The Cold War Museum appeals a decision of the Trademark Trial and Appeal Board (“Board”). The Board cancelled registration of the Cold War Museum’s service mark THE COLD WAR MUSEUM, finding that the Cold War Museum had not proven acquired distinctiveness of the mark. For the following reasons, we reverse.
Appellants Imation Corporation (“Imation”) and Moser Baer India Limited (“Moser Baer,” and collectively, “Appellants”) appeal from the partial final judgment entered by the United States District Court for the District of Minnesota that granted judgment on the pleadings in favor of Appellees Koninklijke Philips Electronics, N.V. and Philips Electronics North America Corporation (collectively, “Philips”). See Imation Corp. v. Koninklijke Philips Elec. N.V., Civ. No. 07-3668 (DWF/AJB), 2008 WL 5104742, at *1 (D. Minn. Nov. 26, 2008) (“Rule 12(c) Opinion”). Because the district court erred in holding that two of Imation’s subsidiaries are not licensed under the parties’ patent license agreement and thus improperly granted judgment on the pleadings, this court reverses the judgment of the district court, orders entry of judgment in favor of Appellants, and remands the case for appropriate further proceedings consistent with this opinion.
We reverse. We assume for purposes of this decision that the district court correctly classified Schrock’s photographs as derivative works. It does not follow, however, that Schrock needed authorization from Learning Curve to copyright the photos. As long as he was authorized to make the photos (he was), he owned the copyright in the photos to the extent of their incremental original expression. In requiring permission to make and permission to copyright the photos, the district court relied on language in Gracen v. Bradford Exchange, 698 F.2d 300 (7th Cir. 1983), suggesting that both are required for copyright in a derivative work. We have more recently explained, however, that copyright in a derivative work arises by operation of law—not through authority from the owner of the copyright in the underlying work— although the parties may alter this default rule by agreement. See Liu v. Price Waterhouse LLP, 302 F.3d 749, 755 (7th Cir. 2002). Schrock created the photos with permission and therefore owned the copyright to the photos provided they satisfied the other requirements for copyright and the parties did not contract around the default rule.
We also take this opportunity to clarify another aspect of Gracen that is prone to misapplication. Gracen said that “a derivative work must be substantially different from the underlying work to be copyrightable.” 698 F.2d at 305. This statement should not be understood to require a heightened standard of originality for copyright in a derivative work. We have more recently explained that “the only ‘originality’ required for [a] new work to be copyrightable . . . is enough expressive variation from public-domain or other existing works to enable the new work to be readily distinguished from its predecessors.” Bucklew v. Hawkins, Ash, Baptie & Co., LLP, 329 F.3d 923, 929 (7th Cir. 2003). Here, Schrock’s photos of Learning Curve’s “Thomas & Friends” toys possessed sufficient incremental original expression to qualify for copyright.
But the record doesn’t tell us enough about the agreements between the parties for us to determine whether they agreed to alter the default rule regarding copyright or whether Learning Curve had an implied license to continue to use Schrock’s photos. Whether Schrock could copyright his photographs and maintain an infringement action against the defendants depends on the contractual understandings between Schrock, Learning Curve, and HIT. Accordingly, we remand to the district court for further proceedings consistent with this opinion.
1800Mattress.com IP, LLC (“1800Mattress.com”), substituted as appellant for Dial-A-Mattress Operating Corp. (“Dial-A-Mattress”), appeals from the final decision of the United States Patent and Trademark Office Trademark Trial and Appeal Board (the “Board”) refusing registration of the mark “MATTRESS.COM.” In re Dial-A-Mattress Operating Corp., Serial No. 78976682, 2008 TTAB Lexis 437 (T.T.A.B. Nov. 13, 2008). Because the Board’s decision finding “MATTRESS.COM” generic in relation to the recited services was supported by substantial evidence, we affirm.
Schering cannot just intone “literal falsity” and by doing so prove a violation of the Lanham Act. But we think the district court was right nevertheless not to dismiss the suit with prejudice; findings by the FDA in the misbranding proceeding may cast the issue of consumer confusion in a different light. AFFIRMED.
The judgments (including the dismissal of the crossappeal, as it is premature to determine what injunctive relief if any the defendants are entitled to) are vacated and the case is remanded. 7th Cir. R. 36 shall apply on remand. VACATED AND REMANDED.