Kelly Toys Lawsuit Via Polygon
Kelly Toys Lawsuit Via Polygon
Kelly Toys Lawsuit Via Polygon
1 12. Plaintiff Jazplus, LLC is a Delaware limited liability company with its
2 principal place of business in Broward County, Florida.
3 13. Plaintiffs are all affiliated entities, governed by common ownership and
4 intercompany agreements.
5 14. On March 31, 2020, non-party Kellytoy Worldwide, Inc., the previous
6 holder of the copyrights and trade dress rights at issue, assigned all legal title to the
7 distinctive trade dress associated with the Squishmallows products, as well as all
8 registered copyrights in and related to the Squishmallows products, to Plaintiff Kelly
9 Toys Holdings, LLC. Accordingly, Plaintiff Kelly Toys Holdings, LLC is the legal
10 owner of registered copyrights in and related to its Squishmallows products and the
11 Squishmallows trade dress.
12 15. Kelly Toys Holdings, LLC provides the rights to the remaining plaintiffs,
13 Jazwares, LLC, Kelly Amusement Holdings, LLC, and Jazplus, LLC, to sell and
14 distribute the Squishmallows products that incorporate the protected intellectual
15 property rights. Plaintiffs are all related companies that each independently have the
16 ability to inspect and monitor the Squishmallows products and to maintain the
17 products’ quality. Each plaintiff thus has a cognizable interest in the infringement at
18 issue.
19 16. Defendant Build-A-Bear is a consumer toy limited liability company
20 organized under the laws of Delaware with its principal place of business at 415 18th
21 Street, Suite 200, St. Louis, Missouri 63103. Build-A-Bear is registered to do business
22 in California, and has over thirty locations in California, including at least eleven of
23 which are in the Central District of California. Build-A-Bear is in the business of
24 manufacturing and selling children’s toys, including plush toys.
25 JURISDICTION AND VENUE
26 17. This action involves the trademark laws of the United States, 15 U.S.C. §
27 1125(a), and, specifically, the statutory and common law of trade dress infringement.
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1 This action also involves the copyright laws of the United States, 17 U.S.C. § 101, et
2 seq.
3 18. This Court has subject matter jurisdiction under 28 U.S.C. §§ 1331, 1338,
4 and 1367, and 15 U.S.C. §§ 1114, 1116, 1117, 1121, and 1125. Specifically, the Court
5 has federal question jurisdiction in this case over the claims brought under federal law
6 and supplemental jurisdiction over the claims brought under state law.
7 19. Venue lies in this judicial district pursuant to 28 U.S.C. § 1391 and
8 1400(a).
9 20. This Court has personal jurisdiction over Defendant Build-A-Bear based
10 on its contacts with the forum. Build-A-Bear has purposefully directed its tortious
11 activity at California. Build-A-Bear has over thirty physical locations in California,
12 including at least eleven within the Central District of California, where Build-A-Bear
13 sells its products, including, upon information and belief, the infringing Skoosherz.
14 The infringing Skoosherz are also available for order online via Build-A-Bear’s
15 website and pick up at physical locations in California. In order to sell Skoosherz in
16 Build-A-Bear’s California branches, the infringing articles were either manufactured
17 in or shipped to California.
18 21. Build-A-Bear knew its actions would cause harm in California. Build-A-
19 Bear is aware of the locations of its physical storefronts and launched its Skoosherz
20 product with the knowledge that it would be sold in its brick-and-mortar locations,
21 including, upon information and belief, in California.
22 BACKGROUND FACTS
23 Kelly Toys Launches Its Squishmallows Products
24 22. Kelly Toys is an innovative and highly successful creator, manufacturer,
25 distributor, and seller of unique plush toys, including its Squishmallows line of plush
26 toys under the SQUISHMALLOWS brand.
27 23. In 2016, Kelly Toys conceived of and began creating its Squishmallows
28 line of plush toy designs that share common, unique features distinguishing them from
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1 the goods of others. Most of these designs are the subject of United States Copyright
2 Registrations or pending applications therefor, and each is sold in commerce under the
3 Squishmallows brand. In essence, these creative development efforts produced an
4 entirely new class of plush toys that has carved a previously non-existent niche in the
5 marketplace.
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24. Kelly Toys Holdings, LLC is the sole owner of all right, title, and interest
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in and to the Squishmallows products that possess unique, recognizable and
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distinguishing features that are common across much of the Squishmallows line. From
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2016 to the present, Kelly Toys has expended large sums of money in developing,
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advertising and promoting the Squishmallows Trade Dress (defined below), and the
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product designs embodying it, throughout the United States. In fact, Kelly Toys spends
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approximately $1,000,000 annually in direct to consumer and business-to-business
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25 advertising in connection with its Squishmallows products.
26 Squishmallows Has a Distinctive Trade Dress
27 25. Due to the distinctive Squishmallows trade dress, coupled with its unique
28 designs, extensive marketing efforts, media coverage, and market penetration, the
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14 27. The Squishmallows Trade Dress, when viewed as a whole, presents a
15 non-functional look and feel that is uniquely associated with Squishmallows. The
16 aesthetic features of the Squishmallows Trade Dress do not have utilitarian
17 functionality, as evidenced and underscored by the following facts: (1) the unique
18 combination of the egg/bell/oval-shaped characters, simplified Kawaii face and
19 repeated egg/bell/oval shapes, embroidered facial features, distinct coloring, and
20 velvety texture yields no utilitarian advantage over other plush toys; (2) there are
21 innumerable alternative stylistic plush toy features available to and used by
22 competitors, including, (i) countless alternative plush toy shapes (e.g. traditional
23 animal designs as opposed to Squishmallows’ whimsical, abstract renditions of
24 animals and characters), (ii) numerous alternative means to depict facial features (e.g.
25 plastic or bead eyes, features emulating realistic animals, countless different facial
26 expressions); (iii) myriad alternative shell materials (e.g. terrycloth, long pile plush,
27 velboa, satin), (iv) countless alternative stuffing materials available (e.g. beans, cotton,
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1 of features actually used and available in the marketplace; (3) even if there were some
2 utilitarian advantages of the Squishmallows Trade Dress, Kelly Toys’ advertising does
3 not tout or market those advantages; and (4) the Squishmallows Trade Dress is not the
4 result from comparatively simple or inexpensive methods of manufactures vis-à-vis
5 other plush toys.
6 28. Further, Squishmallows Trade Dress, when viewed as a whole, does not
7 have aesthetic functionality, as protection of the specific combination of these aesthetic
8 features would not impose a non-reputation-related competitive disadvantage against
9 competitors. Competitors have successfully used innumerable alternative design
10 elements and combinations of those elements, and the specific combination of the
11 Squishmallows Trade Dress features does not serve an aesthetic function wholly
12 independent of any source identifying function. To the contrary, the Squishmallows
13 Trade Dress was specifically designed to distinguish – and has succeeded in
14 distinguishing – the source of products embodying the Squishmallows Trade Dress
15 from the source of other toys. Thus, any advantage gained from the specific
16 combination of aesthetic features comprising the Squishmallows Trade Dress is based
17 on Kelly Toys and Squishmallows’ reputation, as the specific combination of aesthetic
18 features comprising the Squishmallows Trade Dress is highly distinctive and has
19 become associated in the minds of the consuming public with plush toy products of
20 the highest quality, originating from a single source – Squishmallows.
21 Kelly Toys Holdings, LLC Owns Copyrights in Squishmallows
22 29. Additionally, Kelly Toys Holdings, LLC is also the owner of registered
23 copyrights in and related to its Squishmallows products (the “Squishmallows Works”),
24 including listed those in the below chart:
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1 Internet search using the Google search engine yields, for example, about 56,200,000
2 “hits” for the search term “Squishmallows.”
3 32. Beyond marketing and selling Squishmallows through thousands of retail
4 stores nationwide, Kelly Toys additionally markets and sells its Squishmallows via its
5 website www.squishmallows.com and on www.jazwares.com/brands/squishmallows,
6 featuring dozens of copyright-protected photographs of its plush toys and models
7 holding its Squishmallows.
8 33. Kelly Toys also actively engages in promoting its line of Squishmallows
9 products through its numerous social media accounts, including on Instagram, TikTok,
10 Facebook, and Twitter. Indeed, Kelly Toys’ legion of loyal fans of its line of
11 Squishmallows have been extremely engaged on social media, including TikTok,
12 Instagram, and Facebook, demonstrating their awareness and affection for Kelly Toys’
13 Squishmallows. Squishmallows videos have been viewed more than 11 billion times
14 on TikTok and fans have posted Squishmallows content more than 1 million times on
15 Instagram.
16 34. Kelly Toys’ Squishmallows have become a phenomenon––they have
17 turned into a collectors’ item, with their avid fanbase searching high and low to collect
18 as many of the over 3,000 different Squishmallows characters as possible.
19 35. Indeed, sales of Squishmallows have increased over 300% in 2022 alone,
20 with sales soaring to over $200 million worldwide.
21 36. Further adding to their recognition and secondary meaning in the
22 marketplace, Squishmallows have been featured in over 300 publications, including
23 magazines, press articles, reviews, and videos, including many mainstream media
24 publications such as the Washington Post, the New York Times, TIME Magazine,
25 Forbes, The Guardian, the New York Post, the Costco Connections Magazine, People
26 Magazine, Seventeen Magazine, and many others. By way of example, the
27 Washington Post characterized Squishmallows as “the hottest toy on the market” and
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1 described its avid fanbase as follows: “The fandom is often likened to the Beanie Baby
2 craze –– and on its way to be an enduring brand like Hello Kitty and Pokémon.”4
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12 37. The New York Times has proclaimed that “Squishmallows are Taking
13 Over,”5 Forbes named them “2022’s Must-Have Christmas Toy,”6 and The Guardian
14 has recognized the toy’s rise in popularity on social media, writing that
15 “Squishmallows go from TikTok sensation to top Christmas toy.”7
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Jaclyn Peiser, Adults Are Driving Sales of the Hottest Toy on the Market:
20 Squishmallows, Wash. Post. (June 25, 2023),
21 https://www.washingtonpost.com/business/2023/06/24/squishmallows-toy/.
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Taylor Lorenz, Squishmallows Are Taking Over, N.Y. Times (March 18, 2021),
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https://www.nytimes.com/2021/03/16/style/squishmallows.html.
23 6 Mark Faithfull, Squishmallows Going Viral, Warren Buffet and 2022’s Must-Have
24 Christmas Toy, Forbes (Dec. 13, 2022),
https://www.forbes.com/sites/markfaithfull/2022/12/13/squishmallows-going-viral-
25 warren-buffett-and-2022s-must-have-christmas-toy/?sh=692f77db22ad.
26 7 Zoe Wood, Squishmallows Go From TikTok Sensation to Top Christmas Toy,
27 Guardian (Dec. 9, 2022),
https://www.theguardian.com/business/2022/dec/09/squishmallows-go-from-tiktok-
28 sensation-to-top-christmas-toy.
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9 40. In September of 2022, Squishmallows was awarded the “People’s
10 Choice” awards by The Toy Foundation, and in both 2022 and 2023 won the coveted
11 “Toy of the Year” and “Plush Toy of the Year” awards. Squishmallows are so popular
12 that they have been identified as the most popular toy brand across 41% of the U.S.
13 states—far ahead of other well-known mega brands like Hot Wheels, Lego, Nintendo
14 Switch, Nerf, and Play-Doh.
15 41. Due to Squishmallows’ massive success and popularity, consumers
16 associate the high-quality Squishmallows toys with the Squishmallows Trade Dress.
17 Build-A-Bear’s Infringing Skoosherz Products
18 42. True to its name, Build-A-Bear is best known for providing a place for
19 people to create their own customizable toys. Build-A-Bear offers a number of
20 premade, unstuffed plush animals and characters that consumers can stuff themselves
21 to build their own toy. Consumers can also customize their plush toy, for example by
22 buying it clothes and accessories, or purchasing audio recordings to incorporate inside
23 the toy.
24 43. On January 11, 2024, Build-A-Bear launched “Skoosherz,” a line of plush
25 toys that copies and imitates Squishmallows. The Skoosherz products are a radical
26 departure from the company’s typical products. Indeed, they lack all the customizable
27 aspects that Build-A-Bear is known for. Consumers cannot go into a Build-A-Bear
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1 Workshop and build their own Skoosherz. Instead, Skoosherz are pre-made and
2 available for purchase in the same way any traditional manufacturer would sell a toy.
3 44. Instead of maintaining its original idea of allowing consumers to create
4 their own toys, Build-A-Bear now seeks to trade off the goodwill of Squishmallows
5 by marketing obvious copycat products—plush toys that look almost identical to
6 popular Squishmallows. To be clear, Build-A-Bear is not licensed or otherwise
7 authorized by Kelly Toys to market or distribute products embodying the copyrighted
8 designs or the Squishmallows Trade Dress.
9 Skoosherz toys have the same distinctive trade dress as the popular
10 Squishmallows, including: shaped fanciful renditions of animals/characters;
11 simplified Asian style Kawaii faces; embroidered facial features; distinctive and non-
12 monochrome coloring; and velvety velour-like textured exterior. Side by side
13 comparisons of Squishmallows and copycat Skoosherz products plainly show how
14 striking the similarities are:
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2 45. Not only has Build-A-Bear purposely copied the Squishmallows Trade
3 Dress, it uses one of the same suppliers to manufacture Skoosherz that Plaintiffs use
4 to create Squishmallows. Upon information and belief, Build-A-Bear commissioned
5 a Chinese manufacturer that has rights to manufacture Squishmallows to produce the
6 copycat Skoosherz. Upon information and belief, Build-A-Bear received notice and
7 knows that Skoosherz are improper Squishmallows copycats. Yet Build-A-Bear
8 brazenly ignored the warning and produces the toys anyway.
9 Consumer Confusion
10 46. Not only do Skoosherz visually and tactilely simulate Squishmallows, but
11 Build-A-Bear has also tried to trick customers looking for Squishmallows into buying
12 Skoosherz instead. By naming its products that so closely resemble Squishmallows
13 “Skoosherz,” Build-A-Bear has taken steps to ensure that customers seeking out
14 Squishmallows (often referred to as “Squish”) become mistaken by the confusingly
15 similarly named Skoosherz instead.
16 47. Build-A-Bear has sought to market off of this association, portraying its
17 Skoosherz as the “most squishable,” and advertising that consumers can “Squish”
18 them, plainly seeking to create an association between the infringing Skoosherz and
19 the wildly popular Squishmallows, or “Squish:”
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48. Build-A-Bear’s descriptions of individual Skoosherz toys similarly seek
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create an association with Squishmallows, noting that they are “squishable.” For
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example, the product details for Build-A-Bear’s axolotl state:
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1 suggesting that the Build-A-Bear Instagram administrator was being forced to clarify
2 that these were “*Skoosherz” and not Squishmallows against their will:
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52. These users were not alone. Build-A-Bear’s Instagram post announcing
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its new Skoosherz line is riddled with posts calling them “knockoff Squishmallows”
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and noting the obvious similarities between these new products and the well-known
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Squishmallows:
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1 53. Other consumers noted that Skoosherz are “like a worse Squishmallow,”
2 even noting that Skoosherz chose to copy several of the most popular Squishmallows
3 characters. Still others highlight the fact that Skoosherz represent a radical departure
4 from Build-A-Bear’s traditional model of building a custom toy, referring to them as
5 “soulless ripoff[s]”:
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21 54. Build-A-Bear’s actions have caused and will continue to cause significant
22 harm. As a result of consumer confusion, Kelly Toys has lost and will continue to lose
23 potential customers, sales, and market share.
24 55. In sum, Build-A-Bear’s willful conduct has damaged and will continue to
25 irreparably damage the reputation, business, and goodwill of Kelly Toys. And, unless
26 enjoined, Build-A-Bear will continue to further escalate its infringing activities.
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1 Squishmallows Trade Dress is intended to distinguish Kelly Toys products from those
2 of competitors.
3 62. Without Kelly Toys’ authorization or consent, and having knowledge of
4 Kelly Toys Holdings, LLC’s prior rights in the Squishmallows Trade Dress, Defendant
5 has designed, manufactured, distributed, advertised, offered for sale and/or will
6 continue to design, distribute, advertise, offer for sale, and sell replicas of the
7 Squishmallows Trade Dress to the consuming public in direct competition with Kelly
8 Toys, in or affecting interstate commerce.
9 63. Build-A-Bear’s infringing designs are, each alone and together,
10 confusingly similar to the Squishmallows Trade Dress. Defendant’s use of the
11 Squishmallows Trade Dress has caused, and unless enjoined by this Court, will
12 continue to cause a likelihood of confusion and deception of members of the public
13 and, additionally, irreparable injury to goodwill and reputation associated with the
14 Squishmallows Trade Dress.
15 64. Defendant’s use of the Squishmallows Trade Dress thus constitutes trade
16 dress infringement in violation of 15 U.S.C. § 1125(a).
17 65. As a direct and proximate result of Build-A-Bear’s unlawful conduct, it
18 has misappropriated Kelly Toys Holdings, LLC’s rights in the Squishmallows Trade
19 Dress, as well as the goodwill associated therewith, and has diverted sales and profits
20 from Kelly Toys to Build-A-Bear. Thus, as a direct and proximate result of
21 Defendant’s acts of willful infringement, Kelly Toys has suffered and/or will suffer
22 irreparable damage to its valuable brand and reputation, and other damages in an
23 amount to be proven at trial, including Defendant’s profits and Kelly Toys’ lost profits.
24 66. Defendant’s actions described above will cause, have caused, and will
25 continue to cause irreparable damage to Kelly Toys, unless Defendant is enjoined by
26 this Court. Kelly Toys has no adequate remedy at law with regard to Defendant’s
27 infringing conduct. Accordingly, Kelly Toys is entitled to a permanent injunction,
28 pursuant to 15 U.S.C. § 1116, restraining and enjoining Defendant and its agents,
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1 servants, and employees, and all persons acting thereunder, in concert with, or on its
2 behalf, from using Kelly Toys’ Squishmallows Trade Dress, or any colorable imitation
3 or variation thereof, in connection with the sale and/or marketing of any products.
4 67. Defendant’s aforesaid acts are exceptional within the meaning of 15
5 U.S.C. § 1117.
6 SECOND CAUSE OF ACTION
7 (California Common Law Trade Dress Infringement)
8 68. Kelly Toys repeats, realleges, and incorporates each and every allegation
9 made above as if fully set forth herein.
10 69. Kelly Toys Holdings, LLC is the owner of all right, title, and interest in
11 and to the Squishmallows Trade Dress used by Kelly Toys by virtue of its extensive
12 manufacture and sale of products embodying such trade dress as set forth in the
13 preceding paragraphs of the Complaint.
14 70. Kelly Toys’ common law trade dress is distinctive, and furthermore, has
15 acquired secondary meaning. Kelly Toys has continuously used its Squishmallows
16 Trade Dress to identify its goods in California and elsewhere, and to distinguish them
17 from goods of a different origin. As such, there are common law rights to the
18 Squishmallows Trade Dress.
19 71. The Squishmallows Trade Dress is nonfunctional and highly distinctive
20 and has become associated in the public mind with plush toy products of the highest
21 quality and reputation finding their origin in a single source, Kelly Toys.
22 72. The Squishmallows Trade Dress has acquired secondary meaning based
23 upon, at least in part, the amount and manner of advertising of products embodying
24 the Squishmallows Trade Dress, the volume of sales, as well as the length and manner
25 of use of the products.
26 73. The Squishmallows Trade Dress is nonfunctional because its distinctive
27 aesthetic features yield no utilitarian advantage, there are innumerable alternative
28 stylistic plush toy features available to competitors, even if there were some utilitarian
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1 advantages of the design, Kelly Toys’ advertising does not tout or market those
2 advantages, and the Squishmallows Trade Dress is not the result from comparatively
3 simple or inexpensive methods of manufacture. Furthermore, protection of the
4 specific combination of the aesthetic features consistent across Squishmallows
5 products would not impose a non-reputation-related competitive disadvantage against
6 competitors, as there are innumerable alternative design elements and combinations of
7 those elements for competitors to utilize. The combination of the Squishmallows
8 Trade Dress features does not serve an aesthetic function wholly independent of any
9 source identifying function. Rather, the highly distinctive Squishmallows Trade Dress
10 is intended to distinguish Kelly Toys’ plush toys from those of competitors.
11 74. The infringing products advertised, distributed, offered for sale, and sold
12 by Defendant incorporate matter constituting replicas and imitations of Kelly Toys’
13 common law trade dress. Such unauthorized use by Defendant of Kelly Toys’
14 common law trade dress constitutes common law trade dress infringement and has
15 already caused, and will likely continue to cause, confusion and mistake in the minds
16 of the trade and the purchasing public as to the source of the products and is causing
17 purchasers to believe such products are authentic products of Kelly Toys when, in fact,
18 they are not.
19 75. Upon information and belief, Defendant has willfully and intentionally
20 misappropriated aspects of Kelly Toys’ common law trade dress with the intent of
21 causing confusion, mistake, and deception as to the source of its goods and with the
22 intent to palm off its goods as those of Kelly Toys, and as such, Defendant has
23 committed trade dress infringement under the common law.
24 76. By such actions in infringing Kelly Toys’ common law trade dress,
25 Defendant is improperly trading upon the reputation and goodwill, and is impairing
26 valuable rights in, such trade dress.
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1 77. Upon information and belief, Defendant has committed the above alleged
2 acts in conscious disregard of Kelly Toys’ rights, and Kelly Toys is therefore entitled
3 to punitive damages pursuant to the common law of the State of California.
4 78. Kelly Toys has no adequate remedy at law. The conduct of Defendant
5 has caused and, if not enjoined, will continue to cause, irreparable damage to the rights
6 in and business, reputation, and goodwill of the Squishmallows Trade Dress.
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8 THIRD CAUSE OF ACTION
9 (Federal Copyright Infringement – 17 U.S.C. § 501(a))
10 79. Kelly Toys Holdings, LLC repeats, realleges, and incorporates each and
11 every allegation made above as if fully set forth herein.
12 80. Kelly Toys Holdings, LLC is the exclusive owner of the Squishmallows
13 Works.
14 81. On information and belief, Defendant had actual notice of Kelly Toys
15 Holdings, LLC’s exclusive rights in and to the Squishmallows Works.
16 82. Defendant did not attempt and therefore inherently failed to obtain
17 Plaintiffs’ consent or authorization to use, manufacture, reproduce, copy, display,
18 prepare derivative works of, distribute, sell, transfer, rent, perform and/or market Kelly
19 Toys Holdings, LLC’s Squishmallows Works.
20 83. Without permission, Defendant knowingly and intentionally reproduced,
21 copied, and displayed the Squishmallows Works by manufacturing, advertising,
22 marketing, promoting, distributing, displaying, offering for sale and/or selling
23 infringing products which bear such Squishmallows Works, or artwork that is, at a
24 minimum, substantially similar to the Squishmallows Works. For example:
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14 84. Defendant’s unlawful and willful actions as alleged herein constitute
1 Prof. Code § 17200 et seq.), and under common law, and that they have done so
2 willfully;
3 g. Direct Defendant to provide Kelly Toys with an identification in writing
4 of any and all entities that are presently using the Squishmallows Trade Dress or
5 Squishmallows Works on Defendant’s behalf and inform them that they must
6 immediately cease such use;
7 h. Direct Defendant to immediately recall any and all merchandise
8 previously provided to any entity embodying or using the Squishmallows Trade Dress
9 or the Squishmallows Works;
10 i. Enter an order, pursuant to 15 U.S.C. § 1118, directing Defendant to
11 deliver for destruction all products, brochures, marketing materials, decals, stickers,
12 signs, prints, packages, receptacles, wrappers, boxes, and advertisements in their
13 possession or under its control, embodying any unauthorized copy of the
14 Squishmallows Trade Dress or any of the Squishmallows Works, or any simulation,
15 reproduction, counterfeit, copy, confusingly similar likeness, or colorable imitation
16 therefor, and all plates, molds, matrices, programs, and other means of making the
17 same;
18 j. That Defendant provide Kelly Toys in writing with the following
19 information relating to Defendant’s goods marketed, advertised, offered for sale, or
20 sold under either or both of the Squishmallows Trade Dress and/or Squishmallows
21 Works:
22 (i) the name, address, and telephone number of each and every United
23 States entity to whom Defendant has made available or otherwise
24 provided any such products;
25 (ii) the total number of units distributed and sold;
26 (iii) the total number of units remaining in inventory; and
27
28
- 38 -
COMPLAINT
6509778
Case 2:24-cv-01169-JLS-MAR Document 1 Filed 02/12/24 Page 39 of 41 Page ID #:39
- 39 -
COMPLAINT
6509778
Case 2:24-cv-01169-JLS-MAR Document 1 Filed 02/12/24 Page 40 of 41 Page ID #:40