephone conversations between Mr. Cátala and Mr. Gil Arzola were admitted into evidence. These conversations ensued when both of them were subpoenaed by the Justice Department of Puerto Rico in relation to the murder case.

At the detention hearing further information about Mr. Cátala's criminal activity was provided by government agents. This information, fully corroborated by government witnesses and interceptions and consensually recorded conversations, covered the following topics:

1. Suggested to a client of his, and a member of the La Torre gang, to bump off the only witness in a pending robbery case in local court.

2. In his office plans were discussed to kidnap the same witness, which eventually was done, and the case had to be dismissed.

3. Shared in the proceeds of a claim to an insurance company because of an arson to the business of a member of the same gang.

4. Was involved in a plot to help escape from jail a convicted bank robber in a local case.

Mr. Cátala offered character witnesses who, in essence, testified that they have known him through his formative years, that he is not a violent person, and in their opinion he does not present a danger to the community or to any other person.

ERNESTO RODRIGUEZ PARRILLA

Although the evidence presented as to Mr. Rodríguez Parrilla was not as strong and robust as was the evidence against Mr. Cátala, yet he was positively identified as being in the conspiracy to kill Jessica. Mr. Ortiz testified as to numerous meetings where both Mr. Rodríguez and Mr. Cátala were present and where the plans to kill Jessica were discussed. It was Mr. Rodriguez who provided Mr. Cátala with the monies to pay Messrs. Gil Arzola and Cátala. Mr. Ortiz recorded two conversations with Mr. Rodriguez, which were not admitted into evidence because of evidentiary rulings by this Court. Nevertheless, the content was revealed to the Court in order to decide the evidentiary matter. In those two conversations Mr. Rodriguez readily admits the fact that in his presence plans were made to kill Jessica and that he transported money from Mr. Lebrón to Mr. Cátala as part of the contract price.

Finally, during the trial, Mr. Ortiz testified as to a meeting that took place in Mr. Cátala’s office on the Sunday following Jessica’s murder, where all five co-conspirators were present and where they celebrated the successful execution of the plan. There Mr. Rodriguez became upset with Mr. Gil Arzola because the contract price was raised from $15,000 to $22,000.

Information provided during the detention hearing pointed out that as a result of intercepted communications by the government, Messrs. Rodríguez and Arzola at one time discussed plans to rob a supermarket or its owner, in Catafio, Puerto Rico. On other occasions Mr. Rodriguez discussed with government witness Emeterio Ortiz Ortiz the possibility of using Mr. Ortiz’s position within the Police of Puerto Rico as a subterfuge to assault a known narcotics trafficker and steal all'his money and split it up between themselves.

The various witnesses presented by this defendant gave their opinion to the Court that they thought Mr. Rodriguez would not flee the jurisdiction.

Both defendants have brought testimony to the Court that they are not violent nor would they flee the jurisdiction. The evidence presented at trial belies these witnesses. The crime committed by these defendants is by its very nature the most violent of all, that is, the taking of a human life. They were convicted of violations to Title 18, U.S.C., §§ 241 and 242, which each carries a maximum of life in prison, as death resulted. Mr. Cátala faces the additional disgrace of disbarment from the practice of law. The government’s main witness, Mr. Emeterio Ortiz Ortiz, is out on bond awaiting sentence in this case and another one to which he has pled guilty as a result of a plea bargain with the government. Certainly, he does constitute a target because it was not until he decided to cooperate with the government that the Jessica murder was finally solved after almost five years.

The propensity of these two defendants to commit crimes of violence, as shown by the information provided to the Court, constitute a sufficient risk of danger to the community to be considered by the Court in denying their motions for release. Furthermore, just recently, after their convictions, the Secretary of Justice for the Commonwealth of Puerto Rico publicly announced that murder charges for Jessica’s death would be forthcoming against Messrs. Lebrón, Rodríguez, Cátala and Arzola.

Finally, Mr. Cátala was trying to sell his house, which was posted as security for his release on bail, without advising the Court of this fact so that appropriate substitute guaranty could be placed.

For all the reasons stated above and pursuant to 18 U.S.C. 3143(a), the Court DENIES the motions because the defendants have not shown by clear and convincing evidence that they do not pose a risk of flight or danger to any other person in the community. They shall be held without bond until sentenced.

IT IS SO ORDERED.

      . U.S. v. Baca, 444 F.2d 1292, 1296 (10th Cir.), cert. denied, 404 U.S. 979, 92 S.Ct. 347, 30 L.Ed.2d 294 (1971).

      . Title II of H.J.Res. 648, P.L. # 98-473.

      . U.S. v. Bynum, 344 F.Supp. 647 (S.D.N.Y. 1972).

      . Report of the Committee on the Judiciary, United States Senate, 98th Congress, 1st Session, Report No. 98-225, p. 26, U.S.Code Cong. & Admin.News 1984, p. 3182.

      . Ibid, p. 27.

      . U.S. v. Héctor Acevedo Ramos, 600 F.Supp. 501 (D.P.R.1984); U.S. v. Chimurenga, 760 F.2d 400 (2d Cir.1985).

      . The Jessica case, as this trail was commonly referred in the newspapers, received extensive press coverage ever since its inception in May 28, 1980.

      . Title 18, U.S.C., § 2510, et seq.

      . Wright, Federal Practice and Procedure, Criminal 2d, Yol. 3A, p. 137.


author: McCURN, District Judge.

text:
    NEW YORK STATE TEAMSTERS CONFERENCE PENSION & RETIREMENT FUND, by its trustees, T. Edward NOLAN, Curtis Gundersen, Richard Muller, Rocco F. DePerno, Paul E. Bush, and Jack Canzoneri, in their representative capacities, Plaintiff, v. ST. LAWRENCE TRANSIT MIX CORPORATION, Defendant.
    No. 84-CV-1318.
    United States District Court, N.D. New York.
    July 3, 1985.

      Maloney & Kelly, New York City, N.Y., for plaintiff; Martin Coffey, of Counsel.
    Bryant O’Dell & Basso, Syracuse, N.Y., for defendant; Zachary L. Karmen, of Counsel.
   MEMORANDUM-DECISION AND ORDER .

McCURN, District Judge.

Presently before the court are (1) defendant’s motion to stay this action and to compel arbitration and (2) plaintiff’s cross motion for summary judgment or, in the alternative, for an order compelling defendant to pay its past due withdrawal liability payments and to begin making its current liability payments. For the reasons discussed below, the court denies defendant’s motion and grants plaintiff summary judgment.

BACKGROUND

This is an action under the Multiemployer Pension Plan Amendments Act (MPPAA) amending the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. Plaintiff the New York State Teamsters Conference Pension and Retirement Fund (Fund) is the sponsor of an employee benefit and multiemployer pension plan. Under the plan employers contribute to the pension fund on behalf of their employees pursuant to collective bargaining agreements with local Teamsters’ unions.

Defendant St. Lawrence Transit Mix Corp. made contributions to the Fund until March 1983 when the company was purchased by Torrington Industries, now Heritage Homes, Inc. On February 6, 1984, plaintiff notified defendant of its withdrawal liability pursuant to the MPPAA. According to the Fund, defendant owes $35,-296.00 which was to be paid in $2,480.32 monthly installments. Defendant’s attorney requested the Fund’s calculations, which the Fund provided. No withdrawal liability payments have been made, and defendant neither requested the Fund to review defendant’s liability nor demanded arbitration. By letter dated May 2, 1984, the Fund notified defendant that it was in default; its entire liability was due; and the Fund was commencing this action to recover defendant’s withdrawal liability payments. Plaintiff filed the present complaint on September 20, 1984.

Defendant now moves to stay the present action and to compel arbitration under 29 U.S.C. § 1401(a). St. Lawrence Transit Mix Corp. contends that arbitration of its withdrawal liability is mandatory under the statute. However, it refuses to arbitrate before the New York State Joint Grievance Board, which is the arbitrator that the Fund uses. According to defendant, the New York State Joint Grievance Board is biased because its members are employers that are required to contribute to multiemployer funds and union representatives. Defendant seeks arbitration of its withdrawal liability under the Multiemployer Pension Plan Arbitration Rules issued by the International Foundation of Employee Benefit Plans and the American Arbitration Association.

Plaintiff cross moves for summary judgment. The Fund argues that defendant never requested arbitration and the time to do so has run. Therefore, defendant’s withdrawal liability has become fixed, and defendant has waived the affirmative defense it asserts under the MPPAA’s “Sale of Assets” provision, 29 U.S.C. § 1384. According to plaintiff, no questions of fact are in dispute, and it is entitled to summary judgment against defendant for $35,296.00, interest, liquidated damages, costs, and attorney fees. In the alternative, plaintiff requests an order compelling defendant to pay its past due liability payments and to commence making its current monthly payments.

DISCUSSION

ERISA requires an employer that withdraws from a multiemployer pension plan to pay a portion of the plan’s unfunded, accrued liability. 29 U.S.C. § 1381. The pension plan sponsor calculates the amount of the employer’s withdrawal liability in the first instance. 29 U.S.C. § 1382.

29 U.S.C. § 1401 provides that “(a)ny dispute between an employer and the plan sponsor of a multiemployer plan concerning a determination made under sections 4201 through 4219 (including withdrawal liability and “Sale of Assets”) shall be resolved through arbitration.” Section 1401 further provides that either party “may initiate” arbitration within 60 days after the earlier of (A) the date that the Fund notifies the employer of the Fund’s final determination or (B) 120 days after the employer has requested the Fund to review the employer’s withdrawal liability. 29 U.S.C. § 1401(a)(1)(A), (B).

In the present case defendant never asked the Fund to review its determination of defendant’s withdrawal liability or demanded arbitration. The time in which defendant could initiate arbitration has long since run. At the very least, defendant should have notified plaintiff that it intended to arbitrate its liability. If. defendant did not wish to use the arbitrator that plaintiff wanted, defendant should have sought the court’s assistance.

29 U.S.C. § 1401(b)(1) provides: Alternative collection proceedings; civil action subsequent to arbitration award; conduct of arbitration proceedings. (1) If no arbitration proceeding has been initiated pursuant to subsection (a), the amounts demanded by the plan sponsor under section 4219(b)(1) [29 U.S.C. § 1399(b)(1) ] shall be due and owing on the schedule set forth by the plan sponsor. The plan sponsor may bring an action in a State or Federal court of competent jurisdiction for collection.

By failing to timely request arbitration, defendant’s withdrawal liability assessed by the Fund has become fixed. See T.I.M.E.-DC Inc. v. Management-Labor Welfare & Pension Funds, 756 F.2d 939, 944-45 (2d Cir.1985) (holding that “if an employer disputes the amount of its withdrawal liability, then it must proceed to arbitration.”); Sova Outerwear Corp. v. Trustees of the Amalgamated Cotton Garment and Allied Industries Fund, 578 F.Supp. 1126, 1127 (S.D.N.Y.1984) (stating, “Furthermore, because Sova has not objected to the amount of the assessment, or requested arbitration within the prescribed period, see 29 U.S.C. § 1399(b)(2)(A) (within 90 days of trustees’ demand), the amount of liability becomes fixed.”). Because factual questions under 29 U.S.C. § 1384 are also subject to arbitration, the defendant here has waived any defense it may have had under the “Sale of Assets” provision. 29 U.S.C. § 1401(a)(1); Trustees of Western Teamsters Pension Fund v. Arizona-Pacific Tank Lines, 4 E.B.C. 2355 (N.D.Cal.1983). Therefore, no material issues of fact exist in the present action.

Defendant, however, seeks to negate its failure to timely seek arbitration and the concomitant fixing of its liability by challenging the constitutionality and statutory construction of 29 U.S.C. §§ 1401 and 1384. The Second Circuit has held that questions of statutory construction and constitutionality are not subject to mandatory arbitration under the MPPAA but are issues which the court should decide. T.I.M.E.DC, Inc., 756 F.2d at 945.

Defendant challenges the constitutionality of the presumptions established in 29 U.S.C. § 1401(a)(3). Section 1401(a)(3) provides:

(A) For purposes of any proceeding under this section, any determination made by a plan sponsor under sections 4201 through 4219 and section 4225 [29 U.S.C. §§ 1381-1399 and 1405] is presumed correct unless the party contesting the determination shows by a preponderance of the evidence that the determination was unreasonable or clearly erroneous.
(B) In the ease of the determination of a plan’s unfunded vested benefits for a plan year, the determination is presumed correct unless a party contesting the determination shows by a preponderance of evidence that—
(i) the actuarial assumptions and methods used in the determination were, in the aggregate, unreasonable (taking into account the experience of the plan and reasonable expectations), or
(ii) the plan’s actuary made a significant error in applying the actuarial assumptions or methods.

Defendant contends that the presumption that the Fund’s withdrawal liability determination is correct and can only be overcome if the employer can show by a preponderance of the evidence that the Fund’s calculation is wrong, violates defendant’s due process rights.

The Second Circuit in Textile Workers Pension Fund v. Standard Dye & Finishing Co., 725 F.2d 843, 855-56 (2d Cir.1984), expressly rejected plaintiff’s constitutional argument. Finding that the presumptions in section 1401 do not violate due process, the Second Circuit stated:

Under these circumstances, we perceive no unfairness in Congress’ decision to place the initial determination of withdrawal liability on the trustees and to provide that the Fund’s determination is presumptively correct. See Republic [Industries, Inc. v. Teamsters Joint Council] supra, 718 F.2d [628] at 640-41 [D.Va.1983]. Further, since section 1401(b)(2) provides that either party may come to the district court to enforce, vacate or modify an arbitrator’s award, Sibley is not denied meaningful access to the courts. See Republic, supra, 718 F.2d at 641-42.

Id. at 856. Accordingly, plaintiff’s constitutional challenge to section 1401 is without merit. See generally Pension Benefit Guaranty Corp. v. R.A. Gray & Co., — U.S. -, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984) (holding retroactive application of MPPAA withdrawal liability provisions constitutional).

Plaintiff also argues that it was not required to timely seek arbitration because the Pension Benefit Guaranty Corporation’s (PBGC) arbitration regulations have not been adopted. 29 U.S.C. § 1401(a)(2) provides, “An arbitration proceeding under this section shall be conducted in accordance with fair and equitable procedures to be promulgated by the (Pension Benefit Guaranty) corporation.” The corporation has promulgated its regulations, but they have not yet been adopted. The absence of official regulations, however, does not negate defendant’s obligation to timely demand arbitration under section 1401 if it wished to challenge the amount of its withdrawal liability. See T.I.M.E.-DC, Inc., 756 F.2d at 945; Sova Outerwear Corp., 578 F.Supp. at 1127; Pension Benefit Guaranty Corp. Op. Letter No. 82-24 (1982) (stating that in absence of PBGC guidelines, arbitration of withdrawal liability may be conducted under any reasonable procedures the parties may select). As noted above, plaintiff should have timely invoked arbitration and then sought the court’s assistance if the parties could not agree on the arbitration procedures.

Finally, defendant disagrees with the Fund’s interpretation of the “Sale of Assets” provision, 29 U.S.C. § 1384. St. Lawrence Transit Mix Corp. argues that it does not have to pay plaintiff its withdrawal liability because defendant falls within the exemption created by section 1384.

29 U.S.C. § 1384(a) provides:
Sale of Assets
(a) Complete or partial withdrawal not occurring as a result of sale and subsequent cessation of covered operations or cessation of obligation to contribute to covered operations; continuation of liability of seller. (1) A complete or partial withdrawal of an employer (hereinafter in this section referred to as the “seller”) under this section does not occur solely because, as a result of a bona fide, arm’s-length sale of assets to an unrelated party (hereinafter in this section referred to as the “purchaser”), the seller ceases covered operations or ceases to have an obligation to contribute for such operations, if—
(A) the purchaser has an obligation to contribute to the plan with respect to the operations for substantially the same number of contribution base units for which the seller had an obligation to contribute to the plan;
(B) the purchaser provides to the plan for a period of 5 plan years commencing with the first plan year beginning after the sale of assets, a bond issued by a corporate surety company that is an acceptable surety for purposes of section 412 of this Act [29 USC § 1112], or an amount held in escrow by a bank or similar financial institution satisfactory to the plan, in an amount equal to the greater of—
(i) the average annual contribution required to be made by the seller with respect to the operations under the plan for the 3 plan years preceding the plan year in which the sale of the employer’s assets occurs, or
(ii) the annual contribution that the seller was required to make with respect to the operations under the plan for the last plan year before the plan year in which the sale of the assets occurs,
which bond or escrow shall be paid to the plan if the purchaser withdraws from the plan, or fails to make a contribution to the plan when due, at any time during the first 5 plan years beginning after the sale; and
(C) the contract for sale provides that, if the purchaser withdraws in a complete withdrawal, or a partial withdrawal with respect to operations, during such first 5 plan years, the seller is secondarily liable for any withdrawal liability it would have had to the plan with respect to the operations (but for this section) if the liability of the purchaser with respect to the plan is not paid.
(2) If the purchaser—
(A) withdraws before the last day of the fifth plan year beginning after the sale, and
(B) fails to make any withdrawal liability payment when due, then the seller shall pay to the plan an amount equal to the payment that would have been due from the seller but for this section.
(3) (A) If all, or substantially all, of the seller’s assets are distributed, or if the seller is liquidated before the end of the 5 plan year period described in paragraph (1)(C); then the seller shall provide a bond or amount in escrow equal to the present value of the withdrawal liability the seller would have had but for this subsection.
(B) If only a portion of the seller’s assets are distributed during such period, then a bond or escrow shall be required, in accordance with regulations prescribed by the corporation, in a manner consistent with subparagraph (A).
(4) The liability of the party furnishing a bond or escrow under the subsection shall be reduced, upon payment of the bond or escrow to the plan, by the amount thereof.

The Fund contends that 29 U.S.C. § 1384(a)(1)(B) requires the purchaser to post a bond before the seller can fall within the “Sale of Assets” provision. Defendant states that it is willing to post a bond and argues that the seller may provide a bond, instead of the purchaser, pursuant to section 1384(a)(3)(A). In the present action, the purchaser of defendant’s company has not posted a bond, but defendant claims that the purchaser is contributing to the Fund for defendant’s former employees. Defendant also argues that if it is required to pay the withdrawal liability and the purchaser is also paying the Fund, plaintiff will get a double recovery. No case law has been cited to support this position. The court must therefore look to the plain language of the statute and the legislative history in construing section 1384.

The MPPAA, amending ERISA, was enacted to protect multiemployer pension funds and the PBGC from employers withdrawing and leaving the funds without the financial resources to provide benefits to covered employees. H.R.Rep. No. 96-869, Part I, 96th Cong., 2d Sess. 65, 67 (1980); H.R.Rep. No. 96-869, Part II, 96th Cong., 2d Sess. 4 (1980), U.S.Code Cong. & Admin.News 1980, p. 2918; T.I.M.E.-DC, Inc., 756 F.2d at 943-44. As discussed above, the MPPAA requires an employer that withdraws to pay its share of the plan sponsor’s liability. The statute was enacted as a strict liability measure. Section 1384 is an exception to the requirement that the employer must begin paying its withdrawal liability immediately. The exception applies where the employer sells its assets to an unrelated party in an arm’s-length sale. If the conditions of subsection (a) are met, primary liability is shifted to the purchaser and the seller becomes secondarily liable. 29 U.S.C. § 1384(a).

Turning to the provisions of section 1384(a), subsection (1) allows the purchaser to assume primary liability only if the three conditions specified in section 1384(a)(1)(A), (B), and (C) are met. These conditions include the purchaser’s posting a bond and the sale contract’s specifying that the seller will be secondarily liable if the purchaser defaults. 29 U.S.C. § 1384(a)(1)(B), (C). In the present action, conditions (B) and (C) have not been met. Whether condition (A) is satisfied is also unclear. Subsection (2) establishes the seller’s secondary liability. Subsection (3) is designed to further protect the plan sponsor. This subsection provides that a seller who liquidates substantially all of its assets within the five year period must provide a bond to protect the seller’s secondary liability. 29 U.S.C. § 1384(a)(3)(A). The language and structure of section 1384 indicate that the employer cannot use section 1384 as an exemption unless the three conditions of section 1384(a)(1) are met first. Therefore, the purchaser must supply the bond to shift primary liability from the seller.

Although the court notes the possibility of a double recovery, the MPPAA was enacted to protect the Fund. In light of the policy behind ERISA, as amended by the MPPAA, exemptions to a withdrawing employer’s liability should be narrowly construed. Defendant may not circumvent the requirements of section 1384(a)(1)(B) by posting a bond under section 1384(a)(3). See generally Trustees of Western Teamsters Pension Fund v. Arizona-Pacific Tank Lines, 4 E.B.C. 2355.

Because defendant’s constitutional and statutory construction arguments must be rejected and defendant’s failure to timely initiate arbitration has fixed the amount of defendant’s withdrawal liability, no questions of material fact remain. Plaintiff is therefore entitled to summary judgment.

Accordingly, it is hereby

ORDERED, that

1. Defendant’s motion is denied.

2. Plaintiff’s motion for summary judgment is granted.

      . 29 U.S.C. § 1401(a)(1) provides:
      (a) Arbitration proceedings; matters subject to arbitration, procedures applicable, etc. (1) Any dispute between an employer and the plan sponsor of a multiemployer plan concerning a determination made under sections 4201 through 4219 [29 USC §§ 1381-1399] shall be resolved through arbitration. Either party may initiate the arbitration proceeding within a 60-day period after the earlier of—
      (A) the date of notification to the employer under section 4219(b)(2)(B) [29 USC § 1399(b)(2)(B)], or
      (B) 120 days after the date of the employer's request under section 4219(b)(2)(A) [29 USC § 1399(b)(2)(A) ].
      The parties may jointly initiate arbitration within the 180-day period after the date of the plan sponsor’s demand under section 4219(b)(1) [29 USC § 1399(b)(1)].

      . Plaintiff shall submit within thirty (30) days a proposed judgment upon ten (10) days notice to the defendant.