Direct Technologies, LLC v. Electronic Arts, Inc., Nos. 14-56266/14-56745 (9th Cir. Sept. 6, 2016)
Electronic Arts makes the game The Sims, and contracted with a production company, Lithomania, to produce a USB flash drive shaped like a “PlumbBob,” a gem-shaped icon from The Sims to promote a “Collector’s Edition.” Lithomania in turn contracted with Direct Technologies to produce a prototype, then shipped that prototype to a company in China to make essentially the same flash drives for $0.50 cheaper per unit than DT proposed, while lying to DT about the fact that it had been cut out of the deal, apparently in order to get it to sign agreements including IP licenses. Lithomania told EA that it had received a vendor agreement from DT, “so IP’s are all protected.” EA responded, “Great. . . . Protect us all.”
DT ultimately settled breach of contract claims with Lithomania, then sued EA under the federal Copyright Act and the California Uniform Trade Secrets Act. Here, the court of appeals reverses summary judgment for EA on copyrightability, in my opinion mistakenly, and affirms summary judgment for EA on trade secrets given that the design at issue did not derive independent economic value from being kept secret. EA couldn’t get attorneys’ fees on the trade secret claim, though.
Background: When a player controls a specific character, the PlumbBob appears over the character’s head, which is “an iconic symbol of The Sims.” According to the court, EA has a copyright in the PlumbBob (separately registered?). Thus, the question was whether the USB flash drive had enough independent creativity to be a copyrightable derivative work. DT alleged two creative aspects: (1) the USB drive had 12 equal sides, whereas the icon had 20 unequal sides; and (2) DT designed the USB drive to fit into the PlumbBob with a “futuristic cut away look . . . at a unique angle.”
Protection requires nonfunctionality, separability, more than trivial originality, and lack of any effect on the scope of copyright in the preexisting material.
DT argued that the fit of the flash drive had a “futuristic cut away look . . . at a unique angle” which was nonfunctional. The court found that there was a genuine issue of fact about whether the design was merely functional or utilitarian. The “mere feature of having a USB flash drive that can be removed from the PlumbBob object” wasn’t copyrightable. But the manner in which the USB drive was “cut away” was potentially non-functional. [This is the exact kind of reasoning our brief in Varsity Brands argues shouldn’t ever constitute separability: the choice, however aesthetic it might be, is coextensive with the fact that it is for an object containing a USB drive, and thus is not separable from the utilitarian aspects.]
The record showed that DT considered four other designs, and the designer submitted a sworn declaration explaining that his ultimate choice was made “for aesthetic reasons.” A jury could find that this design feature was “truly ‘artistic.’”
As for originality, having 12 or 20 sides wasn’t an original choice, since EA’s versions of the PlumbBob already included both as the icon changed over time. “Even assuming that DT’s version has a slightly different shape than the drawing presented by EA, we have held that a character’s copyright encompasses its ‘distinctive character traits and attributes, even if the character does not maintain the same physical appearance in every context.’” However, there was a genuine issue of material fact about whether “the manner in which DT designed the USB drive to fit into the PlumbBob object” was sufficiently original to merit protection. [Again, note how this framing makes clear the inseparability of the aesthetic choice from the fact that the choice is about how to design the useful object.]
EA argued that the design was so similar to the PlumbBob that if it were copyrightable, DT would have “a monopoly on all USB[ drives] shaped like the PlumbBob, and perhaps even any other 3-D embodiment of the PlumbBob.” The court of appeals disagreed: DT would only have “a copyright in its unique contribution—the artistic manner in which it designed the USB flash drive to fit into the PlumbBob object.” DT’s copyright “would obviously not preclude others from making a 3-D PlumbBob without a flash drive.” [If this is true, again, then there’s no separability—if the only originality comes from a choice that can’t be replicated without also putting a USB drive in the object, then the utilitarian design isn’t separable.]
A jury could also find that EA wasn’t a joint author, but only in a position to offer suggestions, and that DT’s design had “audience appeal” (one factor in the 9th Circuit’s joint authorship inquiry). Moreover, as to the IP license in the vendor agreement with Lithomania, a jury could find that, “if the contract was fraudulently induced, such that it was invalid from the beginning, there would be no valid contract for EA to enforce.”