DCT
2:19-cv-07009
Creative Impact Inc v. MGA Entertainment Inc
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Creative Impact Inc. (British Virgin Islands) and Zuru, Ltd (Oregon)
- Defendant: MGA Entertainment, Inc. (California)
- Plaintiff’s Counsel: Dentons US LLP
- Case Identification: 2:19-cv-07009, C.D. Cal., 08/12/2019
- Venue Allegations: Venue is based on Defendant MGA Entertainment, Inc. being a citizen of California with its principal place of business within the Central District of California.
- Core Dispute: Plaintiffs seek a declaratory judgment that their "5 SURPRISE" line of toys does not infringe Defendant's trade dress for its "L.O.L. Surprise!" products, and further seek cancellation of the Defendant's state-level trade dress registration on the grounds that it is functional and was procured by fraud.
- Technical Context: The lawsuit concerns the highly competitive "surprise toy" market, where the experience of unboxing or unwrapping a toy to reveal hidden items in a specific sequence is a primary feature.
- Key Procedural History: The complaint notes that Defendant MGA sent a cease and desist letter in February 2018. Subsequently, MGA filed a state court action against Plaintiff ZURU in July 2019, which ZURU then removed to federal court. This complaint represents ZURU's declaratory judgment action, arguing that MGA is attempting to protect functional product features as trade dress, pointing to MGA's own utility patent as evidence of that functionality.
Case Timeline
| Date | Event |
|---|---|
| 2017-01-17 | Priority Date for U.S. Patent No. 9,931,579 (’579 Patent) |
| 2018-02-08 | MGA sends cease and desist letter to ZURU |
| 2018-03-01 | ZURU's "5 SURPRISE" product line launches in the U.S. (approx. date) |
| 2018-04-03 | '579 Patent issues |
| 2019-07-24 | MGA files state court action against ZURU (approx. date) |
| 2019-08-12 | Complaint for Declaratory Relief filed by ZURU |
II. Technology and Patent(s)-in-Suit Analysis
This report focuses on the patent central to the Plaintiffs' functionality argument, as the complaint is a declaratory judgment action concerning trade dress, not a direct patent infringement claim.
U.S. Patent No. 9,931,579 - "Toy having multiple serial surprise reveals"
The Invention Explained
- Problem Addressed: The patent application identifies that with most conventional toys, "the child experiences only a single unwrapping," which constitutes only a "single event" (’579 Patent, Ex. 4 at ¶6). The goal was to prolong the excitement of unwrapping and discovery by creating a toy that combined the "unwrapping experience" with the "excitement created by blind bag toys" (’579 Patent, Ex. 4 at ¶7).
- The Patented Solution: The invention is a toy, typically packaged in a sphere, featuring multiple, distinct layers of wrapping. As a child serially removes each layer, different "play objects" (e.g., collectible cards, stickers, accessories) are revealed, some of which are located in recesses on the outer surface of the spherical shell (’579 Patent, col. 1:34-45). After all outer wrappers are removed, the main shell can be opened to reveal a primary play object, such as a doll, inside an inner compartment (’579 Patent, col. 1:49-54). This creates multiple, sequential "reveals" that prolong the unboxing experience.
- Technical Importance: This approach aimed to enhance the "play value" of toys by multiplying the moments of surprise and discovery, capitalizing on the growing "unboxing" trend popular on video platforms (’579 Patent, Ex. 4 at ¶5).
Key Claims at a Glance
- The complaint's functionality argument centers on the scope of the patent's claims, particularly as they compare to the features of the asserted trade dress (Compl. ¶39). The primary independent claim is Claim 1.
- Claim 1 of the ’579 Patent includes these essential elements:
- A toy having a surprise within, comprising a generally spherical hollow shell that is separable into first and second hemispheres.
- A first flexible wrapper at least partially covering the shell's equator.
- A weakened separation line in the first wrapper to facilitate tearing.
- A toy figure inside the shell, accessible after removing the wrapper and separating the hemispheres.
- A second flexible wrapper disposed outward of the first, covering a different part of the sphere.
- The shell having first and second recesses on its outer surface, containing first and second play objects, respectively.
- The first wrapper covers the first recess, and the second wrapper covers the second recess, such that removing each wrapper reveals its corresponding play object.
- The complaint does not reserve the right to assert dependent claims, as it is a declaratory judgment action filed by the alleged non-infringer.
III. The Accused Instrumentality
Product Identification
- Plaintiffs’ "5 SURPRISE" product line (Compl. ¶19).
Functionality and Market Context
- The "5 SURPRISE" product is described as a capsule that a user must "unwrap, peel, and reveal" (Compl. ¶20).
- The capsule contains five sealed segments, each holding a different toy, for a total of five surprises (Compl. ¶20). An image of the product shows a spherical capsule that splits into segments, much like an orange (Compl. ¶19, p. 5).
- Plaintiffs allege their product is distinct from MGA's L.O.L. Surprise! in its branding, construction, and target market, which includes toys for both boys and girls from a range of over 300 different toys (Compl. ¶63).
IV. Analysis of Infringement Allegations
The complaint does not allege patent infringement. Instead, it presents a functionality argument to invalidate MGA's asserted trade dress. The core of this argument is a comparison alleging that the features MGA seeks to protect as trade dress are the same functional features MGA claimed in its '579 Patent. The following table summarizes this central allegation from the complaint.
- Functionality Comparison: Asserted Trade Dress vs. '579 Patent Claims
| Asserted Trade Dress Feature (from CA Registration No. 305168) | Allegedly Corresponding Functional Claim Element (from '579 Patent) | Complaint Citation | Patent Citation |
|---|---|---|---|
| "a configuration of a wrapping and toy container" | "A toy having a surprise within, the toy compromising . . . a flexible first wrapper [and] a second flexible wrapper . . . ." | ¶39 | col. 8:51-64 |
| "the toy container being separable" | "a generally spherical hollow shell . . . the shell comprising separable first and second hemispheres . . ." | ¶39 | col. 8:53-56 |
| "having at least one layer of colored shrink-wrap wrapping that partially covers the toy container including an opening of the container" | "a first flexible wrapper at least partially covering the equator and respectively adjacent portions of the first and second hemispheres, the first flexible wrapper covering some but less than all of the hemispheres . . . the shell has an outer surface and a first recess formed in the outer surface, the first recess containing a first play object, the first recess being covered by the first flexible wrapper such that when a user removes the first flexible wrapper the first play object is revealed..." | ¶39 | col. 8:57-64; col. 4:2-10 |
| "the toy container containing inside of it toy items that are individually wrapped in opaque wrappings" | "The toy of claim 1 wherein the second play object is contained within a non-transparent bag." (from originally filed claim 3) | ¶39 | Not Applicable |
| "the toy items inside the opaque wrappings relating to one another" | "the first and second play objects have a play relationship to one another" (from originally filed claim 15) | ¶39 | Not Applicable |
- Identified Points of Contention:
- Scope Questions: The complaint's central argument raises the question: Are the features described in MGA's California trade dress registration legally indistinct from the functional features claimed in MGA's '579 Patent? The complaint provides a series of still shots from an unboxing video to illustrate the step-by-step reveal process that it argues is functional (Compl. ¶29, p. 9).
- Technical Questions: The complaint juxtaposes the trade dress description of a "separable" container with the patent's claim for "separable first and second hemispheres." The court may need to determine if the general description in the trade dress registration is merely a non-technical way of describing the precise functional mechanism recited in the patent claim.
V. Key Claim Terms for Construction
While this is not a patent infringement case, the dispute hinges on the overlap between the language of the trade dress registration and the patent claims. The construction of terms common to both will be critical.
- The Term: "toy container being separable" (from the trade dress) / "shell comprising separable first and second hemispheres" (from the patent).
- Context and Importance: Practitioners may focus on this term because Plaintiffs' functionality argument depends on showing that the "separable container" of the trade dress is the functional "separable shell" of the patent. If the court finds these terms describe the same thing, it may support the argument that the trade dress protects a functional, and therefore unprotectable, feature.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The trade dress registration itself does not claim a specific shape for the container or the wrappings, stating, "The shape of the toy container and of the opaque wrappings are not claimed" (Compl. ¶28). MGA might argue this leaves room for non-functional, ornamental configurations that fall outside the patent's specific spherical embodiment.
- Evidence for a Narrower Interpretation: The '579 patent specification is replete with descriptions and figures showing a specifically spherical shell that separates into two hemispheres to reveal an inner compartment and a main toy figure (’579 Patent, col. 1:49-54; FIG. 17). Plaintiffs argue that the product specimen submitted with the trade dress registration shows exactly this patented configuration, suggesting the terms are coextensive in practice (Compl. ¶29).
VI. Other Allegations
- Fraud on the California Secretary of State (CSS): The complaint alleges that when MGA applied for its California trade dress registration, it was required to disclose any related USPTO filings but failed to do so (Compl. ¶¶41, 44). Plaintiffs claim that MGA's attorney on the trade dress application was concurrently counsel for the '579 patent application and falsely represented to the CSS that there were no applicable USPTO filings (Compl. ¶¶47, 93). This alleged failure to disclose a utility patent for the same features forms the basis for the Third Claim for Cancellation due to fraud (Compl. ¶¶87-96).
- Willful Infringement: No willful infringement is alleged, as this is a declaratory judgment action.
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of functionality: Can MGA's asserted trade dress, which describes a configuration of a separable toy container with layered wrappings and hidden items, be legally distinguished from the functional invention claimed in MGA's own '579 Patent, which recites a nearly identical structure to achieve the technical goal of a "serial surprise reveal"?
- A key procedural question will be one of inequitable conduct: Did MGA procure its state trade dress registration through fraud by allegedly failing to disclose its parallel utility patent application for what Plaintiffs contend are the very same features, and if so, is cancellation of the registration the appropriate remedy?
- An underlying evidentiary question will be one of market reality: Do the specific product embodiments sold by MGA under the "L.O.L. Surprise!" brand so closely mirror the '579 patent's teachings that the asserted trade dress, in practice, protects nothing more than the functional concept disclosed in the patent?