Mattel, Inc. v. Greiner and Hausser Gmbh

• Decision Date: 22 December 2003
• Docket Number: No. 02-56272.,02-56272.
• Citation: 354 F.3d 857
• Parties: MATTEL, INC., a Delaware corporation, Plaintiff-Appellant, v. GREINER AND HAUSSER GMBH, a German business entity; R. Hausser, an individual; M. — L. Hausser, an individual; Does 1 Thru 10, inclusive, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

354 F.3d 857

MATTEL, INC., a Delaware corporation, Plaintiff-Appellant, v. GREINER AND HAUSSER GMBH, a German business entity; R. Hausser, an individual; M. — L. Hausser, an individual; Does 1 Thru 10, inclusive, Defendants-Appellees.

No. 02-56272.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 13, 2003.

Filed December 22, 2003.

Ronald L. Olson (argued), Michael R. Doyen, Munger, Tolles & Olson, LLP, Los Angeles, CA, Andrian Mary Prueta, Michael T. Zeller, Steven Vaughan, Quinn Emanuel Urquhart Oliver & Hedges, LLP, Los Angeles, CA, for the plaintiff-appellant.

Joseph M. Burton (argued), Daniel J. Herling, Duane Morris LLP, San Francisco, CA, for the defendants-appellees.

Appeal from the United States District Court for the Central District of California Nora M. Manella, District Judge, Presiding. D.C. No. CV-02-00322-NMM.

Before Robert BOOCHEVER, TASHIMA, and CLIFTON, Circuit Judges.

OPINION

CLIFTON, Circuit Judge.

Barbie, the ubiquitous doll produced by Mattel, has been a regular visitor to our court.¹ This time she brings with her an issue of personal jurisdiction — not over her, but over a German toy company which has questioned her ancestry by asserting that Barbie was a copy of its doll and that Mattel had infringed its patent and other intellectual property rights. The German company, Greiner & Hausser GmbH ("G&H"), previously asserted claims to that effect in a lawsuit filed in federal district court in Los Angeles in 1961, more than 40 years ago. That lawsuit was resolved by a dismissal with prejudice of those and other claims. Today, Barbie generates over $2 billion in wholesale revenues each year, a sum which helps to explain why Barbie comes to visit us so frequently. It presumably also helps to explain why a lawsuit was filed in Germany in May 2001 by G&H, claiming that it had been defrauded by Mattel when it entered into a set of related agreements with Mattel in 1964, shortly after the dismissal of the previous California litigation, and seeking damages in the form of a royalty on every Barbie doll sold since that time.

Mattel responded by filing its own lawsuit in Los Angeles federal court against G&H and two related individuals, seeking to "enforce" the resolution of the initial lawsuit, filed in that court and dismissed more than 40 years ago. Among other things, Mattel sought to enjoin G&H's prosecution of the lawsuit it filed in Germany. Mattel sought a preliminary injunction, but that motion was denied by the district court. Soon thereafter, Mattel's entire lawsuit was dismissed by the district court, principally because the court concluded that the German action did not attempt to relitigate matters resolved in the 1961 California lawsuit. The district court dismissed Mattel's action on grounds of (1) lack of personal jurisdiction over the defendants, (2) improper venue, (3) forum non conveniens, and (4) the impropriety of using the Declaratory Judgment Act, 28 U.S.C. § 2201, to adjudicate issues that Mattel might assert as affirmative defenses in the German action. Mattel appeals that dismissal and also the denial of its motion for preliminary injunction.

We affirm the denial of the preliminary injunction. We disagree with the district court's determination that it lacked personal jurisdiction over the defendants, however. We conclude that the subject matter of Mattel's current lawsuit — which concerns and is essentially defined by the claims currently asserted by G&H in Germany — is sufficiently related to the action filed in California by G&H in 1961 to support personal jurisdiction over G&H in the current case, at least at this stage of the proceedings. As a result, we reverse the order of dismissal entered by the district court and remand the case for further proceedings.

I. BACKGROUND

At the center of this case is the question of whether Mattel, when it created the Barbie doll, unfairly copied a doll produced by G&H known as the "Bild-Lilli" doll.² G&H's Lilli doll was based on a character by that name featured in a cartoon series which first appeared in the German newspaper Bild-Zeitung in the early 1950s. G&H maintains that it was approached by the newspaper for the purpose of manufacturing the Bild-Lilli doll, which was introduced to the marketplace in 1955. G&H describes that original Bild-Lilli doll as being characterized by movable arms and legs, with a head that could be turned to the side. G&H alleges that Ruth Handler, a co-founder of Mattel, discovered the Bild-Lilli doll in Switzerland during a European trip in 1956, and that Mattel subsequently developed a similar doll, called "Barbie," at Ms. Handler's direction.

Mattel describes the Barbie doll as possibly the most famous toy in history. It was phenomenally successful from the moment of its introduction in 1959, selling over three hundred thousand units that year, three million by 1961, and more than one billion to date. Today, Barbie products are sold in 150 countries, with annual world-wide wholesale revenues in excess of $2 billion.

In 1960, Rolf Hausser, then the managing director of G&H, received a U.S. patent for the "doll hip joint" employed in G&H's Bild-Lilli doll. That same year, G&H exclusively licensed its rights in the doll in the United States, Canada, Hong Kong, and Great Britain for ten years to Louis Marx & Co., a then-large toy manufacturer based in New York.

In 1961, G&H and Marx brought suit against Mattel in the U.S. District Court for the Southern District of California, Central Division.³ The initial claim was for Mattel's alleged infringement of G&H's patent for the hip joint of its Bild-Lilli doll, which G&H asserted was also a feature of Mattel's Barbie. The plaintiffs sought injunctive relief, an accounting for damages and profits resulting from the alleged infringement, treble damages, and other relief.

Mattel filed an answer denying the infringement, averring that the patent was invalid. In addition, Mattel filed a counterclaim in which it sought a declaratory judgment that the patent was invalid or, if valid, was not infringed by Mattel. Mattel's counterclaim also asserted a claim for unfair competition relating to G&H's assertions of an exclusive right to a structure of doll beyond the scope of its patent, and an associated "campaign and harassment of [Mattel's] customers and potential customers."

G&H and Marx responded by denying the counterclaims and filing an unfair competition counterclaim of their own. They alleged that Barbie was "a direct take-off and copy of" G&H's Bild-Lilli, and that Mattel falsely and misleadingly represented itself as having originated the design.

After the California lawsuit had been pending for over a year, the parties filed with the district court a "Stipulation of Dismissal" on March 4, 1963. That stipulation, which was approved ("so ordered") by the court, provided that all claims were "dismissed with prejudice" (emphasis added). The stipulation explicitly referenced the "Complaint and Counterclaims" filed by G&H and Marx.

According to Mattel, the 1963 dismissal of these claims and counterclaims forms the basis for its current action against G&H. Mattel asserts in its first amended complaint that "Defendants are precluded by the doctrines of res judicata and collateral estoppel from seeking to relitigate those allegations yet again and are barred from otherwise asserting that Mattel has infringed any protectible or enforceable interests in those dolls."

In 1964, the year following the dismissal of the California action, Mattel and G&H entered into several agreements relating to Barbie and Bild-Lilli. Mattel purchased G&H's Bild-Lilli copyright and its German and U.S. patent rights for three lump-sum payments totaling 85,000 deutschemarks (worth at that time approximately $21,600). In exchange for an additional payment of 15,000 deutschemarks ($3,800), the agreements also provided that upon the expiration of Marx's license in 1970, its marketing territories would transfer to Mattel. Mattel agreed not to use the names "Bild-Lilli" or "Lilli," and G&H agreed not to produce any dolls similar to Barbie or Bild-Lilli or to produce or sell any doll with the names "Bild-Lilli," "Lilli," or "Barbie."

The 1964 agreements were in German⁴ and were signed in Frankfurt, Germany. Some of them specify that the "place of jurisdiction is agreed to be Coburg," in Germany, or that the "place of performance and venue" is Coburg, without further elaboration.

During the nearly 40 years since the agreements were made, Barbie went on to achieve tremendous popularity, and Mattel reaped enormous financial benefit. It became the world's largest toy maker, with Barbie as its flagship product line. The years were not as kind to G&H, however. Bankruptcy proceedings were initiated against it in 1983, and it was deleted from the Commercial Register of the Amtsgericht Coburg in 1985.⁵

In 1999, Rolf Hausser, who had been G&H's managing director and acted for G&H in negotiating the 1964 agreements, contacted Mattel to inquire about the identity of the representatives who negotiated the 1964 agreements on Mattel's behalf. Two years later, in May 2001, G&H (through a court-appointed subsequent liquidator, Margarethe-Lilly Hausser, who is Mr. Hausser's wife) filed its lawsuit against Mattel in Germany, alleging fraud in connection with the 1964 agreements. Specifically, G&H claimed that it had been induced to accept a flat fee for the 1964 licenses based on material misrepresentations by Mattel regarding the number of Barbie dolls it was selling in Germany and internationally. G&H asserted that it would have insisted on a per doll royalty had it known the actual volume of Barbie sales. As relief, G&H sought from the German court (1) a declaration that the 1964 agreements are not binding, and (2) damages based on an appropriate royalty for every Barbie doll sold by Mattel since 1964.⁶

Shortly after learning of the German lawsuit, Mattel...