Roblox Corporation v. WowWee Group Limited

Background

Roblox Corporation moved for partial summary judgment against defenses raised by WowWee Group Limited and the other defendants. Summary judgment is a ruling entered before trial when the record shows no genuine dispute about a material fact and the moving party is entitled to judgment under the law. Roblox challenged WowWee’s defenses concerning express and implied licenses, waiver, estoppel, acquiescence, unclean hands, fair use, copyright misuse, and the scope of Roblox’s Terms of Use.

WowWee withdrew its copyright fair-use defense in its opposition, while reserving its rights. It also withdrew its defenses that the Terms of Use were vague or impossible to understand and that they did not transfer copyright ownership, as independent defenses to the infringement and false-advertising claims. The opinion states that WowWee reserved the right to raise those issues concerning the contract-based claims after the stay on those claims is lifted.

Express License

An express license is permission stated in words or writing. WowWee relied on provisions in Roblox’s May 2021 Terms of Use and Roblox’s Name and Logo Community Usage Guidelines. The court found that the Terms of Use in effect when the My Avastars dolls launched did not clearly prohibit creating the dolls, but also did not expressly permit that conduct.

Because WowWee had not identified a provision that clearly excused the alleged copyright and trade-dress infringement, the court granted summary judgment for Roblox on the express-license defense as to those claims. The court denied summary judgment as to the trademark-infringement and false-advertising claims because a genuine factual dispute remained about whether the May 2021 Terms of Use expressly permitted WowWee’s use of the Roblox name and mark. The ruling on this defense was therefore granted in part and denied in part.

Implied License

An implied license is permission inferred from conduct rather than stated directly. WowWee argued that Roblox knew about the My Avastars project through discussions with Gamefam and did not act to stop it. The court found that this evidence could allow a factfinder to infer that Roblox had some knowledge of the dolls before their launch, although not necessarily knowledge of their design.

The court nevertheless found the evidence insufficient to establish an implied license. It concluded that the cited cases involved more than mere knowledge and that the record did not support inferring permission from Roblox’s silence. The court granted summary judgment on WowWee’s implied-license defense.

Waiver

Waiver is the intentional giving up of a known right. WowWee argued that Roblox had allowed earlier toy-related conduct and had not consistently objected to uses of modified Roblox avatars. The court found that the Terms of Use did not clearly prohibit WowWee’s conduct, but also did not show a clear intent by Roblox to give up its intellectual-property rights.

The court further found that evidence of Roblox’s knowledge of the My Avastars dolls did not establish the intent required for waiver. Roblox’s failure to object to other toys did not establish waiver because those were different toys. The court granted summary judgment on WowWee’s waiver defense.

Estoppel

Estoppel can prevent a party from enforcing a right when its conduct misled another party, the other party reasonably relied on that conduct, and suffered harm as a result. The court found that the evidence could allow a rational factfinder to conclude that Roblox had some knowledge of Gamefam’s and WowWee’s plans before the dolls launched.

The court also found factual disputes concerning Roblox’s Terms of Use, later updates to those terms, prior collaborations with Gamefam, and representations made by Gamefam about whether the dolls infringed Roblox’s intellectual property. Those disputes could support WowWee’s estoppel defense. The court denied Roblox’s motion for summary judgment on that defense.

Acquiescence

Acquiescence generally requires an affirmative act or statement showing implied consent, followed by an unjustified delay that prejudices the other party. WowWee relied on a Roblox marketing slide deck, the Community Usage Guidelines, and the May 2021 Terms of Use.

The court held that this evidence did not show an affirmative representation that Roblox would not assert its rights. It also found no unjustified delay because Roblox notified WowWee of its objections shortly after the dolls’ official launch. The court granted summary judgment on WowWee’s acquiescence defense.

Unclean Hands

Unclean hands is an equitable defense requiring the defendant to show that the plaintiff engaged in serious, inequitable conduct directly related to the claims. WowWee alleged that Roblox selectively and inconsistently enforced its policies, made false statements in copyright registrations, and claimed rights in material borrowed from third parties.

The court held that selective enforcement was insufficient as a matter of law. It also found that prior legal disputes with a sealed third party did not establish inequitable conduct toward WowWee. The court further concluded that the dispute over who was listed as author on Roblox’s copyright registrations did not rise to the level of a serious transgression supporting unclean hands. The court granted summary judgment on this defense.

Copyright Misuse

Copyright misuse is a court-created defense that can prevent a copyright owner from using its copyright to obtain control beyond the limited rights granted by copyright law or to restrain competition. WowWee argued that Roblox overstated its intellectual-property rights, misrepresented ownership to the Copyright Office, and used its claims to intimidate users.

The court found that the evidence concerning copyright registrations and disputes with a third party did not support the inferences WowWee sought. It concluded that WowWee had not identified specific facts showing a genuine issue for trial. The court granted summary judgment on the copyright-misuse defense.

Exhibit Dispute and Disposition

WowWee objected to one exhibit submitted with Roblox’s motion, arguing that the exhibit lacked a proper foundation and was not authenticated. The court found the dispute moot because the parties did not rely on the exhibit in their summary-judgment briefing and the court did not consider it. The court stated that WowWee could object if Roblox sought to offer the exhibit at trial.

The court granted in part and denied in part Roblox’s motion for partial summary judgment. Specifically, it granted summary judgment on the implied-license, waiver, acquiescence, unclean-hands, and copyright-misuse defenses; granted in part and denied in part the motion on express license; and denied the motion on estoppel.