Wrench, LLC v. Taco Bell Corp.

51 F.Supp.2d 840 (1999)

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Nature of the Case

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Facts

Wrench (P) created a cartoon character known as 'Psycho Chihuahua.' P marketed Psycho Chihuahua on T-shirts and other merchandise. By 1996, P had licensed the rights to produce the apparel to several large manufacturers. P attended a licensing trade show which D also visited. D was immediately taken with Psycho Chihuahua. D began to promote Psycho Chihuahua within the company as a potential Taco Bell corporate 'icon.' D asked for artboards combining Psycho Chihuahua with the Taco Bell name and image. P sent several artboards along with Psycho Chihuahua T-shirts, hats, and stickers. The materials were widely distributed, and upper-level management was made aware of the concept. P hired a licensing agent to work with D, and the agent made immediate contact with D. P and D met to discuss the concept. P prepared a proposal of the terms for D's use of Psycho Chihuahua. D neither accepted nor rejected the proposal. More meetings were held. P again presented the concept to Ds marketing department in early March 1997. It was called 'Go Psycho at Taco Bell.' The idea included using a live dog manipulated through CGI. Another firm, TLP Partnership was also promoting Psycho Chihuahua to D as one of several possible ideas for a Cinco de Mayo or summer promotion. TLP had discovered Psycho Chihuahua at a trade show in New York and received consent to use the image in its presentation. Yet another presentation was made on April 4, 1997. On March 18, 1997, D hired a new advertising agency. They presented a 'Burp' idea, but D did not like the ideas. On June 2, 1997, they presented again, and one of the ideas involved a Chihuahua, in which a male Chihuahua would pass up a female Chihuahua to get to a person seated on a bench eating Taco Bell food. They conceived the 'Chihuahua' idea as they were having lunch on a Sunday afternoon at an outdoor Mexican restaurant. They noticed a Chihuahua trotting down the street that appeared to be on a mission, and thought that using a Chihuahua may be 'a way of personifying the intense desire for Taco Bell' food. Three commercials were produced one of which included the 'Chihuahua' commercial. In June 1997, P and D met again and said they were interested in using Psycho Chihuahua. The reaction to 'Chihuahua' commercial was very positive. D decided that the Chihuahua would be the focus of its 1998 campaign, and on December 28, 1997, D launched its national campaign. P sued D. D moved for summary judgment. The court first granted in part and denied in part D's motion to dismiss, leaving intact the breach of implied contract, misappropriation, conversion, and unfair competition claims. In its present motion, D contends that it is entitled to summary judgment because Ps have not established an implied in fact contract, or alternately, if they have, their claims are preempted by the Copyright Act because the implied contract creates legal rights that are equivalent to the rights within the general scope of copyright; the concept of using a live Chihuahua in Taco Bell commercials was independently created; and (3) P's ideas were not novel.