v30 #2 Cases of Note — Copyright — Constructive Trust

by | May 23, 2018 | 0 comments

Column Editor:  Bruce Strauch (The Citadel, Emeritus) 

MATTEL, INC. V. MGA ENTERTAINMENT, INC.  UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT, 2010 U.S. App. LEXIS 26937.

This opinion was written by Chief Judge Alex Kozinski who was considered one of the great brains of copyright.  See “Bet You Missed It” in this issue for a brief description of how he was driven off the bench.

Carter Bryant worked in the Mattel “Barbie Collectibles” department designing fashion and hair styles for high-end collector dolls.  In a lightbulb moment, he conceived of Bratz dolls — urban, multiethnic and with a … well … bratty attitude.

He pitched his idea to MGA Entertainment, a Mattel competitor.  They loved it.  He gave two weeks notice to Mattel.

In no time, the “anti-Barbie” began to crush its rival.  By 2005, the Bratz line had revenues of $800 million while Mattel steadily descended to $445.  That will tend to get the attention of the suits in the top floor suites.  And the attack-dog lawyers are just a phone call away.

And you can already see what’s coming.  You know darn well Bryant was under a contract where every thought he had belonged to Mattel.  But he just couldn’t quite see leaving until his bases were covered.

And of course MGA knew Bryant had been under contract to Mattel, and did its best to conceal his employment.  Besides, he claimed he designed Bratz when he was on a hiatus from Mattel and, by golly, his mom would testify to it.

But the Bratz line “The Girls With a Passion for Fashion” was a juggernaut and a badly frightened Mattel did some snooping.

“Wasn’t what’s-his-name in accessory design one of ours?  Where did he go exactly?”

The truth came out, and Mattel sued.

In the final two weeks of Bryant’s Mattel employment, he had done a “sculpt” — a mannequin-like plastic doll body and coined the name “Bratz.”

The trial court really slammed MGA, granting Mattel a constructive trust over everything with Bratz in it.  That included — ready? —:

Bratz dolls (Bratz, Bratz Boyz, Lil’ Bratz, Bratz Lil’ Angelz, Bratz Petz, Bratz Babyz, Itsy Bitsy Bratz, etc.), doll accessories (Bratz World House, Bratz Cowgirlz Stable, Bratz Spring Break Pool, Bratz Babyz Ponyz Buggy Blitz, etc.), video games (“Bratz: Girlz Really Rock,” “Bratz: Forever Diamondz,” “Bratz: Rock Angelz,” etc.) AND Bratz the movie.

The Appeal

A constructive trust transfers wrongfully held property to its rightful owner.  Communist Party of U.S. v. 522 Valencia, Inc., 35 Cal. App. 4th 980 (1995).

That case name should grab your attention.  It’s a fight over ownership of real estate. What?  I thought commies believed in sharing!

Bryant’s Mattel contract had him assigning all “inventions” to the company and stated the term “includes, but is not limited to, all discoveries, improvements, processes, developments, designs, know-how, data computer programs and formulae, whether patentable or unpatentable.”

The Ninth Circuit chewed over whether “ideas” were in the list, but decided it was a jury question for remand.

It did, however, find the constructive trust was way too broad.  The value Mattel would be getting had been made much, much greater than Bryant’s little sculpt and the name “Bratz.”  As you can see from the list of products, there was all that designing, investment and marketing.

Should I defraud you of stock that rises in market value, I can’t complain that you get that benefit when you take it back.  But
“[w]hen the defendant profits from the wrong, it is necessary to identify the profits and to recapture them without capturing the fruits of the defendant’s own labors or legitimate efforts.”  Dan B. Dobbs, Dobbs Law of Remedies: Damages-Equity-Restitution § 6.6(3) (2d ed. 1993).

Gosh-a-rootie.  Dobbs was my Torts prof way back in the UNC Law days of yore.  And a fabulous prof he was.

Bryant was only a minor cog in a machine that took the “Bratz” name and idea and ran with it.  First generation (Cloe, Yasmin, Sasha and Jade), second (Ciara, Dana, Diona, Felicia, Fianna etc.).

Ninth said ‘twas inequitable to transfer a billion dollar brand because Bryant had an idea in the last weeks of his job.

So Now What?

Well, you’re back with copyright violations.

The jury had been quite astute, sending the judge a note asking if it could find that only the first generation of Bratz dolls were infringing.  And he said they could. And they found damages of $10 million, a mere bagatelle.

The judge didn’t care for this and made his own finding of infringement leading to the constructive trust.

The Ninth Cir. held that Mattel only owned copyright in the original sketches and the sculpt with bratty expression — not the idea of a bratty doll.  Mattel could not own the idea of young, hip, female fashion dolls with exaggerated features.

The district court needed to take another look and determine if each doll (“Bratz Wild Wild West Fianna,” “Bratz Funk ‘N’ Glow Jade” et al.) is like (substantially similar) or different from the original sketches.  It could not have found that the vast majority of the dolls were at all like the sketches unless it relied on the similarity of ideas — big-headed, attitudinous mall rats.

See: Cases of Note, Vol. 30-1, p.52 for a discussion of the whole substantial similarity thingy.

The retrial did not go well for Mattel.  MGA had gotten in claims of trade secret theft by Mattel.  The jury decided Mattel had not proven copyright violations but instead had stolen trade secrets and awarded MGA $88.5 mil which the judge bumped up to $310 million.

MGA claimed Mattel had an 11-page “How to Steal” manual and lied its way into private showings for retailers to get advance knowledge of MGA’s toys.  www.giftsanddec.com/…/485187-mga-entertainment-sues-mattel-over-trade-secrets.

See also: tsi.brooklaw.edu/cases/mga-entertainment-inc-v-mattel-inc-et-al

And Business Insider reports that lawyers have done very well from all this having raked in “hundreds of millions” in hourly billings.  www.businessinsider.com/bratz-mattel-lawsuit-2011-8.

And what of Carter Bryant?  The latest on him is from 2013 when he designed “Pinkie Cooper and the Jet Set Pets,” 9-inch fashionistas that are human but with a cocker spaniel’s face for a toymaker named Bridge Direct.  Money.cnn.com/2013/02/04smallbusiness/bratz-dolls-pinkie-cooper/index.html.

The line died within a year, but the internet has many entries by grieving doll collectors.

Isaac Larian, 82% MGA owner, is an Iranian Jewish immigrant who became a billionaire through toys.  Singing Bouncy Baby, rejected by Mattel, became his first hit in 1997.

Larian’s 2013 line, Lalaloopsy — rag dolls with button eyes and names like Lalaloopsy-Oopsy Princess Anise — took in $350 mil in revenue that year while Bratz had dropped to $50 mil.  www.forbes.com/…/the-toy-mogul-who-became-a-billionaire-through-his-fight-to-the-death-with-Barbie.  

 

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