Technology from Heaven Unlimited v. Mattel, Inc.

Based on plans by Mattel, Inc. (defendant) to develop a flying Barbie toy, Technology from Heaven Unlimited (THU) (plaintiff) submitted an idea for a flying, poseable Barbie using a propeller-based drone design. Before submitting the idea, THU executed Mattel’s submission agreement, which specifically stated that submitting an idea did not create any financial, equitable, or other obligations regarding Mattel’s use of the submitted idea. Mattel rejected THU’s idea, finding that the mechanism was too complex. At the idea-review meeting, a Mattel employee demonstrated an existing, on-the-market toy from another manufacturer that employed simpler flight technology to accomplish the same purpose. Mattel subsequently released Barbie Starlight Adventure, which featured Barbie on a flying hoverboard. THU filed a civil damages action against Mattel, alleging that Mattel had breached the submission agreement and misappropriated THU’s idea. Because of the choice-of-law clause in the submission agreement, New York law controlled. The trial court dismissed THU’s complaint with prejudice, holding that THU had failed to prove that its idea was novel in absolute terms. THU appealed, arguing that THU was required to establish only limited novelty, meaning that the idea was novel to Mattel rather than novel in general, because THU’s claim was based on a contract entered into before THU disclosed its idea to Mattel (a predisclosure agreement).