Kozinski CJ of the US Court of Appeals for the Ninth Circuit has won IP Whiteboard’s inaugural “Judgment of the Year” for a fantastic dissertation on the ongoing wars between Mattel and MGA Entertainment over ownership of the “bratty-doll idea”.
The Court of Appeals vacated all of the equitable relief (which included a constructive trust and injunction) that the first instance District Court for the Central District of California had awarded Mattel in relation to Bratz fashion dolls manufactured by MGA. This was on the basis of numerous errors which the Court of Appeals found that the District Court had made, including in its directions to the jury.
The judgment starts like this: “Barbie was the unrivalled queen of the fashion-doll market throughout the latter half of the 20th century. But 2001 saw the introduction of Bratz, “The Girls with a passion for Fashion!” Unlike the relatively demure Barbie, the urban, multi-ethnic and trendy Bratz dolls have attitude. This spunk struck a chord, and Bratz became an overnight success. Mattel, which produces Barbie, didn’t relish the competition. And it was particularly unhappy when it learned that the man behind Bratz was its own former employee, Carter Bryant.”
In August 2000, while he was still employed by Mattel, Bryant pitched his Bratz idea to two employees of MGA Entertainment. He was soon called back to meet the CEO, bringing with him some preliminary sketches as well as a crude dummy constructed out of a doll head from a Mattel bin, a Barbie body and Ken (Barbie’s ex) boots. He signed a consultancy agreement with MGA on 4 October 2000 and that same day, gave his notice of resignation to Mattel. The flurry of ensuing lawsuits can, therefore, have hardly come as a surprise.
In relation to the relief the District Court ordered, Kozinski CJ put it simply: “In effect, Barbie captured the Bratz. The Bratz appeal”.
The appeal turned on a number of elements. Most importantly of course, is the interpretation of Bryant’s 1999 employment agreement. Here, the analysis is not straightforward, because whilst the first instance decision turned on whether Mattel owned Bryant’s ‘ideas’, in fact, the employment agreement did not contain such an express term. Extrinsic evidence from other Mattel employees also indicated that the position was not straightforward as to when, or if, Mattel employees were entitled to own the concepts they developed in their own time, away from work. In light of this uncertainty, it was held that the District Court erred in reaching a summary finding that ideas were “clearly covered” by the employment terms.
Another difficulty was that the constructive trust conferred at first instance was found to be overly broad. It required MGA to transfer its entire Bratz trade mark portfolio to Mattel. This meant that Mattel acquired the fruit of MGA’s legitimate, independent hard work in improving the range, and not just the appreciation in value of the ideas Mattel claimed it owned. Kozinski CJ concluded that to transfer the billion dollar Bratz brand, the value of which was overwhelmingly the result of MGA’s legitimate efforts, was just not equitable.
The treatment of the copyright issues is particularly interesting. Mattel argued that because it ‘owned’ Bryant’s preliminary sketches and sculpt, all subsequent Bratz fashion dolls produced by MGA Entertainment infringed its copyright. The jury’s finding on which or how many Bratz fashion dolls it thought infringed was unclear, so the District Court made its own infringement findings in determining whether Mattel was entitled to equitable relief. It found the vast majority of Bratz dolls infringed. On appeal, it was held that this was far too broad. Kozinsky CJ explained the issue as follows: “Otherwise, the first person to express any idea would have a monopoly over it. Degas can’t prohibit other artists from painting ballerinas, and Charlaine Harris can’t stop Stephanie Meyer from publishing Twilight just because Sookie came first”.
Kozinski CJ found that the District Court had erred in failing to filter out all the unprotectable elements of Bryant’s preliminary sketches, and by finding substantial similarity based on similarities in unprotectable elements. In analysing the issue, he managed to make reference to Betty Boop, to characters in Japanese anime and to Steve Madden ads. He even used Patty and Selma Bouvier. Kozinski CJ concluded that MGA’s Bratz dolls can’t be considered substantially similar to Bryant’s preliminary sketches simply because the dolls and sketches depict young, stylish girls with big heads and an attitude. He did so, drawing on the case of JCW Invs v Novelty, Inc., 482 F.3d 910, 917 (7th Cir 2007): “Novelty could have created another plush doll of a middle-aged farting man that would seem nothing like Fred. He could, for example, have a blond mullet and war flannel, have a nose that is drawn on rather than protruding substantially from the rest of the head, be standing rather than ensconced in an armchair, and be wearing shorts rather than blue pants”. [Why don’t we have facts like these in our Australian cases?]
Kozinsky CJ perhaps left his finest to last: “
The judgment can be found here.