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Nadel v. Play-by-Play Toys & Novelties, Inc

Brief Fact Summary. Nadel (Plaintiff), a toy idea person, sued Play-by-Play Toys & Novelties, Inc. (Defendant), a toy manufacturer, for taking its toy idea without paying compensation.

Synopsis of Rule of Law. Showing genuine novelty or invention can sustain claims for breach of contract, quasi-contract, and unfair competition.

Points of Law - Legal Principles in this Case for Law Students.

When one submits an idea to another, no promise to pay for its use may be implied, and no asserted agreement enforced, if the elements of novelty and originality are absent, since the property right in an idea is based upon these two elements.

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Facts. Nadel (Plaintiff), a toy idea person, proposed a toy in he form of an upright, sound-emitting, spinning plush toy monkey to Play-by-Play Toys & Novelties, Inc. (Play-by-Play ‘toys) (Defendant), a toy manufacturer, alleging that, after rejecting his idea, the toy company used his idea in one of their own toy products without paying compensation to Nadel (Plaintiff).  The federal district court granted summary judgment in favor of Play-by-Play Toys and dismissed Plaintiff’s suit.  Plaintiff appealed the dismissal.

Issue. Can a showing of genuine novelty or invention sustain claims for breach of contract, quasi-contract, and unfair competition?

Held. (Sotomayor, J.)  Yes.  Showing genuine novelty or invention can sustain claims for breach of contract, quasi-contract, and unfair competition.  The record included a genuine issue of material fact regarding whether Nadal’s (Plaintiff) toy idea was sufficiently novel or original at the time it was disclosed to Play-by-Play (Defendant) where the proposed toy, in the form of a monkey, was an upright, spinning plush toy with sound that may have constituted “novelty to the buyer†even if unoriginal or non-novel in a general sense.  A court may only conclude that, as a matter of law, an idea lacks both the originality necessary to support a misappropriation claim and the novelty to the buyer necessary to support a contract claim if the idea is so lacking in novelty that it obviously bespeaks widespread and public knowledge of the idea.  That was not the case here.  The lower court failed to decide whether Plaintiff’s idea displayed genuine novelty or invention or whether was only a clever or useful adaptation of existing knowledge.  The determination of novelty in a given case depends upon several factors, including the idea’s specificity, its commonality, its uniqueness, and its commercial availability.  These factors were not examined by the district court.  Reversed and remanded.

Discussion. The courted noted that the “novelty to the buyer†standard is not limited to cases involving an express post-disclosure contract for payment based on an idea’s use.  A seller my, as Nadal (Plaintiff) did in this case, bring an action against a buyer who allegedly used the seller’s ideas without payment, claiming both misappropriation of property and breach of an express or implied-in-fact contract.

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