Barbie v. Bratz Part Two:  When Does a Company Own an Employee’s Ideas?

In my last post, I discussed the implications of Mattel v. MGA Entertainment on the idea-expression dichotomy in copyright law.  Even before getting to the issue of what was copyrighted and whether there was infringement in the case, however, the Ninth Circuit first had to address who owned the copyrights, trademarks, and other concepts underlying the Bratz doll line. 

It is a basic tenet of intellectual property law that a person owns his or her own creative output.  However, a creator can assign his or her intellectual property to another person or entity, including a corporation like Mattel.  At issue in this case is what Carter Bryant, creator of Bratz, assigned to Mattel in his employment agreement with them.  In particular, the court addressed whether “inventions” assigned by the contract included intangible or ephemeral ideas, and whether inventions made on his own time had to be assigned to Mattel.  

In district court, Mattel successfully argued on summary judgment that Bryant’s employment agreement assigned the ideas behind Bratz to his former employer, as he developed them while still working at Mattel.  This agreement held that employees had to assign to Mattel all “inventions . . . conceived or reduced to practice . . . during [their] employment.” 

Two ambiguities in this agreement require the court to determine whether ideas are within the scope of inventions assigned by the contract, and when an employer owns its employee’s inventions.  First, it is unclear whether all of the ideas that Mattel claimed rights to were included in the definition of “inventions.”  Mattel broadly construed the definition of “inventions” and claimed that the agreement assigned it Bryant’s ideas for Bratz and the Jade doll.  “Inventions” generally tend to refer to tangible, physical items, whereas ideas are more temporary and less tangible.  Judge Kozinski drew this distinction in his opinion: “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.”  However, the examples of inventions listed in the agreement include both concrete things – such as “improvements, processes, developments, designs, . . .  data computer programs and formulae” – and less tangible things – such as “discoveries” and “know-how.”  The agreement’s coverage of both the tangible and intangible is further evident in the assignment of inventions both “reduced to practice” and merely “conceived.”  Still, however, ideas are not clearly included in the scope of the agreement.    

Reading the definition of inventions as broadly as Mattel does, the company could claim to own every idea – be it relevant to work or not – that pops into an employee’s mind while on the job.  This seems excessive.  While the Ninth Circuit did not make a final decision as to the meaning of “inventions,” it did hold that the agreement did not clearly include ideas.  Rather, a jury on remand must decide what “inventions” actually includes.    

Second, it is unclear what the bounds of “during . . . employment” are.  Mattel claimed that the sculpt and sketches developed by Bryant while still an employee were assigned to the company.  The parameter “during . . . employment” could include all of the time – in and outside of work – that Bryant was employed at Mattel.  Thus, anything Bryant “invented,” even if developed completely on his own time, would be assigned to Mattel.  The court does note, however, that California law limits the ability for a company to assign an employee’s inventions created completely on his or her own time, except in particular circumstances.  On the other hand, the agreement could just include time spent at work or engaged in work activities.  The Ninth Circuit also found that this aspect of the agreement was too ambiguous to have been decided on summary judgment, and held that the scope of employment is a question for the jury on remand.   

Mattel’s expansive reading of the employment agreement, read broadly enough, would assign to the company every idea an employee has, regardless of whether it is thought up on or off the clock.  Both basic sparks of imagination and fully developed concepts would become the property of Mattel.  Such a reading could easily chill creative development.  If an idea developed during employment became company property, individuals might be discouraged to bring ripe ideas to market, instead choosing to wait until their employment – and potentially the utility of the idea – had ceased.  Employees might also be less willing to experiment in ways that could be useful to the company, if their basic ideas do not remain their property.  

On remand, the district court must take care to determine the true boundaries of the employment agreement.  If the broad interpretation of the agreement was not its original scope, Mattel must not be allowed to claim ownership in the ideas underlying the Bratz.  If Mattel is seeking to manipulate its employment contract to capture the creativity and ingenuity of a former employee, the court must intercede.  

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