22 July 2010

What Part of "Ambiguous" Did Barbie Not Understand?

In this day and age, authors can very, very seldom support themselves solely on their freelance writing. For every John Scalzi out there, there are dozens of Jay Lakes and hundreds of far-less-luminary authors who maintain day jobs (whether by choice or by necessity). And it's similar for other creative industries, too.

More to the point, there are people whose "day jobs" relate peripherally, or even directly, to their creative ambitions who want to stop being mere employees. Even fashion designers. Even fashion designers for dolls. And, thus, our tale for today.

Once upon a time, a designer of doll fashion accessories wanted more. So at home, at night and on weekends, he designed not just fashion accessories, but the entire bloody doll. Another company became interested in the dolls; he left the employer; the new dolls came out, and — with a lot of attitude — hurt the feelings of the first company. (Whether they actually cut into the sales of the first company's product line remains a rather elusive inquiry.) The first company found out that its ex-employee had conceived of the dolls while he was still employed there, and did what anyone in the entertainment industry would do: It hired a bunch of very expensive corporate litigators from a white-shoe firm and sued. And thus, we end up with the question that Judge Kozinski asked this morning:

Who owns Bratz?

Mattel, Inc. v. MGA Enter., Inc., No. 09–55673 (9th Cir. Jul. 22, 2010) (PDF), slip op. at 10529. And his answer, as implied by the title of this post, was "It's not certain — a jury must decide."

Mattel, as is common, imposed a "we pwn yr IP" clause in its employment handbook and agreements:

A constructive trust would be appropriate only if Bryant assigned his ideas for “Bratz” and “Jade” to Mattel in the first place. Whether he did turns on the interpretation of Bryant’s 1999 employment agreement, which provides: “I agree to communicate to the Company as promptly and fully as practicable all inventions (as defined below) conceived or reduced to practice by me (alone or jointly by others) at any time during my employment by the Company. I hereby assign to the Company . . . all my right, title and interest in such inventions, and all my right, title and interest in any patents, copyrights, patent applications or copyright applications based thereon.” (Emphasis added.) The contract specifies that “the 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.”

Id., slip op. at 10532–33 (footnote omitted; emphasis and ellipses as in opinion). The District Court granted Mattel (mostly) summary judgment (and partly the benefit of a jury trial), but the Ninth Circuit overturned on two separate grounds that will be of interest to authors.1

First, the court held that the definition of "invention" is ambiguous enough that a jury should have been allowed to determine whether the copyrights at issue — which are not ordinarily granted for useful inventions! — fell within the scope of that clause. For example, other Mattel employees had contracts that explicitly covered both "ideas" and "inventions." The court also held that the injunction issued by the trial court was too broad, and included both the value of what was properly at issue (two of the Bratz dolls) and what was not (everything else MGA did, including additional Bratz dolls, non-doll accessories, etc.).

Of greater interest to writers than even the subject matter, though, is time. Based on both this opinion and what I've read of the case elsewhere, there didn't seem to be one of the old "He did it at work with the company computer" issues; instead, it seems fairly clear that Bryant did his work off-site outside of "duty hours." Mattel claimed that "at any time during my employment by the Company" means "24/7 while this employment agreement is in effect." However, the court held that

The phrase “at any time during my employment” is ambiguous. It could easily refer to the entire calendar period Bryant worked for Mattel, including nights and weekends. But it can also be read more narrowly to encompass only those inventions created during work hours (“during my employment”), possibly including lunch and coffee breaks (“at any time”).7 Extrinsic evidence doesn’t resolve the ambiguity. For example, an employee testified that it was “common knowledge that a lot of people were moonlighting and doing other work,” which wasn’t a problem so long as it was done on “their own time,” and at “their own house.” She agreed when asked, “Was it your understanding that if you designed dolls when you were at home at night that you owned them?” However, another employee testified, “Everything I did for Mattel belonged to Mattel. Actually, everything I did while I was working for Mattel belonged to Mattel.”

Because the agreement’s language is ambiguous and some extrinsic evidence supports each party’s reading, the district court erred by granting summary judgment to Mattel on this issue and holding that the agreement clearly assigned works made outside the scope of Bryant’s employment. The issue should have been submitted to the jury, which could then have been instructed to determine (1) whether Bryant’s agreement assigned works created outside the scope of his employment at Mattel, and (2) whether Bryant’s creation of the Bratz sketches and sculpt was outside the scope of his employment.

7 Mattel argues that because employers are already considered the authors of works made for hire under the Copyright Act, 17 U.S.C. § 201(b), the agreement must cover works made outside the scope of employment. Otherwise, employees would be assigning to Mattel works the company already owns. But the contract provides Mattel additional rights by covering more than just copyrightable works. The contract can also be enforced in state court, whereas Copyright Act claims must be heard in federal court.

Id., slip op. at 10538–39 (citations omitted). Although the court claims not to be making a definitive finding — instead, sending it back to the trial court for proper proceedings — the close of the opinion is rather ominous for Mattel:

America thrives on competition; Barbie, the all-American girl, will too.

Id., slip op. at 10549. That doesn't quite answer Judge Kozinski's initial question... but it seems awfully close to the answer that Mattel didn't want to hear.

So, what does this mean to authors? At the moment, keep in mind that it is limited to the particular language in this particular employment agreement, and to an employee whose freelance work was very close to (perhaps too close to, and more than arguably competitive with) his "day job"... but that even under those circumstances, the court seems quite skeptical that Mattel pwnd Bratz. For authors doing freelance work, the first step — obviously — needs to be looking at employment agreements (or employee handbooks). This will get really, really interesting, though, in H'wood and among editors in the publishing (and journalism) segments of the entertainment industry who are trying to write their own freelance works... because the language in the Mattel-Bryant agreement is quite common, and seems to have been so unsatisfactory here. It will also be relevant to college and university employees, most of whom have2 far-more-draconian provisions in their employment agreements; there's more than one assistant-professor-denied-tenure out there who wrote a novel at night and on weekends, and was later confronted with a demand to turn over the copyright to the novel.

  1. For the moment, we're leaving aside the question of whether such an agreement is appropriate in the first place... and, in particular, whether it can reach material that is not, by its subject matter, related to an employee's duties.
  2. [Edited, 25 Jul 2010] As a correspondent pointed out, this may no longer be correct as stated. My documentation of such practices at universities, and the two instances I refer to later in the sentence, arise from 1990s-era contracts. That said, there are still considerable questions raised by university and college contracts over copyright control of teaching materials — that is, if one records a lecture, is it the college/university or the instructor whose permission matters? — that also arise from the same types of agreements... and leave open the question of how later written works by a professor that are derived from classroom discussions will be treated.

    In any event, this language is overinclusive. It's probably not contemporary, and possibly not even correct as to "most" at that time... although that's merely a negative inference, as five out of six of the contracts I ran across from that era fell into the class of "overinclusive" on their faces, modified (perhaps) by later agreements between faculty senates and the respective institutions.

    In short, I let the rhetoric get away from the small data set, a mistake I try to avoid. That doesn't mean "don't worry, be happy" about educational-institution ownership of employee IP; it just means, in this instance, "look before you leap."