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District court holds online gaming platform Roblox adequately pled Lanham Act claims against manufacturer of figurines resembling Roblox avatars, but dismisses copyright infringement claims based on avatars Roblox failed to register for copyright before filing suit.
Plaintiff Roblox Corporation operates a popular online gaming platform offering virtual games and online entertainment experiences. Users interact on the platform using virtual representations of themselves known as “avatars.” Roblox offers various “Classic Avatars” to users and also allows users to customize their own avatars from template “Avatar Bases” by changing hairstyles, clothing, accessories and facial expressions. Given the popularity of its avatars, Roblox authorized co-plaintiff Jazwares to manufacture avatar figurines, which are real-world toys based on the Classic Avatars.
Roblox and Jazwares brought suit in 2022 against toy manufacturers and sellers Wowwee Group Limited, Wowwee Canada, Inc., and Wowwee USA for copyright infringement, trademark infringement, false advertising, false association and designation of origin, trade dress infringement and various state-law claims, alleging that Wowwee’s toy dolls, called “My Avastars,” were copied directly from Roblox’s Classic Avatars. Plaintiffs alleged that defendants’ social media posts and other marketing for their My Avastars dolls established that the dolls were copied from the Roblox Classic Avatars. Plaintiffs pointed specifically to videos and social media posts by Wowwee Group’s Vice President of Brand Development and Creative Strategy showing a My Avastars doll based on her Roblox avatar, in which she admits she was “inspired” to create the doll line while playing Roblox and customizing her avatar. Plaintiffs also alleged that defendants improperly marketed the dolls online using the hashtags “#roblox” and “#newroblox,” and on the Roblox platform itself. Defendants moved to dismiss the complaint; the district court granted in part and denied in part defendants’ motion.
The court dismissed plaintiffs’ copyright claims based on certain avatars that were not timely registered for copyright. Specifically, the court dismissed claims based on the Claire Dancefiend Avatar and Figurine, Brookhaven Customer Avatar and Figurine, and Stylz Salon Stylist Avatar and Figurine because those works were not registered before plaintiffs filed suit. Although the works were later registered, before plaintiffs filed an amended complaint, the court held that plaintiffs could not cure this deficiency through amendment. Permitting plaintiffs to maintain those claims, the court held, would undermine the U.S. Supreme Court’s 2019 decision in Fourth Est. Pub. Benefit Corp. v. Wall-Street.com, LLC, which held that copyright holders cannot sue for infringement until after registration has been made.
The court also dismissed claims based on the “Avatar Bases” because Roblox did not sufficiently allege those works were copyrighted. The court held that Roblox’s registration of derivative works (i.e., avatars based on the Avatar Bases) did not effectively register the underlying Avatar Bases because (1) registrations for the Cindy, Dennis, Lindsey, Kenneth and Claire Dancefiend Avatars do not identify the Avatar Bases as preexisting material and (2) the Stylz Salon Stylist Avatar and Brookhaven Customer Avatar registrations merely list as preexisting material a “[p]reviously published avatar body,” which does not identify with sufficient specificity the unregistered preexisting Avatar Bases on which they were based.
The court did, however, sustain plaintiffs’ claims based on the Cindy, Lindsey, Kenneth and Dennis Avatars, which were properly registered prior to commencement of the suit. The court held that plaintiffs had satisfied the extrinsic test for substantial similarity because Roblox alleged that both its own avatars and the Wowwee dolls seemingly based on them consist of “humanoid figures with cylindrical heads, C-shaped hands, block-shaped bodies and legs, square arms, and cartoon-like facial expressions that lack a nose.” Although defendants argued the avatars are similar to those of other toys, such as LEGO figurines, and thus result in only “thin” protection for the avatar features at issue, the court held there are nonetheless “differences in the customizability of features of plaintiffs’ avatars and the shape of the avatars’ legs” that distinguish them from other toys.
Next, the court held that plaintiffs adequately pled their trade dress infringement claim. As the court noted, trade dress refers to the total image of a product and may include features such as size, shape, color, color combination, texture or graphics. The court rejected defendants’ argument that the trade dress was not clearly articulated and that the elements of the marks were too generic. It held instead that plaintiffs had “described a distinct trade dress” and had pled consumer confusion about whether defendants’ products were associated with Roblox, showing the trade dress was distinctive and had acquired secondary meaning.
The court also held that plaintiffs adequately pled their claims for trademark infringement, false designation of origin and false advertising, which have similar requirements under the Lanham Act. In so holding, the court rejected defendants’ argument that Wowwee’s use of the Roblox name in advertising constituted nominative fair use. To establish nominative fair use, a defendant must prove plaintiff’s product is not readily identifiable without use of the trademark, that it only used enough of the work to reasonably identify plaintiff’s product, and that the defendant has done nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder.
According to the court, defendants’ advertisements did more than merely use the Roblox mark to describe Roblox’s products or services, and Roblox adequately alleged consumer confusion stemming from the advertisements. Among other things, plaintiffs alleged that defendants confused consumers into believing the companies were affiliated by marketing the My Avastars dolls with a “code” that could be used on the Roblox platform, claimed to be working with top Roblox developers, and further promoted confusion by using Roblox hashtags.
Although defendants argued that the use of Roblox hashtags could not, as a matter of law, constitute trademark infringement, the court rejected this argument as well. While defendants cited to other cases stating that “hashtags are merely descriptive devices, not trademarks,” and the use of a hashtag was “merely a functional tool to direct the location of [a] promotion so that it is viewed by a group of consumers, not an actual trademark,” the court noted that none of those other cases involved a blanket holding that use of a hashtag cannot constitute trademark infringement. Instead, those cases held that adding a hashtag does not transform an otherwise unregistrable mark into a registrable mark. The court clarified: the use of a hashtag can constitute trademark infringement when the use otherwise meets the test for trademark infringement.
Finally, the court held that plaintiffs’ contractual claims were subject to arbitration as against U.S. resident defendants based on the Roblox Terms of Use. The court declined to force the Canadian defendants into arbitration, however, given that such an outcome was not plainly required by the Terms of Use.
Summary prepared by Frank D’Angelo and Shannon Gonyou
