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Nadel v. Play-By-Play Toys & Novelties, Inc.

Nadel v. Play-By-Play Toys & Novelties, Inc.

United States Court of Appeals for the Second Circuit

November 10, 1999, Argued ; March 27, 2000, Decided

Docket Nos. 99-7214(L), 99-7232(XAP)

Opinion

 [***1810]   [*371]  SOTOMAYOR, Circuit Judge:

Plaintiff-appellant Craig P. Nadel ("Nadel") brought this action against  [***1811]  defendant-appellee Play-By-Play Toys & Novelties, Inc. ("Play-By-Play") for breach of contract, quasi contract, and unfair competition. The thrust of Nadel's complaint was that Play-By-Play took his idea for an upright, sound-emitting, spinning plush toy and that, contrary to industry custom, Play-By-Play used the idea in its "Tornado Taz" product without paying him compensation. Play-By-Play also filed several counterclaims against Nadel, alleging that Nadel falsely told other members of the toy industry that Play-By-Play had stolen his idea, thereby harming its ability to receive toy concepts from toy industry members.

For the reasons that follow, we vacate that part of the district court's order granting Play-By-Play's motion for summary judgment and dismissing Nadel's complaint and affirm that part of the district court's order dismissing Play-By-Play's counterclaims.

BACKGROUND

Nadel is a toy idea man. Toy companies regularly do business with independent inventors such as Nadel in order to develop and market new toy concepts as quickly as possible. To facilitate [**3]  the exchange of ideas, the standard custom and practice in the toy industry calls for companies to treat the submission of an idea as confidential. If the company subsequently uses  [*372]  the disclosed idea, industry custom provides that the company shall compensate the inventor, unless, of course, the disclosed idea was already known to the company.

In 1996, Nadel developed the toy concept at issue in this case. He transplanted the "eccentric mechanism" 1 found in several hanging Halloween toys then on the market--such as "Spooky Skull" and "Shaking Mutant Pumpkin"--and placed the mechanism inside of a plush toy monkey skin to develop the prototype for a new table-top monkey toy. This plush toy figure sat upright, emitted sound, and spun when placed on a flat surface.

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208 F.3d 368 *; 2000 U.S. App. LEXIS 5122 **; 54 U.S.P.Q.2D (BNA) 1810 ***

CRAIG P. NADEL, Plaintiff-Counter-Defendant-Appellant-Cross-Appellee, v. PLAY-BY-PLAY TOYS & NOVELTIES, INC., Defendant-Counter-Claimant-Appellee-Cross-Appellant.

Prior History:  [**1]  Appeal from an order of the United States District Court for the Southern District of New York (Sidney H. Stein, Judge) granting defendant's motion for summary judgment and dismissing plaintiff's complaint arising out of defendant's alleged use of plaintiff's toy idea without paying compensation. Defendant cross-appeals from the district court's grant of summary judgment dismissing defendant's counterclaims for tortious interference, unfair competition, and violations of the Lanham Act. We find that the district court misconstrued the standards for novelty in submission-of-idea cases under New York law and erred in applying such standards to plaintiff's claims, but we agree with the district court's dismissal of defendant's counterclaims.

Disposition: Affirmed in part; vacated and remanded in part.

CORE TERMS

toy, novelty, novel, buyer, cases, misappropriation, district court, contract claim, disclosure, spinning, monkey, contract-based, unoriginal, plush, prototype, business relationship, submission-of-idea, post-disclosure, counterclaims, unfair competition, property-based, parties, genuine issue of material fact, summary judgment motion, matter of law, upright, summary judgment, public domain, Lanham Act, confidentiality

Business & Corporate Compliance, Contract Formation, Consideration, Sufficient Consideration, Torts, Business Torts, Unfair Business Practices, General Overview, Contracts Law, Copyright Law, Protected Subject Matter, Limited Protection for Ideas, Misappropriation of Ideas, Contracts Law, Types of Contracts, Express Contracts, Quasi Contracts, Criminal Law & Procedure, Theft & Related Offenses, Larceny & Theft, Elements, Breach, Civil Procedure, Appeals, Standards of Review, De Novo Review, Summary Judgment Review, Standards of Review, Summary Judgment, Entitlement as Matter of Law, Prospective Advantage, Intentional Interference, Commercial Interference, Federal Unfair Competition Law, False Designation of Origin, Elements of False Designation of Origin, Trademark Law, Entertainment Industry Falsity & Performance Misattribution, Trade Dress Protection, Antitrust & Trade Law, Consumer Protection, False Advertising, Unfair Competition, Likelihood of Confusion