## Facts

- Ty, Inc. created and sold Beanie Babies, plush toys protected by copyright as sculptural works.
- Publications International, Ltd. (PIL) published and sold commercial books containing photographs of Beanie Babies, including a child-oriented picture book and a collector’s guide with dates and estimated values.
- PIL lacked a license to reproduce images of the Beanie Babies and conceded the photographs were derivative works in the sense that they copied the copyrighted toys.
- Ty sued PIL for copyright infringement and trademark infringement based on PIL’s publication and sale of the Beanie Babies books.
- PIL asserted fair use under 17 U.S.C. § 107 as its principal defense to the copyright claim.
- The district court granted summary judgment to Ty on copyright infringement, entered a permanent injunction barring sales of the books, and awarded Ty PIL’s profits plus prejudgment interest.
- The trademark claim remained pending, but the district court entered partial final judgment on the copyright claim under Federal Rule of Civil Procedure 54(b) to permit an immediate appeal.

## Issues

1. Whether the district court properly certified a partial final judgment under Rule 54(b) when the unresolved trademark claim arose from the same publications and conduct.
2. Whether the court of appeals could reach the merits of PIL’s fair-use defense given the posture of the appeal.

## Decision

- The Seventh Circuit dismissed the appeal for lack of appellate jurisdiction.
- The court held Rule 54(b) certification was improper because the copyright and trademark counts were not separate “claims” for Rule 54(b) purposes.
- The court remanded for further proceedings in the district court.
- The court did not issue a definitive merits ruling on fair use because the improper certification prevented appellate review.

## Legal Principles

- Rule 54(b) permits entry of final judgment on fewer than all claims only when the resolved claim is factually separate from the claims that remain pending.
- Distinct legal theories (e.g., copyright and trademark) do not, by themselves, create separate Rule 54(b) “claims”; the controlling question is whether the theories rest on different facts.
- When claims share substantial factual overlap—such as the same works, marketing, audiences, and economic effects—piecemeal appeals risk duplicative proceedings and inconsistent determinations and therefore are disfavored under Rule 54(b).
- Fair-use analysis under 17 U.S.C. § 107 often turns on fact-bound questions (including market effects), which may overlap with evidence relevant to trademark issues arising from the same conduct.

## Conclusion

The Seventh Circuit dismissed the appeal because the partial final judgment was not properly certified under Rule 54(b): the copyright and trademark disputes were based on the same books and related factual questions, so the case had to proceed as a unit in the district court before any appeal on the merits.


Ty, Inc. v. Publ'ns Int'l Ltd., 292 F.3d 512 (7th Cir. 2002)