## Facts

- Craig P. Nadel, an independent toy inventor, developed a prototype plush monkey that sat upright, emitted sound, and spun/vibrated on a flat surface by placing an existing vibrating mechanism inside a plush skin.
- Toy companies commonly receive ideas from independent inventors; Nadel asserted an industry custom that submissions are treated as confidential and that companies pay if they use a submitted idea unless the idea was already known to the company.
- In October 1996, Nadel met with Play-By-Play executive Neil Wasserman and, according to Nadel, disclosed and demonstrated his prototype.
- Nadel alleged Wasserman expressed interest in adapting the concept to a licensed Tasmanian Devil (“Taz”) plush product Play-By-Play was already producing.
- Play-By-Play later marketed “Tornado Taz,” a moving, sound-emitting plush toy; Nadel claimed it incorporated the concept he disclosed.
- Play-By-Play contended it independently developed the product and that similar moving plush toys predated Nadel’s disclosure.
- After the dispute arose, Nadel allegedly told others in the toy industry that Play-By-Play had stolen his idea; Play-By-Play asserted counterclaims based on those statements.

## Issues

1. Under New York law, must an idea be generally novel (novel to the public) to support idea-submission claims for breach of contract, quasi-contract, and unfair competition, or is “novelty to the buyer” sufficient?
2. Was there a genuine dispute of material fact as to whether Nadel’s disclosed concept was novel to Play-By-Play at the time of disclosure?
3. Did Play-By-Play present sufficient evidence for its counterclaims, including whether Nadel’s statements constituted “commercial advertising or promotion” under the Lanham Act?

## Decision

- The court vacated the summary judgment dismissing Nadel’s claims and remanded for further proceedings.
- The court held that, for contract-based idea-submission theories, New York law allows recovery where the idea was “novelty to the buyer,” even if not generally novel.
- The court concluded the record presented a triable issue on whether the disclosed concept was novel to Play-By-Play when presented.
- The court affirmed summary judgment dismissing Play-By-Play’s counterclaims, including its Lanham Act theory.

## Legal Principles

- In New York idea-submission disputes, contract-based claims may be supported by “novelty to the buyer” as consideration; general novelty is not invariably required.
- Misappropriation-style theories framed as property claims generally require genuine novelty or invention in an objective sense, but a contract theory can proceed even if the idea is not novel to the public.
- A court may resolve novelty against the proponent as a matter of law only where the idea is so obviously in the public domain that it lacks both general novelty and novelty to the buyer.
- Novelty determinations are fact-intensive and may consider specificity, commonality, uniqueness, and commercial availability, as well as what the defendant actually knew at the time of disclosure.
- Informal communications within an industry community by a non-competitor complaining of alleged theft do not, without more, satisfy the Lanham Act requirement of “commercial advertising or promotion.”
- Counterclaims for interference and reputational harms require adequate evidence of actionable conduct and causation; conclusory assertions of harm are insufficient at summary judgment.

## Conclusion

The Second Circuit reinstated an inventor’s idea-submission claims by clarifying that New York contract-based recovery may rest on “novelty to the buyer,” making the buyer’s prior knowledge a central factual question, while separately upholding dismissal of the manufacturer’s counterclaims because the alleged industry statements did not meet the evidentiary and statutory requirements, including under the Lanham Act.


Nadel v. Play-By-Play Toys & Novelties, Inc., 208 F.3d 368 (2d Cir. 2000)