## Facts

- Technology from Heaven Unlimited (THU), a California nonprofit that develops toy ideas, learned Mattel, Inc. planned to develop a flying Barbie toy.
- Mattel required outside inventors to submit ideas through its online process (Mattel Inventor Connect) and to accept a written Submission Agreement before disclosing any idea.
- The Submission Agreement stated that submitting an idea created no financial, equitable, or other obligation for Mattel regarding use of the idea; any obligation could arise only from a separate written agreement physically signed by the inventor and a Mattel officer.
- The Submission Agreement also stated that no rights, duties, or obligations could be read into the agreement or the parties’ relationship under theories such as custom, trade usage, course of dealing, course of performance, or implied contract, and it selected New York law.
- THU submitted a “flying Barbie” proposal using a four‑propeller drone mechanism and depicting Barbie in multiple configurations, including standing on the drone like a hoverboard, hanging like a hang glider, and pairing with the drone like fairy wings.
- At an idea-review meeting at Mattel’s facilities, THU discussed that simpler “auto-hover” flight technology could be more suitable for children; during the meeting, a Mattel employee demonstrated a commercially available, on-the-market toy from another manufacturer that used simpler flight technology to achieve a similar effect.
- Mattel rejected THU’s proposal, stating the mechanism was too complex.
- Mattel later released “Barbie Starlight Adventure,” featuring Barbie on a flying hoverboard.
- THU sued for civil damages, alleging Mattel breached the Submission Agreement and misappropriated THU’s idea.
- The trial court sustained Mattel’s demurrer to THU’s first amended complaint without leave to amend and dismissed the case with prejudice, concluding THU had not alleged that its idea was novel in absolute terms as required by New York law.
- THU appealed, arguing that for its contract-based theory a pre-disclosure agreement should require only “limited novelty” (novelty to Mattel), not absolute novelty.

## Issues

1. Under New York law, must a plaintiff alleging (a) tortious/property-based misappropriation of an idea and (b) contract-based misappropriation of an idea plead that the idea is novel in absolute (general) terms, rather than merely novel to the defendant?
2. Did THU’s first amended complaint adequately allege the required level of novelty, and did the trial court properly sustain the demurrer without leave to amend?

## Decision

- The Court of Appeal affirmed the judgment of dismissal.
- Applying New York law (per the Submission Agreement’s choice-of-law clause), the court held that both tort-based and contract-based idea-misappropriation claims require the plaintiff to plead that the idea is novel in absolute terms.
- The court rejected THU’s argument that a pre-disclosure contract automatically lowers the novelty requirement to “limited novelty” (novelty to the buyer) for the contract claim.
- THU’s allegations did not plead absolute novelty because the pleaded facts indicated the core elements were already available in the marketplace, including the presence of an existing commercial toy demonstrating similar flight functionality.
- Because THU did not show a reasonable possibility it could amend to allege absolute novelty, the court upheld denial of leave to amend.

## Legal Principles

- When a contract contains a choice-of-law clause, courts generally apply the selected state’s law to the covered dispute; here, New York law governed the novelty requirement for the pleaded idea-misappropriation theories.
- Under New York law as applied in this decision, a plaintiff asserting idea misappropriation—whether framed in tort (property-based) or in contract—must plead an idea that is sufficiently novel in absolute (general) terms, not merely new to the particular defendant.
- The “novelty-to-the-buyer” concept recognized in some New York contract cases does not eliminate the absolute-novelty requirement for an idea-misappropriation claim where the governing New York authorities require general novelty.
- A submission agreement that expressly disclaims any obligation from submission alone, requires any obligation to be set out in a separate signed writing, and bars implied-contract theories will be enforced according to its terms.
- An idea composed of known elements, or shown by the pleadings to be reflected in existing products, will not satisfy absolute novelty at the pleading stage.
- A plaintiff seeking leave to amend after a demurrer must show how amendment could cure the defect; absent that showing, denial of leave to amend is proper.

## Conclusion

The court affirmed dismissal of THU’s lawsuit because, under New York law selected in Mattel’s Submission Agreement, both THU’s tort and contract theories required pleading an idea that was novel in absolute terms, and THU’s allegations—including the presence of similar on-the-market flight technology—did not meet that standard; THU also failed to show it could amend to cure the lack of absolute novelty.


Technology from Heaven Unlimited v. Mattel, Inc., 2021 WL 753343 (2021)