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FASA CORP. v. PLAYMATES TOYS

June 19, 1995

FASA CORPORATION and VIRTUAL WORLD ENTERTAINMENT, Plaintiffs,
v.
PLAYMATES TOYS, INC., Defendant.



The opinion of the court was delivered by: RUBEN CASTILLO

 Beginning on June 19, 1995, the Court began the first phase of a potential four phase bench trial in this matter which involves an intellectual property dispute involving futuristic robot-like battle toys. Due to the scope and complexity of the issues to be tried in this case, See FASA Corp. v. Playmates Toys, Inc., 869 F. Supp. 1334 at 1334-1365 (N.D. Ill. 1994), this Court entered Trial Sequence and Timing Orders on June 6, 1995 and June 9, 1995, which are attached hereto as Appendices A and B.

 The Court hereby enters the following Findings of Fact and Conclusions of Law at the conclusion of Sequence One of the trial which addressed Playmates' affirmative defense of waiver. *fn1" The Findings of Fact are based upon consideration of all the admissible evidence as well as this Court's assessment of the credibility of the trial witnesses.

 The following factual findings are based on all of the competent evidence adduced at trial and are essentially undisputed by the parties:

 1. Plaintiff FASA Corporation ("FASA") is an Illinois corporation with its principal place of business in Chicago, Illinois.

 2. FASA is the creator, developer, publisher, promoter and distributor of various fictional universes, including but not limited to BATTLETECH, which form the basis for board games, role-playing games, novels, game systems and other game supplements.

 3. FASA licenses the intellectual property and proprietary rights in BATTLETECH to third parties for the development of location-based interactive entertainment games and centers, disk-based computer games, cartridge-based computer games, models, miniatures, merchandise, movies, television programming, toys and other items.

 4. Plaintiff Virtual World Entertainment ("VWE") is a Delaware corporation with its principal place of business in Burbank, California, and an office in Chicago, Illinois.

 5. VWE was founded by the creators of BATTLETECH in 1987.

 6. VWE is a virtual reality entertainment company engaged in the acquisition, development, operation, licensing and franchising of location-based virtual reality entertainment games and entertainment centers associated with BATTLETECH and other games.

 7. Defendant Playmates Toys, Inc. ("Playmates"), is a California corporation with its principal place of business in La Mirada, California.

 8. Playmates is a distributor of toys supplied by a related company, Playmates Toys (Hong Kong) Ltd. ("Playmates HK"), including TEENAGE MUTANT NINJA TURTLES, STAR TREK, ADDAMS FAMILY and various Disney characters, and also participates in the development of toys pursuant to an agreement with Playmates HK.

 9. Plaintiffs FASA and VWE *fn2" have sued Playmates alleging federal and common-law unfair competition (Counts I and II, respectively), copyright infringement (Counts III and IV), trademark infringement (Counts V and VI), dilution under Illinois' anti-dilution statute, 765 ILCS 1035/15 (Counts VII and VIII), and tortious interference with prospective business advantage (Count IX).

 10. The lawsuit centers on Playmates' alleged infringement of FASA's intellectual property and proprietary rights in BATTLETECH by designing and marketing the ExoSquad toy line.

 11. On December 5, 1994, this Court denied Playmates' Motion for Summary Judgment with respect to FASA's claims for federal unfair competition (Count I), copyright infringement (Counts III and IV) and trademark infringement (Counts V and VI) and granted Playmates' Motion for Summary Judgment with respect to Playmates' claims for common law unfair competition (Count II), dilution (Counts VII and VIII) and tortious interference (Count IX). FASA Corp. v. Playmates Toys, Inc., 869 F. Supp. 1334 (N.D. Ill. 1994).

 II. FINDINGS OF FACT - WAIVER ISSUE

 12. In late 1991, Robert Allen, a Cincinnati, Ohio, toy designer, asked FASA for the opportunity to interest toy companies in the BATTLETECH property.

 13. Although Allen and FASA never reached agreement on the nature and scope of Allen's role, FASA did permit Allen to make at least three presentations to toy companies regarding a BATTLETECH toy line.

 14. In response to a telephone inquiry, Playmates invited Allen to its California headquarters for a meeting to discuss several toy designs, including BATTLETECH.

 15. On December 10 or 11, 1991, Allen met with Chris Devine Dailey, an employee of Playmates, and presented three potential toy lines: BATTLETECH, Wendy And Her Wagon and Speedballs.

 
It is the policy of Playmates Toys, Inc. not to review or consider any unsolicited proposals of any kind.
 
You have advised us that you have an "idea" which you believe may be of interest to us.
 
We are prepared to consider your idea only upon the following terms:
 
1. You will expressly waive any and all claims of any kind whatsoever, past, present or future, known or unknown against Playmates Toys, Inc. in any way relating to or connected to the "idea".
 
2. In consideration for such waiver, Playmates Toys, Inc., will review your "idea" in written form. We will return all materials submitted in connection therewith within two weeks after submission.
 
3. At our sole and complete discretion, we may then enter into negotiations with you for a contractual agreement regarding the idea.
 
4. Except as to any future agreement entered into under Paragraph 3, we shall have no obligation of any kind toward you in connection with the proposed idea.

 The disclosed matter relates to: [handwritten] (1) "BATTLETECH" (2) "WENDY & HER WAGON" (3) "SPEEDBALLS".

 17. Allen had signed nondisclosure or new product submission forms before which did not require or include waivers of either copyright or trademark infringement claims or of other future unknown claims by the owner of the property.

 18. Chris Dailey did not tell Allen that the form included a waiver of any rights. Ms. Dailey did not ...


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