Mattel, Inc. v. MGA Ent’mt., Inc.

(United States Ninth Circuit) – In an action for copyright infringement and breach of an employment agreement arising out of defendant’s sale of a toy doll idea to a competitor of plaintiff instead of disclosing and assigning it to plaintiff as required by the agreement, an injunction in favor of plaintiff is vacated where: 1) the district court’s imposition of a constructive trust forcing defendant-corporation to hand over its sweat equity was an abuse of discretion and must be vacated; 2) because the agreement’s language was ambiguous and some extrinsic evidence supported each party’s reading, the district court erred by granting summary judgment to plaintiff on this issue and holding that the agreement clearly assigned works made outside the scope of defendant’s employment; and 3) the district court’s error in construing the employment agreement was sufficient to vacate the copyright injunction.