'Doodling' with IP Rights

The recent opinion in Fisher-Price and Pilot Corp.'s battle over the Magna Doodle trademark can provide practical guidance to savvy businesses, who should take away at least two lessons from the court's decision in favor of Fisher-Price. This month's column will discuss the first of these.

For many years, Fisher-Price distributed the very popular Magna Doodle drawing toy. Fisher-Price was a licensee of Pilot Corp. (PCA), who owned a patent to the product and the name Magna Doodle, plus several related trademarks. As is common, over the course of the companies' relationship, Fisher-Price (with PCA's consent) changed the design of the product and packaging. At the end of 2003, though, the relationship soured and the license agreement was terminated.

Fisher-Price then developed a new product, Doodle Pro, with a design and packaging nearly identical to the last version of the Magna Doodle it sold. Not surprisingly, PCA found a new licensee for the Magna Doodle and its new product bears the same Magna Doodle logo as the last Fisher-Price version, though the packaging differs.

However, PCA did not like the fact that Fisher-Price was still using packaging and product design on its Doodle Pro that was nearly identical to the design Fisher-Price used while it was a Magna Doodle licensee. PCA sued, claiming that the “trade dress” (i.e., the total look) of Fisher-Price's new product infringed on Magna Doodle's prior design. Because the two designs were nearly identical, it sounds like PCA should have had a pretty good case, right?

But there's one problem—the court found that PCA did not own the trade dress to the Magna Doodle packaging and design. Even though PCA owned the trademark, and licensed it and the patent to Fisher-Price, the court found that the packaging and product design belonged to Fisher-Price.

The court found two key facts persuasive: (1) because Fisher-Price created the packaging and product design, it should be presumed to the owner; and (2) the license was “silent” regarding which party would own the trade dress. PCA argued that the term “mark” in the license included “trade dress,” and that toy industry custom would require trade dress rights to be transferred by Fisher-Price. The court rejected both arguments.

Leaving intellectual property ownership decisions to the courts is a risky business. PCA could have required Fisher-Price to transfer ownership of Magna Doodle's trade dress as part of the license, but it didn't. Don't “doodle” with your trademark and make the same mistake.