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The Elves of the IP Naughty and Nice List
December 18, 2017

johndonchBy John C. Donch Jr. and Kelly L. Hoffman

The holiday industry in the United States is a multi-billion dollar business.  In 2016, U.S. consumers spent $655.8 billion dollars between Black Friday and Christmas Eve and the average household budget for holiday gifts came in at approximately $588.90.[1] Given the volume of consumer spending devoted to holiday cheer, most companies aim to capture a slice of the proverbial fruitcake.  Occasionally, this battle for profit can pit companies against one another, leading to less-than-cheerful legal showdowns. One case in particular comes down to a battle over a quintessential figure of holiday productivity: the elf.

Most people are familiar with the iconic “Elf on the Shelf” figurine that has embedded itself into the hearts, minds and homes of families across the country and globe. The 8.5 inch elf figurine, dressed in a red suit reminiscent of Chris Cringle’s, is accompanied by a book that describes the character’s origins.  The story goes that Santa was in desperate need of scouts to help track individuals for the naughty and nice lists throughout the year. Santa sent these elves to each family to watch over the children and report back to the North Pole at night. The elves pass along each child’s Christmas list and tell Santa whether they behaved nicely or poorly that day. Many parents have spent their evenings creating amusing (and often elaborate) scenes for the elves. In the morning, children wake up believing their elf really did travel to the North Pole and happened to fall into a little mischief on the return journey.

Since its inception in 2005, 11 million copies of the book and its accompanying figurine have been sold. The elf creators, CCA and B, LLC (“CCAB”), believed they had a winning idea from the start and judiciously secured copyright protection for the elf doll and the sitting elf image depicted on the cover of the book (an elf in a red Santa suit sitting on a shelf). CCAB also obtained registered trademarks for the word mark “Elf on the Shelf,” the sitting elf image and the logo on the cover of the book.  Considering its popularity and prevalence in homes around the United States, it can sometimes feel as though the elf is displacing Santa himself as the new icon of Christmas cheer.

While many parents bring a great deal of creativity to their elaborate elf dioramas, there are many others who find the nightly routine of devising a new hiding spot or position for their elf a laborious and mentally taxing chore.  Some of these parents have sought comedic relief to their elf-induced exasperation by giving their elves broken limbs, even putting them in comas, to cut down on the number of times they need to move their elf. With so many sarcastic and satiric displays circulating online, it was only a matter of time before someone decided to put an R-rated twist on an otherwise wholesome tradition. Enter Horace the Elf. Horace’s creators, F & W Media, Inc. (“FW”), took notice of the elf mania and saw an opportunity for an adult-themed parody, partially fueled by the parental divide over the encumbrances of elf-induced activities. Horace the Elf is described as the elf “off the Shelf.”  In his origin story, the first-person narrative describes how Horace took the “shelf gig” as an opportunity to leave his parent’s basement for the first time in a couple of hundred years. After receiving a “lousy” first name from his family, he decides he isn’t going to play the good little elf role any longer.  Instead, he’s going to devote his evenings to more mature activities, like imbibing spiked eggnog, attempting to woo Barbie, and pursuing other pleasures rated “mature” for adult audiences.

Horace’s book does not come with a figurine. The front cover, although similar to the Elf on the Shelf cover, depicts an elf in a green suit dangling from a shelf rather than a red-suited elf in a seated position. “Elf off the Shelf” also includes a byline on the cover, identifying it as “A Christmas Tradition Gone Bad” and further states “A new holiday parody – for Mom and Dad.” The back cover takes the disclaimer one step further and, in small print, explains that the book was not “prepared, approved, or authorized” by the creators of Elf on the Shelf.

Despite FW’s abundance of caution, when CCAB learned of the parody in 2011 they filed a Motion for Temporary Restraining Order and Preliminary Injunction claiming trademark and copyright infringement by the makers of Elf off the Shelf. The case was heard in the United States District Court for the Northern District of Georgia, where the presiding judge quickly dubbed the respective parties “Elf On” and “Elf Off.

In examining the plaintiff’s claims (Elf On), the court scrutinized a number of different factors for each type of infringement. In copyright analysis, a work is a protected parody if its purpose is to critique or comment on a prior work, while adding an additional element of artistry or creativity to discern it from the original. In the case of trademark infringement, a court will look to see if there is a substantial likelihood of consumer confusion between the product and the accused infringer. In other words, if the differences between the two products are so negligible that a customer could mistake the infringing product for the “real deal,” there is a strong argument to support a claim of infringement.

In defense of the copyright infringement claim, Defendant Elf Off quickly fought back with their parody defense, which is protected by the fair use doctrine in copyright law. A work qualifies for this safe harbor protection “if its aim is to comment upon or criticize a prior work by appropriating elements of the original in creating a new artistic, as opposed to scholarly or journalistic, work.”[2] An inherent characteristic of parody is the need to rely on quintessential elements of the original work in order to make the subject of the critique obvious. The only question a court needs to answer is whether the allegedly infringing work could reasonably be perceived as a parody from the content.[3] After reviewing the content of Elf Off,  the Court admitted that “Horace is not hilarious, but he does use his foul mouth to say something pointedly different than the elf in the Plaintiff’s work.”[4] The parody in Elf Off is apparent as the creators use Horace to “highlight the perceived absurdity” of a surveillance elf, in addition to using the wholesome image to create some pretty un-wholesome scenery.[5]  Elf Off depicts Horace in frequently compromising situations, such as in bed with Barbie or sleeping next to some incriminatingly spilled eggnog.  Even though Plaintiff’s claims encompassed the elf doll itself, as well as the sitting elf image, the court stated that the use of the elements by the Defendant was clearly in the context of parody.

The trademark infringement analysis presented a much closer call for Horace, but he was able to dodge that legal snowball.  For the product to pass muster as a parody under trademark analysis, the new work must differentiate itself from the original, while communicating an “articulable element of satire, ridicule, joking or amusement.”[6] Since the trademarks in question are limited to the stylized word mark on the cover of Elf On and the sitting elf image, the court likewise limited their analysis. Although the font and style of the book title in Elf Off was markedly similar to Elf On, the court ultimately determined that the “modest alterations” made in color and typeface, combined with the disclaimer language added to the front and back covers of Elf Off were sufficient enough to convey parodic intent.

In the end, Christmas came early for Horace and Elf On’s motion was denied.  The court found that Elf On had not met its burden for showing a substantial likelihood of consumer confusion on the trademark infringement claim. On the copyright infringement claim, the court agreed with Elf Off regarding their parody defense under the fair use doctrine. The story of Elf On versus Elf Off is probably not the classic tale suited for fireside retellings during the holiday season, but it is fundamentally illustrative of the value of intellectual property protection and strategy. While intellectual property protection can go a long way to building a naughty list of infringing competitors, a thorough understanding of IP law can also provide a strategy that maintains a product’s status on the nice list.




[2] SunTrust Bank v. Houghton Mifflin Co., 268 F.3d 1257

[3] Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569

[4] CCA & B, LLC., v. F + W Media Inc., 819 F. Supp. 2d 1310

[5] Id.

[6] Smith v. Wal-Mart Stores, Inc., 537 F. Supp. 2d 1302, 1316 (N.D. Ga 2008)