Fasa Corp. v. Playmates Toys, Inc.

• Citation: 869 F. Supp. 1334
• Decision Date: 05 December 1994
• Docket Number: No. 93 C 2445.,93 C 2445.
• Parties: FASA CORPORATION and Virtual World Entertainment, Plaintiffs, v. PLAYMATES TOYS, INC., Defendant.
• Court: U.S. District Court — Northern District of Illinois

869 F. Supp. 1334

FASA CORPORATION and Virtual World Entertainment, Plaintiffs, v. PLAYMATES TOYS, INC., Defendant.

No. 93 C 2445.

United States District Court, N.D. Illinois, Eastern Division.

December 5, 1994.

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Karen Beth Ksander, Liza Marie Franklin, Sonnenschein, Nath & Rosenthal, Chicago, IL, for plaintiffs.

Paul R. Garcia, Kirkland & Ellis, Mark Van Buren Partridge, David C. Hillard, Marianne E. Ryan, Pattishall, McAuliffe, Newbury, Hillard & Geraldson, Chicago, IL, for defendant.

MEMORANDUM OPINION AND ORDER

CASTILLO, District Judge.

Plaintiffs FASA Corporation ("FASA") and Virtual World Entertainment ("VWE")¹ sue defendant Playmates Toys, Inc. ("Playmates") alleging federal and common-law unfair competition (Counts I and II, respectively), copyright infringement (Counts III and IV), trademark infringement (Counts V and VI), dilution under Illinois' anti-dilution statute, 765 ILCS 1035/15 (Counts VII and VIII), and tortious interference with prospective business advantage (Count IX). Pursuant to Rule 56, Playmates moves for summary judgment on all counts.²

BACKGROUND

The following undisputed facts are gleaned from the parties' respective Local Rule 12(M) statements of material facts and accompanying exhibits.³

FASA is the creator, developer, and distributor of various fictional universes, including BATTLETECH, which form the basis for board games, role-playing games, novels, and various game supplements. FASA also licenses the intellectual property and proprietary rights in its fictional universes to third parties for the development of interactive entertainment games, models, miniatures, merchandise, toys and other items.⁴ Pls.' Objs. & Resps. to Def.'s Reqs. for Admis. hereinafter Pls.' Admis. ¶ 1. VWE is a virtual reality entertainment company formed by the creators of BATTLETECH to create and develop virtual reality games simulating adventures in the BATTLETECH universe. Pls.' Facts ¶ 2. Playmates is a marketer of toys including a line of six toys featuring characters and vehicles found in the EXOSQUAD animated cartoon series.⁵Id. ¶¶ 6, 7, 9. The present lawsuit centers on Playmates' alleged infringement of FASA's intellectual property and proprietary rights in BATTLETECH by designing and marketing the EXOSQUAD toy line.

BATTLETECH — created by FASA in 1984 and originally sold as a role-playing game — is a fictional universe set in the 31st century. The BATTLETECH universe is comprised of empires such as the Star League, an empire consisting of five cosmic houses each of which encompasses hundreds of interstellar worlds. Each house seeks control of the galaxy. The battles between worlds are dominated by BattleMechs (also called Mechs), massive man-shaped, robotlike tanks of various shapes and designs⁶ which are piloted by human soldiers called MechWarriors. Pls.' Admis. ¶ 2.⁷ Among the MechWarriors' adversaries are the Clan Elementals, "men and women bred to be foot soldiers." FASA Corp., BATTLETECH THE RETURN OF KERENSKY TECHNICAL READOUT: 3050 (1990) at 8.

The EXOSQUAD story line is set in the 22nd Century and involves confrontations between the conquering, genetically engineered, Neosapien race and an enslaved human race living on Earth, Venus and Mars. The Neosapiens and humans battle each other, encased in large robotic fighting machines known as "Exo-Frames" or "E-Frames."⁸ Segal Decl. ¶ 5. Playmates markets a toy line — consisting of six toys — featuring characters and vehicles from the EXOSQUAD cartoon series.⁹ Pls.' Facts ¶¶ 7, 9.

In late 1991, FASA entered into an agreement with Robert Allen whereby Allen would present the BATTLETECH concept, story, and models, on behalf of FASA to a number of toy companies in order to find a company to manufacture a BATTLETECH toy line.¹⁰ Allen Dep. at 14-15, 150. On December 10 or 11, 1991, Allen met with Chris Devine Dailey, an employee of Playmates, and presented three potential toy lines, including BATTLETECH. Pls.' Facts ¶ 10. Playmates had been looking for a futuristic robotrelated toy line for several months prior to Allen's presentation and had previously reviewed a variety of robot-related materials. Def.'s Resp. ¶ 12. Playmates had also been engaged in discussions with Universal Cartoon Studios — prior to Allen's presentation — regarding the development of a "hard-edged" robot line. Id.

At the outset of the meeting with Allen, Dailey required him to sign an untitled document on Playmates' letterhead which provides as follows:

It is the policy of Playmates Toys, Inc. not to review or consider any unsolicited proposals of any kind.

You have advised us that you have an "idea" which you believe may be of interest to us.

We are prepared to consider your idea only upon the following terms:

1. You will expressly waive any and all claims of any kind whatsoever, past, present or future, known or unknown against Playmates Toys, Inc. in any way relating to or connected to the "idea".

2. In consideration for such waiver, Playmates Toys, Inc., will review your "idea" in written form. We will return all materials submitted in connection therewith within two weeks after submission.

. . . . .

The disclosed matter relates to: handwritten (1) "BATTLETECH" (2) "WENDY & HER WAGON" (3) "SPEEDBALLS"

Partridge Decl., Ex. 37.¹¹ After signing the document, Allen introduced four BATTLETECH toy prototypes¹² and provided various BATTLETECH materials for Playmates' subsequent review. Def.'s Resp. ¶¶ 14, 15. Although the record is less than clear with respect to what materials Allen left with Playmates, it appears that Allen left the following: a press kit containing information on BATTLETECH centers; a poster displaying various miniature BattleMech gaming pieces; a FASA catalogue which displays all of FASA's products; and, a BATTLETECH center operations manual. Allen Dep. at 68, 70, 80, 82; Def.'s Resp. ¶ 15. Dailey told Allen that Playmates would not inform him of any decisions regarding the BATTLETECH toy line until after the February 1992 Toy Fair. Allen Dep. at 59.

In March 1992, Allen received several requests from Playmates for additional BATTLETECH product — including two calls (on or about March 3 and March 7) from Karl Aaronian, Playmates' Director of Marketing and one call (on or about March 30) from Richard Sallis, Playmates' President. Id. at 92-99. In response, Allen provided Playmates with a promotional videotape; the BATTLETECH Technical Readout 2750 — a catalogue of "illustrations, statistics and other vital information about the BATTLEMECHS"; the BATTLETECH Compendium — a compilation of rules, "battle demonstrations ... and MECH construction"; and additional press material. Id. at 79; Ksander Decl., Ex. 23, Allen Letter to Sallis at 2; Pls.' Add'l Facts ¶ 21.

On May 27, 1992, Playmates' Marketing Director, Karl Aaronian informed Allen that Playmates was not interested in a BATTLETECH license. Def.'s Resp. ¶ 32; Allen Dep. at 116. On June 3, 1992, Aaronian returned the promotional videotape and certain other materials supplied by Allen; however, Playmates retained the BattleMech poster, the BATTLETECH Compendium, and the BATTLETECH Technical Readout 2750 containing detailed Mech designs. Def.'s Resp. ¶ 33; Ksander Decl., Ex. 31, Aaronian Letter to Allen.

While it was still considering the BATTLETECH toy line, Playmates entered into a work-for hire agreement, dated April 7, 1992, with Russell Edmisson, a freelance designer, to prepare drawings and prototypes for Playmates. Edmisson's agreement was captioned "RE: Battle Tech." Ksander Decl., Ex. 27. Edmisson testified in his deposition that Aaronian told him that Playmates had a "very high priority project" involving the construction of "a large robot with tons of firepower ... he wanted the robot to be humanoid in the fact that it would have arms and legs and a head area." Edmisson Dep. at 27, 30. Edmisson also testified that Aaronian had shown him some material "torn out of magazines," id. at 26, 32, but Edmisson could not recall precisely what the material was. Id. Edmisson further testified that, working in conjunction with a model maker, he created two toy robot prototypes but he knew nothing about BATTLETECH (besides the name) at the time he constructed the prototypes and had never seen any books or materials bearing the BATTLETECH name. Id. at 63-64.

While it was considering licensing BATTLETECH, Playmates also instructed Frank Asano, a designer with the Japanese company Sente, to build a BATTLETECH prototype using the BATTLETECH MAD CAT design as a model for the styling of the prototype. Aaronian Dep. at 191; Def.'s Resp. ¶ 25. Aaronian testified that the prototype made by Sente "looked nothing like the BATTLETECH reference sent, and nothing else was done with it." Aaronian Dep. at 108.

Meanwhile, in January 1992, Allen had presented BATTLETECH to Tyco Toys, Inc. ("Tyco"). Def.'s Resp. ¶ 16. Following Playmates' rejection of the opportunity to purchase a BATTLETECH license, FASA renewed its discussions with Tyco and began developing designs for a BATTLETECH toy line. Def.'s Resp. ¶ 34. FASA's Chairman and CEO, Morton Weisman, testified in his affidavit that FASA had planned on entering into a BATTLETECH licensing agreement with TYCO at the 1993 Toy Fair but that Tyco backed out after discovering that Playmates had introduced the EXOSQUAD toy line in its 1993 catalogue. Weisman Decl. ¶ 4. However, approximately two months later, in April 1993, Tyco and FASA entered into a letter of agreement on the terms for an exclusive worldwide master toy license for BATTLETECH. Second Partridge Decl. Ex. 49.

The core of FASA's complaint is that "the designs, images, descriptions characteristics and other elements of ExoSquad are substantially similar to the unique images, designs, descriptions, characteristics and other elements of the BATTLETECH universe." Pls.' Compl. ¶ 44. In particular, FASA alleges the following (which we quote at...