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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Case Nos. 99-cv-571-EWN-PAC and 00-cv-2063- EWN-PAC AMAZON, INC., Plaintiff and Counterclaim-defendant, v. CANNONDALE CORP., Defendant and Counterclaim-plaintiff.

_____________________________________________________________________________ CANNONDALE'S REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF MOTION FOR SUMMARY JUDGMENT _____________________________________________________________________________ Cannondale Corporation ("Cannondale") respectfully submits the following reply memorandum in further support of its motion for summary judgment dismissing Case No. 99-N571 and Case No. 00-N-2063. I. PRELIMINARY STATEMENT Amazon's principal defense to Cannondale's summary judgment motio n is that the Court should disregard the express requirements set forth in Joe Dickerson & Assoc., LLC v. Dittmar, 34 P.3d 995, 1002 (Colo. 2001), and Donchez v. Coors Brewing Co., 392 F.3d 1211, 1220 (10th Cir. 2004), that essential elements of a right of publicity claim are actual damage and causation. Instead, Amazon contends that "there is no necessity to prove some actual commercial damage"

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but rather that "damage is presumed when a party's name or likeness is used without his or her consent." (Amazon Brf. at 14.) Amazon would have the Court transform the limited right individuals have to control the commercial uses of their names or images into an absolute monopoly, such that any use without express authorization is per se unlawful, even absent actua l injury. Even if Amazon were correct that a violation could be proven without any evidence of actual injury, it still would be entitled to no relief because it has in fact presented no evidence of actual or calculable damages (including the supposed "fair market value" of the images) and because any claim for injunctive relief has been rendered moot by the passage of six years since Cannondale ceased use of its 1999 catalog. Indeed, its witnesses expressly admitted they could calculate no harm Amazon sustained or benefit Cannondale received. And although Amazon asserts that "fair market value" of the images can be equated with the entire amount - indeed more than the entire amount - it received in 1997 and 1998 as compensation for providing an entire season of competitive racing and related services, the conclusion is utterly arbitrary and indeed is contrary to the only evidence, which is that riders' images are routinely used in just the fashion Cannondale used Ms. Giove's image without any compensation. Amazon offers no

expert testimony or actual evidence that its theory bears any relation to any injury it suffered or any benefit Cannondale received from the modest use in issue. Nor has it identified any

precedent (legal or otherwise) in which any one has ever received any compensation for the type of use in issue. Moreover, as a matter of law, Amazon's right of publicity claim should be dismissed with prejudice under principles of de minimis use, fair use, and because Amazon's claim is barred by its own consent.

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Amazon does not even attempt to argue that its guaranty claim or state law unfair competition claim can withstand summary judgment. It is perhaps little surprise, therefore, that Amazon simultaneously has asked the Court to disregard the evidence demonstrating the diversity of the parties in suit (and its own pleadings alleging diversity jurisdiction) so as to have its own case dismissed for lack of jurisdiction so that it can try to find a more favorable forum. II. ARGUMENT A. Summary Judgment Is Proper

Amazon's bare refusal to acknowledge that its witnesses said what they said - on the subject of injury and causation in particular - does not create any material issue of fact. Yet, review of Amazon's Rule 56.1A statement ­ most notably paragraphs 71-97 on the subject of injury and causation (specifically addressed below) - reveals only conclusory disagreement with the facts and record citations Cannondale offered without any record citations of its own to sustain its burden of proof - except perhaps to two conclusory denials contained in a new declaration of Benedict Giove. Indeed, it is telling that Amazon has taken the trouble to submit a new declaration of Mr. Giove, its designated witness on damages, yet provides in his declaration no new or specific facts to counter his prior admissions he could not even begin to assess whether or to what extent Amazon sustained any actual injury. (Giove Decl. ¶ 7.) Nor can a party create a genuine issue to defeat summary judgment merely by contradicting its prior sworn testimony, as Mr. Giove purports to do regarding some or all of paragraphs 75, 80-81 or 92. Franks v. Nimmo, 796 F.2d 1230, 1237 (10th Cir. 1986) ("[T]he utility of summary judgment as a procedure for screening out sham fact issues would be greatly undermined if a party could create an issue of fact merely by submitting an affidavit contradicting his own prior

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testimony."(citation omitted)); Burns v. Bd. of County Comm'rs, 330 F.3d 1275, 1282 (10th Cir. 2003) (where an affidavit contradicts the affiant's prior sworn statements, the court will disregard the contrary affidavit when it "constitutes an attempt to create a sham fact issue" (internal citations omitted)). Likewise, the Court's Special Instructions Concerning Motions for Summary Judgment, Instruction 4, requires that "[a]ny denial shall be accompanied by a brief factual explanation of the reason(s) for the denial and a specific reference to material in the record supporting the denial." If bare denials, unsupported by admissible evidence could suffice to defeat summary judgment, Rule 56 would lose all meaning or effect. "[T]he requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).1 To defeat such a motion, the non- moving party must affirmatively set forth facts showing that there is a genuine issue for trial. Id. at 257; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Although unwilling to concede it can not prove injury in fact, Amazon does ultimately admit that Mr. Giove's testimony shows it can not measure any harm it purports to have sustained. (Amazon Rule 56.1 Statement ¶ 75(a)-(g).) Since it is Amazon's burden to prove injury, its admission it can not measure any injury it sustained or benefit to Canno ndale ­ demonstrates its inability to sustain its burden of proving an essential element of its claim. As shown below, its other theories of recovery bear no rational relation to Cannondale's publication of its 1999 catalog. Summary judgment thus is appropriate.

1

A fact issue is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party;" a fact is "material" for these purposes if it "might affect the outcome of the suit under the governing law." Anderson, 477 U.S. at 248.

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1.

Reply Concerning Undisputed Facts on Injury and Causation

Amazon's responses to the following facts regarding injury and causation demonstrate its inability to satisfy its burden of proof. 71. Identifies theories; not facts. 72. No facts. 73. No facts. 74. Admitted. 75. Conclusory denial only. Admits no measurable injury. 76. No facts. 77. Non-responsive; identifies no specific individuals. 78. Admitted. 79. Non-responsive. 80. Conclusory denial only. 81. Conclusory denial only. 82. No facts. Because Ben Giove was Amazon's designated witness on damages, his admissions bind the company, and the company has no other witness. 83. No facts. Because Ben Giove was Amazon's designated witness on damages, his admissions bind the company, and the company has no other witness. 84. No facts. Non-responsive in that the costs Cannondale did not incur in not redoing its catalog are not profits. 85. No facts. 86. No facts to dispute actual wording of contract. (Cann. Ex. A-7 ¶ 2.)

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87. No facts. 88. Admitted. 89. No facts/non sequitur. 90. No facts/non-responsive. 91. No facts/non-responsive. 92. Conclusory denial; can not contradict prior admission. 93. Admitted. 94 ­ 97. No facts/non-responsive. Submitted herewith are additional excerpts from the deposition transcript of Missy Giove providing the relevant foundation for Ex. A-13. (See Supp. Moskin Decl. Ex. A21.1 at p. 80-82; Moskin Decl. ¶ 8.) B. Amazon's Publicity Claim Should Be Dismissed With Prejudice 1. Amazon Is Unable to Prove Injury or Causation

Despite the express holding of the Supreme Court of Colorado in Joe Dickerson that the elements of an invasion of privacy by appropriation claim include that "the plaintiff suffered damages" and "the defendant caused the damages incurred," 34 P.3d at 1002, Amazon argues that "plaintiff is not required to show proof of injury in order to prevail on its right of publicity claim." (Amazon Brf. at 14.) Amazon nowhere even acknowledges the parallel holding of the Tenth Circuit in Donchez (citing Joe Dickerson) that Colorado law, to the extent it recognizes a right of publicity, requires proof of non-consensua l use to defendant's advantage and causing injury to plaintiff. 392 F.3d at 1220. Amazon instead argues that it "does not have to prove that defendant received a specific benefit because if a defendant appropriates a party's name and likeness for its commercial advantage, it necessarily derives a commercial benefit from its use."

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(Amazon Brf. at 15 n. 2.) The statement is both circular (and hence meaningless) and contrary to Joe Dickerson. Either way, it simply ignores that Amazon has not shown that Cannondale received any commercial advantage or commercial benefit from its modest use of the three disputed images. That Amazon has even had to make the legal argument at all reveals as well its utter inability to marshal any facts demonstrating damages or injury. None of the cases Amazon cites supports its contention that it need not present any evidence of actual injury, or any demonstration based on admissible evidence that the amount of its injury is more than zero. 2 In Waits v. Frito-Lay, Inc., 978 F.2d 1093 (9th Cir. 1992), cited by Amazon, the court, relying on expert testimony, was able to determine a value for the use of Mr. Waits' singing voice (which defendants took for free by hiring an imitator to sing in a television commercial). Id. at 1104 ("from the testimony of Waits' expert witness, the jury could have inferred that if Waits ever wanted to do a commercial in the future, the fee he could command would be lowered by $50,000 to $150,000 because of the Doritos commercial"). 3 Amazon, by contrast, has retained no expert and has offered no rational theory for assessing whether, or to what extent, it suffered harm from Cannondale's use of her name and image in its 1999 catalog. In Frazier v. South Florida Cruises, 19 U.S.P.Q.2d 1470 (E.D. Pa. 1991), where a cruise line falsely advertised that the boxer, Joe Frazier, would be on a particular cruise, there was expert
2

Amazon also relies on a treatise, 1 J. Thomas McCarthy, The Rights of Publicity and Privacy, 3:2 (2d ed. 2005), which itself seems to argue that a plaintiff has no necessary duty to quantify the amount of its injury or the amount of the benefit received by the defendant, citing principally a case on which Amazon relies, Henley v. Dillard Dep't Stores, 46 F. Supp. 2d 587 (N.D. Tex. 1999). However, that case neither excuses a party from proving injury in fact nor purports to alter Colorado law. Moreover, since there is no need for an injunction in this case, where Cannondale could not realistically be expected to resume use of a 1999 catalog, the inability to quantify injury simply means Amazon is entitled to no relief, monetary or equitable. 3 Waits also evidently included a claim under California law for emotional distress (which Amazon does not allege here). 978 F.2d at 1103. Hence the recovery in Waits for emotional injury is not relevant here. Indeed, the individual, Melissa Giove, is not even a party. Amazon, Inc., a corporation, is not capable of suffering emotional injury.

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testimony as to what it would have cost for the sports star actually to have participated as advertised. By contrast, there is no testimony here, expert or otherwise, as to the value of the three pictures Cannondale included in its catalog ­ or even that there exists a market for such uses of riders' images. To the contrary, the only evidence is riders' images routinely appear in catalogs without compensation after they have ceased riding for the relevant team. (Cann. Ex. A-16, Hus Decl. ¶ 12; Cann. Ex. A-15, Schuler Decl. ¶ 12; Cann. Ex A-2 at 31 l. 9 ­ 32 l. 10.)) Toney v. L'Oreal USA, Inc., 406 F.3d 905 (7th Cir. 2005), simply addressed when or if the right of publicity is preempted by copyright law. Part of the basis for the court's decision that the right (in the form presented in that case) was not preempted was that, unlike copyright, "'commercial purpose' is an element required by the [Illinois Right of Publicity Act]." Id. at 910. Indeed, the court further clarified that "[t]he basis of a right of publicity claim concerns the message ­ whether the plaintiff endorses, or appears to endorse the product in question." Id. In granting summary judgment dismissing Amazon's Lanham Act claim, this Court already concluded there was no likelihood consumers would be confused into believing incorrectly that Ms. Giove sponsored or endorsed Cannondale or its products simply because the three small pictures appeared in the catalog. And Toney of course was applying an Illinois statute, not Colorado common law. Neither White v. Samsung Electronics, Inc., 971 F.2d 1395 (9th Cir. 1992), nor Henley v. Dillard Department Stores, 46 F. Supp. 2d 587 (N.D.Tex. 1999), even addressed whether or to what extent the plaintiff had suffered damages. 4 More closely on point here is Marks v. Elephant Walk, Inc., 548 N.Y.S.2d 549 (N.Y. App. Div. 1989) (citation omitted), where summary judgment was granted dismissing a claimed
4

However, Henley did offer numerous insights into the economic theory for protecting the right of publicity. See infra note 5 and § 2 p. 15.

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misappropriation of the right of publicity where "the potential rewards for using the plaintiff's name were too remote and speculative to sustain her claim." Id. at 552. In lieu of demonstrating damages, plaintiff contends it is seeking a "fair market value of $500,000." (Amazon Brf. at 16.) The basis for this calculation is that that was roughly what Amazon was paid by TSMI in 1997 and 1998 for Ms. Giove's racing services, including her agreement to maintain competitive fitness; to train with the team; and to appear at promotional events (Cann. Ex. A-7 ¶ 1); for her to use Cannondale's and the other team sponsors' equipment (id. ¶ 6); to provide a minimum of ten days' promotional services (id. ¶ 8); and, of course, to permit all thirty sponsors to use her name and image for advertising and publicity "in print or any media." (id. ¶ 9.) The actual amount paid for these and other commitments was $480,000 annually, not $500,000 as Amazon now asserts on unknown grounds (Id. ¶ 2). As Cannondale already has argued and Amazon has not disputed, the value of Missy Giove's services as a racer in 1997-1998 bears no obvious or logical relationship to the fair market value of three specific pictures presented inconspicuously on the inside pages of Cannondale's 96-page product catalog, and Amazon never explains what the two have to do with one another. By Amazon's measure, every time basketball star Shaquille O'Neal's picture is presented (anywhere) without his consent, he should be entitled to $27.6 million, because that is how much he is paid by the Miami Heat this year to play for the team. And by Amazon's logic, even if Mr. O'Neal is paid nothing next year, he would still be entitled to $27.6 million if his image is so-used next year. Just so, Missy Giove was paid zero for publicity in 1999, the year in dispute, but only was reimbursed her racing expenses of $100,000. (8/19/05 Ben Giove Decl., A1 ¶ 9). Although Mr. Giove now says this amount was also for publicity, he previously admitted

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otherwise (B. Giove Tr., Cann. Ex. A p. 33 l. 8 ­ 34 l. 2; Ex. A -1 -8.). His willingness to contradict his prior sworn testimony and the actual language of the agreement does not create a material issue of fact. Franks, 796 F.2d at 1237. Very simply, an annual salary for participating in a competitive and dangerous sport is not a realistic or even rational measure of the value of any particular photograph of someone competing in that sport. To the contrary, the fair market value means what someone in an open market would pay for the use in question ­ and naturally, that value will vary whether the use is for a major television advertising campaign, a series of promotional posters, a print ad in a nationally-distributed publication on the one hand, or, on the other, a small ad in an obscure newsletter, a posting on a rarely visited internet site or so on. The only evidence here is that bicycle manufacturers' catalogs routinely include pictures of prior years' racers with no compensation forthcoming for such use. (Cann. Ex. A-16, Hus Decl., ¶ 12; Cann. Ex. A -15, Schuler Decl., ¶ 12; Cann. Ex A-2 at 31 l. 9 ­ 32 l. 10.) Amazon has identified no witness ­ expert or otherwise ­ competent to assess the fair market value of the modest use in Cannondale's catalog and has presented no evidence anyone has ever paid anything for such use. Even its own witnesses, Ben and Missy Giove, have said nothing of the kind ­ just the opposite, as Ben Giove admitted he lacked the expertise to assess the impact or value of the act or use in issue (Ex A-1 at 166 l. 10-13, 137 l. 11 ­ 138 l. 7; 165 l. 11 ­ 166. l. 13; 168 l. 12-16), and Missy Giove admitted athletes typically receive nothing for such uses. (M. Giove Tr., Cann Ex. A-2 at 31 l. 9 ­ 32 l. 10.) And even assuming Cannondale required Amazon's consent to use the three pictures in the way it did, and even if Amazon might have insisted on $500,000 for such

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use (although it never did), there is no reason to believe Cannondale would have agreed to pay such an absurd amount rather than forego using the pictures. Amazon also says the policy of deterrence and avoiding unjust enrichment warrants some award (Amazon Brf. At 8.) Yet, it does not explain what in Cannondale's conduct justifies any such exemplary relief. As Amazon acknowledges, under the Restatement (Third) of Unfair Competition § 49 (1995), an accounting of profits may be inappropriate in the case of an innocent infringer. Although it says there is a dispute about Cannondale's good faith (Brf. at 19, n. 4), Ben Giove previously admitted there was no such evidence (Cann. Ex. A-1 at 161 l. 24-162 l. 21), and the Court previously agreed in dismissing Amazon's Lanham Act claim. (Cann. Ex. A-14 p. 16, 18.) Amazon also avers that at most it has been unable to quantify its alleged injury. (Brief at 15.) To the contrary, its own designated witness on damages, Ben Giove, admitted he could place no value on any of the specific images in the catalog. What he said was: Q Is there any way you can identify or put a number on the value to Cannondale of including a picture of the unidentified person on page 44 of the catalog? A I have no way of answering that.

Q What about the picture of Mario Cipollini on page 2; any way to identify what value that has for Cannondale? .... A Only that Mario is a star. He is a known quantity.

Q You can tell the amount of the value of Cannondale putting his picture in the catalog? A I couldn't tell you now

Q Do you have any way of knowing whether the picture of Mario Cipollini has any impact on Cannondale's customers?

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A

I have no way of knowing, no.

Q Do you have any way of knowing whether the picture on page 44 has any impact on Cannondale's customers? A I have no way of knowing, no.

Q Do you have any way of knowing whether the picture of Missy Giove in the catalog has any impact on Cannondale's customers? A 166 l. 13.) Again, I have no way of knowing. (Cann. Ex. A-1 at 165 l. 11 ­

Effectively conceding it can prove no commercial injury, Amazon states it "suffered" unwanted association with Cannondale (Brief at 15). However, Amazon but does not explain how this translates into any cognizable injury to any identifiable commercial interest. Indeed, the Tenth Circuit made clear in Cardtoons v. Major League Baseball Players Assoc., 95 F.3d 959 (10th Cir. 1996), that in states where the right of publicity is recognized, it serves to remedy the commercial injury well-known persons may suffer through loss of control over the value of their names and images and the ability to "profit from the full commercial value of their identities," Id. at 968, not from "having their feelings bruised" from unwanted public exposure. Id. at 967.5 Ms. Giove's possible personal feelings about Cannondale have no place in the determination whether Amazon suffered commercial harm warranting recovery under the right of publicity. At any rate, Ben Giove testified under oath he could identify no such harm:

5

Quoting the Restatement (Second) of Torts § 632(c) comment d, Henley (one of the cases on which Amazon relies) explained: "It is only when the publicity is given for the purpose of appropriating to the defendant's benefit the commercial or other values associated with the name or likeness that the right of publicity is invaded." 46 F. Supp. 2d at 596. Henley further explained that "'the mere fact that the [ad] was published and the defendant[] intended to make a profit from the [ad] is not enough to constitute commercial benefit.'" Id., quoting Polsby v. Spruill, No. Civ. 96-1641(TFH), 1997 WL 680550, at * 4 (D.D.C. Aug. 1, 1997).

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Q But again given your testimony earlier, that no one would have thought she was no longer with the team, you can't say that, but for the catalog, people's impressions would have been any different? A I couldn't answer that

Q Is there any way to measure or quantify the actual impact of the catalog in continuing to foster the belief among people that she was still on the team? A Is there a way that I can? Q Yes

A Just by the pure volume of how many catalogs were printed and dealt out to customers. I would have no way of measuring it, no. Myself, no. Q Can you think of any way to measure the actual impact of the catalog influenced reactions among the public? A Personally I couldn't tell you. It is not my line of expertise.

(Cann. Ex. A-1 at 137 l. 11 ­ 138 l. 7.) Because Amazon has identified no one who does possess such expertise, no trial is needed to conclude Amazon can not identify any harm. Moreover, if what Amazon means by unwanted association is likelihood of confusion, in previously granting summary judgment on Amazon's Lanham Act claim, the Court already concluded there was no material risk of likelihood of confusion with Cannondale. Amazon further contends that Cannondale benefited from not having to redo its 1999 catalog in 1999. However, this argument fails on at least two levels. First, the reason

Cannondale was not required to redo its catalog in 1999 was because Amazon did not succeed in showing on its motion for a preliminary injunction that it was likely to prevail on the merits. If Amazon believed the Court's ruling was erroneous, its remedy was by appeal. Moreover and more important, that Cannondale did not have to incur the cost of redoing its entire catalog proves nothing as to the value, if any, it obtained by incorporating in the publication the three

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specific images of Ms. Giove in issue. To have redone the catalog would have been costly, to be sure; but the purely negative nuisance expense of redoing an entire 96-page catalog (the labor, the paper, the printing and shipping costs, etc.) bears no reasonable relationship to any actual benefit Cannondale is supposed to have enjoyed from placing the three little pictures in the catalog in the first place or from having left them there in 1999. By Amazon's logic, if one wished to determine the value to a publisher of a single advertisement in a single publication (a periodical for instance), one would have to include as well the cost or value of all other ads in the periodical, and the overall value of the magazine (as measured, for instance by its newsstand and subscription sales). In short, a potential broadside disruption of part of Cannondale's business would have had no demonstrated connection to the fair market value, if any, of the three little pictures, which cannot be measured by labor costs, paper or printing expenses, shipping charges or the like. Indeed, measured this way, the value of the pictures could only be zero, because there would be no incremental difference of producing a catalog with or without the pictures. More relevant, when asked directly whether Amazon could identify any actual benefit Cannondale enjoyed, his testimony confirmed he could not: Q ... Can you identify any specific profits that Cannondale has obtained from the use of Ms. Giove's name or picture in its 1999 catalog? A I have no way of knowing that. (Cann. Ex. A-1 at 168 l. 12 ­ 16.)

2.

Cannondale's De Minimis Use Is Not Actionable

Amazon's primary if not only response to Cannondale's defense that its admittedly inconsequential use of three minute images of Ms. Giove constituted permissible incidental or de minimis use, is to contend that the defense applies only to core First-Amendment-protected

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activities such as books or motion pictures. Not so. In D'Andrea v. Rafla-Demetrious, 972 F. Supp. 154, 156-7 (S.D.N.Y. 1997), aff'd, 146 F.3d 63 (2d Cir. 1998), judgment as a matter of law was entered dismissing a claim for a hospital's incidental use of a resident's photograph on one half page of a 16-page brochure promoting the hospital. The brochure was largely if not entirely lacking in artistic or political content. Rather, the minimal use of the plaintiff's image was too attenuated to the promotional purpose of the brochure to warrant liability. Hoepker v. Kruger, 200 F. Supp. 2d 340, 350 n.15 (S.D.N.Y. 2002), concerned use of plaintiff's image in three pictures among hundreds in a catalog advertising an art exhibit. The exhibit may have had artistic merit but the catalog itself was plainly promotional. In Epic Metals Corp. v. Condec, Inc., 867 F. Supp. 1009, 1016 (M.D. Fla. 1994), summary judgment was granted dismissing a claim for use of the counterclaimant's photo in catalog as background showing shipment of deck materials. Again, the expressive interests at stake were minimal. And in Aligo v. Time-Life Books, Inc., 23 Media L. Rep. 1315 (N.D. Cal. 1994), the complaint was dismissed where an infomercial made fleeting use of plaintiff's image. None of these publications made any

pretense to serious journalism or artistic expression. Each had a primarily commercial focus. Yet, each use was deemed an incidental or de minimis use for which no liability attached. And even conceding the Cannondale catalog served some promotional purposes (as well as communicating information), it hardly follows that Ms. Giove's image in the catalog had any such promotional value or served any promotional function. Henley, one of the cases on which Amazon relies, is instructive. The court thus first explained what the plaintiff must show,

namely "whether Defendant appropriated Plaintiff's name and likeness for the value associated with it, and not in an incidental manner." 46 F. Supp. 2d at 592. The court then went on to

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explain that "[o]ne of the primary purposes of advertising is to motivate a decision to purchase a particular product or service. The first step toward selling a product or service is to attract the consumers' attention." Id. at 594 (citation omitted). Eastwood v. Superior Court, 49 Cal. App. 3d 409, 420, 198 Cal. Rptr. 342, 349 (Cal. Ct. App. 1983) (same). Although defendant's prominent use of the name "Don Henley" in an advertisement was an attention-getting device and violated the plaintiff's right of publicity, Cannondale's inconspicuous use of Ms. Giove's name and image was not. Even if the incidental use defense sometimes (or even often) has been used to protect writers and artists, findings of incidental, de minimis use, frequently have required dismissal of right of publicity claims concerning commercial catalogs and other such works no less businessoriented (if not plainly more so) than Cannondale's 1999 product catalog. In short, a de minimis use is a de minimis use regardless whether the work is high art, low art or purely commercial and lacking artistry of any kind. The law thus recognizes the reality that certain uses are so

insignificant and so unlikely to cause injury (which, of course, is an element of this or any tort), that the interests protected by the right of publicity must give way to countervailing interests (even commercial interests). Just so, here, where Cannondale expended a considerable effort creating a product catalog ­ for the principal purpose of identifying the specifications of its many products ­ Cannondale's financial interest in the catalog, and its dealers' need for access to the information presented in the catalog, vastly outweighed the interest of Amazon (a purely commercial interest at that) in controlling uses of Ms. Giove's image, no matter how inconsequential. If any case calls out for application of the de minimis use defense, this is it, and if the defense does not apply here it is hard to imagine where it does. Indeed, as the Tenth

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Circuit recognized in Cardtoons, the right of publicity advances few valuable public policies, 95 F.3d at 973-76, thus requiring courts to guard against "overprotection" of the right. Id. at 976. 3. Cannondale's Use Is A Fair Use and Not Actionable

Determined to draw a bright line distinction between core First-Amendment-protected works such as books and movies, on the one hand, and all other forms of speech on the other, Amazon does not address the actual Constitutional distinction courts have drawn between commercial and non-commercial speech. As Cannondale has already shown (and Amazon has not disputed), as a matter of law, "commercial speech" is speech that "does no more than propose a commercial transaction." Gionfriddo v. Major League B aseball, 114 Cal. Rptr. 2d 307, 316 (Cal. Ct. App. 2001) (quoting Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 66 (1983). If speech is not purely commercial, that is, if it does more than merely propose a commercial transaction, it is entitled to full First Amendment protection. Cardtoons, 95 F.3d at 970 (trading cards not commercial speech "merely because they are sold for a profit" (citation omitted)); Hoffman v. Capital Cities/ABC, Inc., 255 F.3d 1180, 1185-86 (9th Cir. 2001). That was true in Gionfriddo, where, although the players' names and images were used to promote the game of professional baseball, the programs in which they were used were not mere commercial speech. 114 Cal. Rptr. 2d at 316. Cannondale's catalog likewise was used to convey information about Cannondale's products of interest to dealers, and Ms. Giove's image was used discreetly to show use of such products. Amazon does not dispute that under the relevant test of what is commercial speech, Cannondale's catalog is not, and is thus entitled to full First Amendment protection. Even conceding Cannondale's catalog served some commercial purposes, it does not follow that the

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catalog does no more than propose a commercial transaction. Indeed, unlike an "LL Bean" or "Land's End" catalog or the "Abercrombie" catalog at issue in Downing v. Abercrombie & Fitch, 265 F.3d 994 (9th Cir. 2001), the Cannondale catalog contained no prices and was not distributed to consumers to generate sales. (Cann. Ex A-9; Hus Decl. ¶ 9.) Rather, it was distributed to dealers to provide information about Cannondale's products. And even conceding the information in the catalog served to advance Cannondale's commercial interests, it hardly follows that the photographs of Ms. Giove were directly connected to the commercial ends of the catalog. By contrast, in Downing, the plaintiff's image had no meaningful or direct relationship to any informational purpose of the catalog. Instead, as the court noted, "there is a tenuous relationship between Appellants' photograph and the theme presented." 265 F.3d at 1002.6 Compare D'Andrea, 972 F. Supp at 157 ("In order to establish liability, plaintiff must demonstrate a `direct and substantial connection between the appearance of the plaintiff's name or likeness and the main purpose and subject of the work,'") quoting Preston v. Martin Bregman Prods., Inc. 765 F. Supp. 116, 120 (S.D.N.Y. 1991). Accord Aligo, 23 Media L. Rep. at 1315 ("No such connection exists in this case. There is no suggestion that Defendants used the photograph in an effort to convey Plaintiff's endorsement of the music anthology and, as discussed above, the promotional value of the photograph is insignificant.") See also Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n, 447 U.S. 557 (1980) (First Amendment right to engage in truthful commercial speech). Contrary to Amazon's contention, Gionfriddo did not any more clearly than this case involve an "expressive work". The players names and images in Gionfriddo were used in for6

As Amazon notes, Downing did not even consider the de minimis use defense. (Amazon Brf. at 23.) No conclusion thus can be drawn what conclusion the court would have reached had it addressed the defense.

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profit game-day programs, in videos and on the MLB website to promote the game. 7 That did not preclude a finding that balancing plaintiffs' economic interests in protecting their publicity rights against MLB's interest in providing fans information about the game, MLB's interest deserved greater weight. 114 Cal. Rptr. 2d at 318. So too here, no trial is needed to see that Cannondale's interest in providing information about its bicycles and their use outweighs Amazon's narrow interest in concealing her actual role on the Volvo/Cannondale team. Amazon is also incorrect that the catalog makes any false promise that Ms. Giove would be at any particular event in 1999.8 And although it is not necessary for the Court to decide what other types of truthful references to athletes should be permitted to the teams for whom they performed, the Court can conclude that Cannondale's interest in providing its dealers information about its products includes making at least some discreet and truthful references to recent past team members and that, as used in the 1999 Cannondale catalog, this interest outweighs Amazon's interest in controlling the commercial use of Ms. Giove's name or image. 4. Amazon's Contractual Consent With TSMI Bars Its Publicity Claim

What Cannondale has argued in moving fo r summary judgment on the issue of consent is that, to the extent it is even necessary to consider the scope of Amazon's contractual consent to TSMI to allow Cannondale to use Ms. Giove's image as it did in its catalog, the scope of TSMI's rights under its agreement with Amazon were put in issue by Amazon, were challenged by TSMI and were then resolved "on the merits" by Amazon's settlement with TSMI. Amazon contends

7

The court distinguished such use from use in advertisements or use directly on products, the latter of which was the basis for liability in Shamsky v. Garan, Inc., 632 N.Y.S.2d 930 (N.Y. Sup. Ct. 1995), on which Amazon relies. 8 What the catalog says is only that "depending on what camp you choose you may find yourself ripping up singletrack with Missy Giove and Tinker Juarez of the Volvo/Cannondale racing team, sharing a gourmet lunch with an editor of Bicycling Magazine or listening to a cycling pro recount adventures on the circuit." (Cann. Ex. A-9 at p. 85. (Emphasis added.))

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the exact terms of its settlement with TSMI are not public, but it does not dispute that it is barred from further litigating those claims and has not itself offered to disclose the details of its settlement with TSMI to prove otherwise. Cannondale's argument of course is not that the Court should attempt to resolve issues of contract interpretation on this motion for summary judgment, but simply that there are (or were) issues of contract interpretation that were in dispute; that they were resolved "on the merits' when Amazon settled with TSMI, and that they can no longer be litigated against Cannondale. Amazon contends its contract with TSMI was so clear that parol evidence can not be admitted to vary those terms, but once again, Amazon does not dispute that TSMI (before it settled) had challenged that assessment of the contract and raised various defenses, each of which Amazon is now barred from pursuing "on the merits." (Schuler Decl., A-15 ¶¶ 12, 14.9 ) (One of those defenses was that a course of dealing in the trade had to be considered in construing Amazon's contract with TSMI. Amazon does not even address the repeatedly cited Wisconsin law that permits consideration of a course of dealing entirely irrespective of the parol evidence rule. 10 )

9

Those defenses are that as a matter of custom and usage, no separate consent was needed for Cannondale to complete use of its 1999 catalog in 1999, notwithstanding that a few athletes on the roster may have changed; that no new consent was necessary to complete the usage, and that if the contract was violated, it was not a material breach. 10 Under Wisconsin law (which expressly governs Amazon's agreement with TSMI), it is "quite acceptable" to add terms to parties' written agreement based on a course of dealing. NW Nat'l Ins. Co. v. Marsh & McLennan, Inc., 817 F. Supp. 1424, 1431 (E.D. Wis. 1993) ("The court agrees that the parties' dealings establish the existence of a contract..."). Accord Karp v. Coolview of Wis., Inc., 25 Wis. 2d 299, 303, 130 N.W. 2d 790, 792 (Wis. 1964) ("In a breach of contract action a local custom or usage or an individual course of dealing between two parties may be proven as having probative value to show the intention of the parties to a contract or on what the parties had a right to depend in their dealing."). See also Wis. Stat. § 401.205(2) (2005) ("A usage of trade is any practice or method of dealing having such regularity of observance in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question.").

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Amazon does not question that it settled its disputed claims with TSMI without proving its claim that TSMI lacked authority to permit Cannondale's conduct. Nor does Amazon

address any of the actual precedent Cannondale cited showing that a consent decree knowingly entered is entitled to preclusive effect. Satsky v. Paramount Commc'ns, Inc., 7 F.3d 1464, 1468 (10th Cir. 1993) ("a consent decree is afforded the same effect as any other judgment"); Klingman v. Levinson, 831 F.2d 1292, 1296 (7th Cir. 1987) (consent decree given conclusive effect where "the parties could reasonably have foreseen the conclusive effect of their actions," quoting 1B J. Moore, J. Lucas and T. Currier, Moore's Federal Practice ¶ 0.444[1], at 794 (2d ed. 1984)); Balbirer v. Austin, 790 F.2d 1524, 1528 (11th Cir. 1986) (consent decree entered "with prejudice" can be afforded issue preclusive effect, but case remanded to determine intent of the parties); Yachts Am., Inc. v. United States, 673 F.2d 356, 361-62 (Ct. Cl.) (parties' stipulation of settlement and judgment given issue preclusive effect), cert. denied, 459 U.S. 839 (1982). Amazon likewise does not dispute that by this same logic its settlement of its breach of guaranty claim without any showing the underlying contract was breached bars any claim now against Cannondale on the guaranty. Amazon of course concedes that the settlement agreement with TSMI was accepted and entered by the Court "on the merits." (Dkt. No. 76.) Instead, Amazon simply notes that the current edition of Moore's Federal Practice sets forth a broad rule that consent judgments are not automatically entitled to preclusive effect if there has been no actual findings by the court. See 18 James Wm. Moore et al., Moore's

Federal Practice § 132.03[2][i][ii] (3d ed. 2005). However, the treatise also recognizes that consent judgments are given preclusive effect "when the parties to a stipulation or consent judgment intended to foreclose an issue from future litigation." Id. at 132-87-88.

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Ultimately, of course, the question is not what Professor Moore believes but what the courts have held. Thus, Satsky explains: "'A consent decree ... is an agreement that the parties desire and expect will be reflected in and be enforceable as a judicial decree that is subject to rules generally applicable to other judgments and decrees.'" 7 F.3d at 1468, quoting Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367, 378, 112 S.Ct. 748, 757, 116 L.Ed.2d 867 (1992). Accord, Klingman, 831 F.2d at 1296 ("if the parties to a consent decree indicated clearly the intention that the decree to be entered shall not only terminate the litigation of claims but, also, determine finally certain issues, then their intention should be effectuated." (internal quotations and citation omitted.)) Amazon does not dispute that when it and TSMI entered their settlement "on the merits" they meant it to be a final resolution of all claims concerning the scope of TSMI's contractual rights and whether TSMI exceeded those rights by authorizing Cannondale's conduct, as Amazon alleges (Amended Complaint ¶¶ 13, 14, 80); whether the alleged breach, if any, was sufficiently material as to raise a colorable claim (Id. ¶ 81); and whether TSMI may have had other defenses to the contract claim. The contract and consent issues have now been resolved forever by Amazon's settlement with TSMI. For the very same reason, Amazon's claim for alleged breach by Cannondale of a guaranty agreement is barred by Amazon's failure to prove breach of the underlying contract (see Cannondale moving brief at p.38 et seq.). Just so, because Amazon is barred from litigating against Cannondale any questions concerning the scope of its consent to TSMI, which have now been dismissed on the merits, Amazon is unable to sustain its burden of proving that Cannondale's use went beyond the scope of TSMI's authority to permit Cannondale's conduct. Since Amazon thus cannot sustain its burden of proving absence of consent, the right of publicity claim should be dismissed.

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a. Cannondale's Single Publication Is Protected By Consent One final issue brought into focus by Amazon's opposition to summary judgment is that Cannondale's 1999 catalog, first published in 1998 when most of the copies were distributed, should, as a matter of law, be considered a single publication. Because Amazon concedes the publication was permitted in 1998, before termination of Amazon's contract with TSMI, under the single publication rule, Cannondale's completion of publication in 1999 of the same unchanged catalog does not give rise to liability. The single publication rule, at issue in Zoll v. Jordache Enterprises, Inc., No. 01 Civ. 1339(CSH), 2003 WL 1964054 (S.D.N.Y. Apr. 24, 2003), cited by Amazon at p. 23 of its opposition brief, primarily is applied to determine the statutory limitations period in libel actions. Under the rule, completion of distribution of a single publication does not create a new or separate cause of action. See generally, Rinaldi v. Viking Penguin, Inc., 52 N.Y.2d 422, 420 N.E.2d 377 (N.Y. 1981); Cuccioli v. Jekyll & Hyde Neue Metropol Bremen, 150 F. Supp. 2d 566, 573 (S.D.N.Y. 2001) (single publication rule applied to right of publicity claim). Cannondale's publication of its 1999 catalog was unquestionably a single publication, notwithstanding that a significant number of catalogs were distributed in the first few months of 1999. (Hus Decl., Ex. A -16, ¶10.) However, it was not altered in any way from the date of initial distribution in September 1998 until the last copies were given away in 1999, and the distribution was uninterrupted. Unlike Welch v. Mr. Christmas, Inc., 57 N.Y.2d 143, 454 N.Y.S.2d 971 (N.Y. 1982), cited by Amazon, publication did not cease and then resume years later. Because even Amazon concedes it consented to the first publication of the 1999 catalog in 1998, when most of the copies were distributed, no new cause of action arose in 1999 when

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Cannondale simply completed distribution of the 1999 catalog as intended. It was a single publication. III. CONCLUSION For the foregoing reasons, Cannondale requests that judgment be entered dismissing Amazon's remaining claims against Cannondale in their entirety, together with such other and further relief as the Court deems just and proper.

Date: October 11, 2005

Respectfully submitted,

s/ Jonathan Moskin _ Jonathan E. Moskin WHITE & CASE LLP 1155 Avenue of the Americas New York, New York 10036 Telephone: (212) 819-8200 Facsimile: (212) 354-8113 E- mail: [email protected] - and -

s/ Jennifer Palmer _ James E. Goldfarb Jennifer M. Palmer SENTER, GOLDFARB & RICE, L.L.C. 1700 Broadway, Suite 1700 Denver, Colorado 80290 Telephone: (303) 320-0509 Facsimile: (303) 320-0120 E- mail: [email protected] [email protected] Attorneys for Defendant

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CERTIFICATE OF MAILING I HEREBY CERTIFY that on this 11th day of October, 2005, I electronically filed a true and correct copy of the above and foregoing CANNONDALE'S REPLY MEMORANDUM OF LAW IN FURTHER SUPPPORT OF MOTION FOR SUMMARY JUDGMENT with the Clerk of Court using the EM/ECF system which will send notification of such filing to the following e- mail addresses: Kenneth A. Feinswog, Esq. ([email protected]) Susan S. Sperber, Esq. ([email protected])

s/ Patricia Ashman _ Patricia Ashman Email: [email protected] Database Manager, Managing Clerk, White & Case, LLP

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