Letter from Amerikat: Happy Bunny Day!

The AmeriKat has been enjoying the warmth of the sunbeams that have danced across her numerous files, spreadsheets and bundles this past week. The warmer weather brings out the summer clothes and English smiles, but also insects. Almost this time last year the AmeriKat was in the throws of a biblical scale warfare with swarms, floods, and drought inflicting her house. She had hoped that the spring and summer of 2010 was a blip in the calendar of insect infestations she would have to deal with, but alas, with the warmer weather the ants are back. She has now found the gap in her floorboards were the pesky insects have been arriving from, but like plugging a hole in a leaky boat, the water will always find somewhere else to spill in from. So instead of lounging out in the sun, dying eggs, eating chocolate and drinking lemonade on Easter Sunday, she is instead attacking any small six-legged body racing across her floor. (picture, left- the AmeriKat inspecting an alleged Easter bunny) Happy Easter from the AmeriKat!

Bratz Beats Barbie with $89 million jury-award

From pesky six-legged insects, to perky two-legged dolls. Last week a Californian federal jury issued their verdict in favor of Bratz (picture, right) in the now-famous copyright and trade secret battle between Barbie and Bratz (see previous reports here). Barbie's maker, Mattel, had alleged that the maker of the Bratz doll - MGA Entertainment- stole the idea for the Bratz doll by entering into a deal with the designer of the doll, Carter Bryant, who had previously worked for Mattel. Mattel subsequently filed a lawsuit for copyright infringement and trade secret violations, while MGA alleged unfair competition and also trade secret theft. This case was heard by first by Judge Larson who ruled in favor of Mattel, but that $100 million verdict was overturned on appeal. The Court of Appeals for the Ninth Circuit held that the federal court judge had erred in ruling that Mattel automatically owned the designer's sketch of the doll under the terms of the 'Employee Confidential and Inventions Agreement' between Mattel and the designer and remanded the case back to the federal court.

Bryant's employment agreement had assigned all rights, titles and interests in any such inventions, patents and copyrights to Mattel. The contract defined "inventions" as including, but not limited to, discoveries, improvements, processes, designs and know-how. The district court had held that this agreement assigned Bryant's ideas to Mattel despite 'ideas" not being included on the list or mentioned anywhere else. Mattel argued that the list of examples in the contract were illustrative not exclusive, but the Court held that "ideas" are "markedly different from the list of examples including discoveries, improvements and designs" (People ex rel Lungren v superior Court (1996)). (picture, left - no amount of law school could prepare Lawyer Barbie for the cruelty of a jury verdict) The Court of Appeals stated that the contract was arguable capable of either including or not including ideas, but that the trial court did not recognize this ambiguity and thus did not examine the extrinsic evidence before it on this issue.The Appeals Court concluded that the agreement could be interpreted to cover ideas, but that the text of the agreement did not compel that reading and thus remanded the issue back to the district court. They stated that:

"Designs, processes, computer programs and formulae are concrete, unlike ideas which are ephemeral and often reflect bursts of inspiration that exist only in the mind."

At the end of last year, Mattel and MGA applied for summary judgment on the issue of copyright infringement for the first and second generation Bratz dolls. Judge Carter granted summary judgment in MGA's favor in respect of the second generation Bratz dolls, but the remaining issues, including breach of copyright for the first generation of Bratz dolls and the breach of confidence/trade secret claims, remained for trial. The court was tasked with determining whether the Inventions Agreement entitled Mattel to Bryant's ideas for names like "Bratz" together with sketches that he created outside working hours. Also, ripe for ruling was MGA's trade secret claim against Mattel through a campaign of corporate espionage, whereby MGA alleged that Mattel's employees gained access to regulated private MGA toy showrooms by deceptive means.

On Thursday, a federal court jury in Santa Anna, California, found in favor of MGA and following the Court of Appeals opinion held that Mattel did not own the sketches or ideas for the Bratz dolls. The jury verdict also held in favor of MGA's counterclaim that Mattel had willfully misappropriated trade secrets and slammed Mattel with a $88.5 million damages price tag. A slight saving grace, albeit an insulting one, was that the federal jury also found that MGA had interfered with Bryant's contract with Mattel and issued Mattel a $10,000 award for the interference.

Although the battle may not be over with reports that Mattel will file a motion for a retrial within two weeks and will reserve the right to appeal, the case does remind everyone of the importance of carefully drafted employee contracts, as well as taking the business decision to litigate over seven or so years even if it costs your shareholders $400 million (see MSN money report here). However, if Mattel's intention was to quash the rival dollmaker, the litigation may have just done that. MGA's CEO, Isaac Larian is reported as saying that the Bratz brand "will never be the same level it was before."

The IPKat will keep you posted on any further developments in the case.

Tony Duquette seeing Spots with J.Crew sweater

Tony Duquette, Inc, the proprietor of the various IP rights associated from the late namesake artist and designer filed a trade mark infringement suit against clothing retailer and AmeriKat favorite, J.Crew in a New York federal court last week. For those not in the know, the late Tony Duquette was a Tony award-winning designer and artist who counted Elizabeth Arden and the Duke and Duchess of Windsor as clients. Tony Duquette allege that J.Crew has infringed the DUQUETTE name and trade mark by producing and selling a sweater with the style name the "J.Crew Duquette Factory Leopard Print". The complaint alleges that J.Crew knowingly and willfully used the DUQUETTE trade mark in connection with their leopard print sweater because of Duquette's alleged unique association with leopard prints, in particular with woven and printed textiles including carpets and tapestries. (picture, left - a fabric design by Duquette) The AmeriKat is seeing more and more product descriptions that use trade marked words become the subject of trade mark disputes. In the UK, one can always invoke the fun game of whether the product description is being used as a function (of many, many functions) of a trade mark. In the U.S., the case is arguably little more straightforward.

Albeit having not read the complaint, the AmeriKat's gut instinct is that there is not enough here to satisfy the test of trade mark infringement. i.e., namely where is the confusion and whether Duquette has enough reputation in his name associated with leopard print textiles to claim dilution? Further live trade mark registration for DUQUETTE the AmeriKat found on USPTO is for tapestries of textiles, carpets and rugs - not apparel (Reg No. 3863326). The AmeriKat perused J.Crew's website today and found one leopard print sweater which is called the "Wild spots cardigan" - a very un-J.Crew product name - so her guess is that J.Crew has already taken steps to change the name of the contentious product. The Amerikat predicts this lawsuit to die a quickish death, just like the animal print trend of last season.

Apple v Samsung v Apple v Samsung v Apple....

Last year the AmeriKat was constantly up-to-date reporting on the latest of the patent mobile phone wars. She has now officially lost track, except for the latest of the battles now between Samsung and Apple. Apple sued Samsung two weeks ago in California federal court for trade dress, design patent, trade mark and patent infringement against Samsung's Galaxy line of smartphones and tablets. Apple allege that Samsung's products are copies of the iPhone and iPad designs including the "icons with the rounded corners."

The incestuous ties of the smartphone and tablet manufacturers and retailers are felt in this case. In 2010 Samsung earned a reported $5.7 billion revenue from Apple by way of their purchase of Samsung semidconductors. Tim Cook, Apple's CEO, told the Wall Street Journal that Apple is

"Samsung's largest customer, and Samsung is a very valued component supplier to us, and I expect the strong relationship will continue. Separately from this, we felt the mobile communication division of Samsung had crossed the line, and after trying for some time to work the issue, we decided we needed to rely on the courts."

The litigator in the AmeriKat sensed a nice little bargaining chip for Apple in this suit, however not to be uncharacteristic in this type of litigation Samsung then "countersued" Apple last week, but not in the U.S. Samsung filed patent infringement lawsuits against Apple in Korea, Japan and Germany alleging violations of patents filed in each of those jurisdictions. The allegedly infringed patents involve "transmission optimization and reduction of power usage during data transmission, 3G technology for reducing data-transmission errors and a method of tethering a mobile phone to a PC to enable the PC to utilize the phone's wireless data connection." The speed in which these lawsuits were filed indicate that Samsung may have been preparing itself for this counter-attack for sometime.

This latest chapter in the mobile patent war saga again demonstrates that when it comes to litigation surrounding smartphone technology, the best defence that is repeatedly being employed by parties is that of pursuing offensive litigation strategies on a global level. Whether or not that will prompt the parties to settle sooner is not a certainty, but the more complicated and more jurisdictions in which a company has to battle, the more attractive it becomes to resolve the dispute before litigation costs rocket and stated commercial relationships are massively affected.