[co-author: Meghan McBerry]
The California Court of Appeal recently upheld the dismissal of claims against Mattel, which alleged that Mattel stole the idea for its flying Barbie doll from Technology from Heaven Unlimited (“TFHU”). Applying New York law, the Court found that Mattel did not misappropriate TFHU’s idea to create a flying Barbie using drone technology, as this idea did not have general novelty, even if the idea was novel to the buyer. Moving forward, companies should ensure that they have clear policies and procedures in place before accepting ideas and before entering into contracts for the disclosure of ideas, because whether an idea may be novel may depend on the timing of the contract.
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Applying New York law, the United States District Court for the Southern District of New York has held that a joint venture between the insured and a capital-contributing partner constituted a “subsidiary” of the insured pursuant to the terms of its D&O policy.
The insured and a capital-contributing partner formed a joint venture of which each initially owned 50% of the economic and voting interests. The capital-contributing partner violated the terms of the operating agreement and forfeited its voting rights, but not its economic rights, on March 25, 2015. The joint venture later filed for bankruptcy, and the bankruptcy trustee filed an adversary proceeding against the capital-contributing partner and the co-manager alleging wrongful acts that occurred in July 2015. Accordingly, at all times relevant to the coverage analysis, the insured owned 50% of the economic interest and 100% of the voting interest in the joint