Companies Need New Ideas to Thrive. What Happens if They Steal Them?

photo - toy idea theftA stagnant company, one that’s not looking to improve on its products or come up with new ones, may not have a bright future. There may be pressure to come up with the next successful products as well as pressure to cut costs and improve profits. That may result in legal problems if a company illegally uses someone else’s concept without their approval or paying them. A recent Bloomberg article spelled out this problem of intellectual property theft in the toy industry.

Ellie Shapiro came up with a toy in 2012. They were little animal figurines with snow globes in their bellies which she called Wishables. She worked as a freelance toy inventor but prior to that she spent ten years as an executive at Mattel Inc. and Walt Disney Co. Shapiro pitched her toy ideas to toymakers including Hasbro, Inc.

She signed a confidentiality agreement, met with Hasbro executives in Santa Monica in 2013 and showed off her prototypes, sample packaging and feed back from focus group testing. Executives liked the presentation, asked for samples but later told her they were passing on the idea.

In the fall of 2014 she walked into a Target store and saw a new Hasbro toy, an animal figurine that was also a snow globe. “At first, I was in shock and in disbelief,” Shapiro told Bloomberg. “Then I felt completely sick.” She later sued Hasbro for stealing her idea in federal court in the Central District of California. The company responded by saying snow globes have been used in toys for years and a similar design was developed in-house in 2012, prior to her submission.

Shapiro sued an Australian toy maker previously and settled the case in 2014. In the past she felt Hasbro stole a previous idea, threatened to sue them but ultimately did not. Freelancers like Shapiro face the double threats of having their ideas stolen and not making any money or suing (which can be expensive) and getting a litigious reputation risking being avoided by toy companies and not making any money. Some inventors see theft as the cost of doing business, hoping eventually a company may agree to pay for an idea.

The toy industry has consolidated so there are fewer opportunities for toy inventors. The industry is also more reliant on licensed toys based on movies or computer games which require licensing fees. To keep costs down companies may feel it’s cheaper to steal ideas given the low risk of successfully being sued by inventors.

Pursuing a strategy of stealing ideas and not paying for them poses risks for the toy industry. It’s dependent on freelancers for new ideas which may dry up if they refuse to work with a company known for stiffing toy developers. Without good, new ideas sales for a toy company could be hurt.

There are also risks if a case goes to trial. A plaintiff could tell the story of the little guy being ripped off by the big corporation, which may anger jury members and bias them against the defendant. If the company and sales of the disputed toys are big enough, it could cost millions. In 2014 Hasbro settled with former NASA engineer Lonnie Johnson, who invented the Super Soaker, for $58 million after he brought claims of failure to pay some royalties.

Her case is ongoing and Shapiro says she’s not abandoning her profession but her experience with Hasbro has her rethinking how she’ll now deal with toymakers. She says she needs to find a new way to get her ideas out into the marketplace without having them stolen.

If you’re an inventor and feel your ideas have been stolen by another party, or your business is accused of misappropriating intellection property, contact our office so we can discuss the situation, what laws may apply and your best options to protect your interests and legal rights.