Corporate & Securities Law

A Defined-Term Lesson from the Bratz Doll Saga

By Ken Adams

In an opinion published yesterday, the Ninth Circuit reversed much of the December 2008 ruling that gave Mattel the rights to MGA?s Bratz doll products. (Click here for the Bloomberg story; click here for the opinion.)

This dispute holds little interest for me, but I did sniff out a contract-drafting side to the story.

An important issue in the litigation was whether Carter Bryant, the man behind Bratz dolls and a former Mattel employee, had assigned two Bratz doll names to Mattel. In a 1999 employment agreement, Bryant assigned to Mattel all “inventions” conceived or reduced to practice by him during his employment by Mattel.

The employment agreement defined “inventions” as follows:

[T]he term “inventions” includes, but is not limited to, all discoveries, improvements, processes, developments, designs, know-how, data computer programs and formulae, whether patentable or unpatentable.

But did the employment agreement serve to assign to Mattell Bryant’s ideas? The district court held that yes, it did, but the Ninth Circuit disagreed, holding that the employment agreement “could be interpreted to cover ideas, but the text doesn?t compel that reading.”

In particular, here’s what the Ninth Circuit had to say about the definition of “inventions”:

Mattel points out that the list of examples of what constitutes an invention is illustrative rather than exclusive. Ideas, however, are markedly different from most of the listed examples. Cf. People ex rel. Lungren v. Superior Ct., 926 P.2d1042, 1057 (Cal. 1996) (courts avoid constructions that would make “a particular item in a series … markedly dissimilar to other items on the same list”). 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. On the other hand, the agreement also lists less tangible inventions such as “know-how” and “discoveries.” And Bryant may have conveyed rights in innovations that were not embodied in a tangible form by assigning inventions he “conceived” as well as those he reduced to practice.

The autonomous definition of “inventions” contained in the employment agreement doesn’t give the entire meaning of the defined term: it isn’t a “full” definition, using means. Instead, it’s an “enlarging” definition, using includes. (See MSCD 5.19.) The risk with enlarging definitions is that you end up asking yourself what else falls within the scope of the defined term, and in that uncertainty there’s plenty of room for dispute.

So the Bratz saga serves as a reminder that it’s generally best not to use enlarging definitions on their own. Use instead full definitions. And you can always tack an enlarging definition on to a full definition?X means Y and includes Z?without creating the uncertainty associated with enlarging definitions.

Full post as published by AdamsDrafting on July 23, 2010 (boomark / email).