Thursday, July 22, 2010

Battle of Barbie v. Bratz - Round goes to Bratz (and employees)

Employees with the "next bright idea" rejoice - you may not have to assign any and all rights to your employer under your employment contract. You may be able to cash in on your next great app or software idea, even though you work in technology (for example). Ideas created on your own time and outside the scope of your employment duties may remain yours, depending on the exact wording of the agreement.

The Ninth Circuit Court of Appeals released their decision today in the Mattel, Inc. v. MGA Entertainment, Inc., et al case - more commonly known as Barbie v. Bratz. The dispute revolves around the creation and ownership of the Bratz Dolls, the brain child of Carter Bryant who, at the time, was designing clothes and hairstyles for a high end collectible line of Barbie dolls.

Not just child's play, at stake are possibly $1 billion+ in interest-adjusted profits MGA has made on the Bratz dolls. Mattel claims they owned the rights in the dolls because Bryant came up with the initial names and ideas while still employed with the company. MGA argued that the ideas were created on Bryant's own time and were outside the scope of his duties for Mattel. As the Court noted, under his employment agreement, Bryant assigned to Mattel inventions created "at any time" during his employment with Mattel.

What exactly is "at any time?" Are smoking breaks and/or weekends included? All hours of the day or just those sitting behind your desk? And should it matter that the initial Bratz ideas were not related to his specific duties and work for Mattel? Extreme example: what if Bryant had been the receptionist or mail room clerk at Mattel?

In determining the answers, it becomes a matter of interpretation based on extrinsic evidence in addition to the contract agreement. Factors include whether other employees "moonlight", whether "ideas" also include "invention", and the provisions/language provided in other employment agreements at the company.

It is one thing if your idea falls within the scope of what you've been hired to do. You're already receiving a paycheck for the value of that idea. It is another matter if your idea came to you while listening to the radio on your drive into the office. Why should a company substantially benefit from a light-bulb moment they haven't paid for? As noted by this decision, the proper analysis is to look at what the parties intended and bargained for when they each signed up. The impact of the lower court's strict interpretation could chill creativity and lead to profits neither party intended when the employment agreement was signed.

To quote Chief Judge Kozinski - "America thrives on competition; Barbie, the all-American girl, will too."

**These are just my personal views and thoughts, not intended to reflect the views of anyone else nor intended to provide advice, legal or otherwise. I'm an attorney with the law firm Hall Booth Smith & Slover located in Atlanta, GA., merely contributing as a guest blogger on behalf of Errata Security.

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