The Ninth Circuit vacates a constructive trust and a copyright injunction concerning MGA Entertainment’s Bratz dolls, remanding Barbie doll maker Mattel, Inc.’s copyright infringement suit with state law claims to the district court for retrial.The U.S. Court of Appeals for the Ninth Circuit vacated a constructive trust and a copyright injunction imposed on defendant MGA Entertainment, Inc. (“MGA”), the maker of Bratz dolls. Plaintiff in the action, Mattel, Inc., is the maker of Barbie dolls and the former employer of Bratz creator Carter Bryant. In August 2000, while still an employee at Mattel, Bryant created a Bratz sculpt and Bratz sketches embodying his concept for the dolls and pitched his idea to MGA. Soon after, Bryant went to work for MGA and Bratz quickly garnered tremendous popularity, spawning other lines of dolls, video games and a Bratz movie. Mattel sued MGA for copyright infringement and state law claims. After a jury trial, the district court for the Central District of California imposed a constructive trust as equitable relief under the state law claims, essentially transferring the Bratz trademark portfolio to Mattel. The district court also issued a copyright injunction prohibiting MGA from producing or marketing virtually every Bratz doll. “In effect, Barbie captured the Bratz.” In vacating the district court’s grant of equitable relief, the Ninth Circuit stated that “a significant portion – if not all – of the jury verdict and the damage award should be vacated, and the entire case will probably need to be retried.”
First, the Ninth Circuit held that the district court erred both in its construction of the employment agreement upon which the relief was based and in imposing a constructive trust that was far too broad. The contract issue focused on the question of whether the word “inventions,” as used in Bryant’s employment agreement with Mattel, included ideas. If “inventions” does include ideas, then Bryant’s ideas for Bratz were assigned to Mattel. The district court held, as a matter of law, that “inventions” unambiguously covered ideas, but the Ninth Circuit, reviewing the district court’s interpretation de novo, found that there was ambiguity as to the term’s meaning. The court stated that "[d]esigns, processes, computer programs and formulae are concrete, unlike ideas, which are ephemeral and often reflect bursts of inspiration that exist only in the mind." As such, the court found error sufficient to vacate the constructive trust in the district court’s failure to send the question of interpretation to the jury, along with intrinsic evidence of each side’s proposed interpretation. The court further reasoned that, the contract question notwithstanding, the constructive trust was too broad. Noting that “[w]hen the value of the property held in trust increases significantly because of a defendant’s efforts, a constructive trust that passes on the profit of the defendant’s labor usually goes too far,” the court reasoned that because MGA’s efforts turned Bratz into a billion-dollar brand, it would be inequitable to award the totality of MGA’s “sweat equity” to Mattel. Finding that the district court abused its discretion in imposing such a broad constructive trust, the court vacated the trust.
Turning to the district court’s copyright injunction, the court looked to another error in the district court’s construction of the employment agreement before discussing the district court’s infringement analysis. The district court’s copyright injunction relied on the finding that the phrase “at any time during my employment” in Bryant’s employment agreement meant any time, whether Bryant was at work or not, and that Bryant had therefore assigned the Bratz sculpt and the Bratz sketches to Mattel. The district court granted summary judgment in Mattel’s favor on this issue, but the Ninth Circuit found that the meaning of the phrase was ambiguous and the failure to send the question to the jury was error sufficient to vacate the copyright injunction.
Having already found sufficient basis for vacating the copyright injunction, the Ninth Circuit proceeded to review the district court’s copyright infringement analysis. Applying the two-part “extrinsic/intrinsic” test from Apple Computer, Inc. v. Microsoft Corp., the court found that the district court erred in its analysis of the infringement of Bryant’s preliminary Bratz sculpt and Bratz sketches, both of which Mattel claim as its own. With regard to the Bratz sculpt, the court found that, because the “expression of an attractive young, female fashion doll with exaggerated proportions” is “highly constrained,” the scope of copyright protection afforded to the Bratz sculpt is necessarily very thin. As such, the district court erred in finding that Mattel was only burdened to demonstrate substantial similarity in copying rather than being held to the higher “virtually identical” standard appropriate for a work with a narrow range of expression. While finding that the district court did not err in applying the substantially similar standard to the Bratz sketches, the court did find error in the district court’s failure to filter out all unprotectable elements of the sketches prior to performing its substantial similarity analysis. “Mattel can’t claim a monopoly over fashion dolls with a bratty look or attitude, or dolls sporting trendy clothing – these are all unprotectable ideas.”