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Banner & Witcoff, Ltd
USA
October 28 2009

Have you reviewed your employee agreements recently? This is a timely question given the epic battle between MATTEL® and MGA over BRATZ® dolls. One of the central disputes in that case is the meaning of an employment agreement, and its genesis is instructive on how to avoid similar conflicts in the future.    

First, you may be asking why you should even care about the language of your employment agreements? The answer is reflected in the sheer scope and expense of the Bratz case, which is utterly astounding. The case has been ongoing for five years, has resulted in a $100-million verdict and another reported $100 million in combined legal fees, and has produced an incredible 550-plus page docket sheet that includes no fewer than 6,000 docket entries. Do we have your attention now?

The case began in 2004, when Mattel sued Carter Bryant, a former Mattel designer, accusing him of violating his agreement with, and duties owed to Mattel, and of infringing Mattel’s copyright. Thereafter, the case swelled with Bryant and his new employer, MGA, filing their own complaints against Mattel. Eventually Bryant settled with Mattel, but MGA did not.

One of Mattel’s key arguments was that Bryant conceived of the name “Bratz” and created drawings of the “Bratz” dolls while employed with Mattel, and that the name and designs belonged to Mattel. Essentially, Mattel’s claims rested on a broad interpretation of an “Inventions Agreement” Bryant signed when he began working for Mattel, which states in relevant part (with emphasis added):

[I, the employee, agree] to communicate to [Mattel]…all inventions…conceived… at any time during my employment by [Mattel], [and] I hereby assign to [Mattel]…all my right, title and interest in such inventions, and…in any… copyright…or copyright applications based thereon….[T]he term “inventions” includes, but is not limited to, all discoveries, improvements, processes developments, designs, know-how… whether patentable or unpatentable…. [This agreement] shall not apply to an invention that the employee developed on his or her own time…except for those inventions that…relate at the time of conception or reduction to practice of the invention to the employer’s business….

MGA and Bryant, of course, argued for a more narrow interpretation of the agreement. In a series of rulings, the District Court agreed with Mattel and concluded that the Inventions Agreement conveyed to Mattel “any Bratz-related ‘inventions’ (including any designs, improvements, ideas, concepts and copyrightable subject matter), that Bryant created while employed with Mattel.”

Though the decision is on appeal, and there are yet further proceedings ongoing at the district court level, the lesson is clear. Unless you enjoy spending a lot of time and money with your lawyers in court, take a small amount of time upfront with your lawyers to carefully review and craft any employment agreement. It may avoid a costly fight with the bad guys down the road.

Marc S. Cooperman

Marc S. Cooperman

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