Roblox Corporation v. WowWee Group Limited

Background

Roblox Corporation owns an online gaming platform where users create games, experiences, virtual items, and customizable virtual characters called Avatars. Roblox authorized Jazwares to manufacture physical Avatar Figurines. Roblox alleged that WowWee Group Limited, WowWee Canada, Inc., and WowWee USA, Inc. copied Roblox’s Classic Avatars in making, promoting, and selling My Avastars dolls.

The plaintiffs asserted claims involving copyright infringement, false advertising, trademark infringement, false association and false designation of origin, trade dress infringement, intentional interference with contractual relations, breach of contract, and related California unfair-competition and false-advertising claims. The defendants moved to dismiss the First Amended Complaint, sought to compel arbitration of certain claims, and asked the court to take judicial notice of 19 exhibits.

Copyright claims

The court held that Roblox adequately pleaded ownership of valid copyrights for the Cindy, Lindsey, Kenneth, and Dennis Avatars. The court dismissed claims based on the Stylz Salon Stylist Avatar, Brookhaven Customer Avatar, and Claire Dancefiend Avatar and their figurines because those works were registered after the original complaint was filed. The court also dismissed claims based on the Avatar Bases because Roblox did not sufficiently allege that those works were copyrighted. The court stated that claims involving the Gamefam My Avastars Avatar were moot because the complaint did not allege registration of that work.

The court denied dismissal based on lack of substantial similarity. Although some features of the avatars resembled features found in other toys, the court found that Roblox had adequately alleged a protectible combination of features and that the My Avastars figurines were virtually identical in shape to the alleged copyrighted avatars.

Trade dress and trademark-related claims

The court held that the plaintiffs adequately described a distinct trade dress based on the overall combination of the avatars’ humanoid, blocky shape, cylindrical heads, C-shaped hands, block-shaped legs, square or rounded arms, cartoon-like facial expressions, lack of a nose, and other features. Allegations that consumers confused WowWee’s products with Roblox’s products were sufficient at the pleading stage to allege that the trade dress had acquired secondary meaning.

The court also held that the claims for trademark infringement, false designation of origin, and false advertising under the Lanham Act were adequately pleaded. The complaint alleged that WowWee used the Roblox name and mark, Roblox hashtags, images of the Roblox interface, and claims about codes redeemable on Roblox in marketing the dolls. The court declined to find at the motion-to-dismiss stage that the use was protected by nominative fair use. It also held that use of a hashtag can constitute trademark infringement when the use otherwise satisfies the legal test. The court denied dismissal of the related California false-advertising and unfair-competition claims.

Arbitration and stay

The defendants sought arbitration of the contract and interference claims based on an arbitration provision in Roblox’s Terms of Use. The court held that the provision applied only to U.S. residents. It therefore denied the request to compel arbitration as to the international defendants.

The court granted the request to compel arbitration of claims six and seven as to the U.S.-resident defendants. It rejected the plaintiffs’ argument that the claims were exempt because they sought only injunctive relief, explaining that the Terms exempted actions seeking only injunctive relief, while this lawsuit as a whole sought additional relief. The court stayed proceedings on claims six and seven pending arbitration, but did not stay the intellectual-property claims.

Jazwares’ standing

Standing is the legal requirement that a plaintiff show a sufficient connection to the dispute and the requested relief. The court held that Jazwares had not pleaded ownership of any relevant copyright and therefore lacked standing to bring copyright claims. The court also dismissed Jazwares as a plaintiff for all claims except the claims under 15 U.S.C. § 1125(a) and the California Business and Professions Code. Jazwares did adequately plead injury for false advertising, false association, false designation of origin, and the related California claims by alleging that consumer confusion caused lost sales of its Avatar Figurines.

Disposition

For Jazwares, defendants’ motion to dismiss was denied as to the fourth, eighth, and ninth causes of action and granted as to all other causes of action. For Roblox, the motion was denied as to the second, third, fourth, and fifth causes of action. As to the first cause of action, the motion was denied for claims based on the Kenneth, Lindsey, Cindy, and Dennis Avatars and granted for claims based on the late-registered Avatars, Avatar Figurines, and Avatar Bases.

The request to compel arbitration of claims six and seven was granted as to the U.S.-resident defendants and denied as to the international defendants. Proceedings were stayed as to claims six and seven only. The court stated that dismissal was with leave to amend and gave the plaintiffs until March 24, 2023, to amend.