Game inventor’s case against toy giant Mattel gets much-needed shot in the arm from panel of judges
By CORTNEY FIELDING Special to the Daily Press
FEDERAL COURT — A Santa Monica game inventor stands to be awarded millions of dollars now that a federal panel of judges has ruled that an e-mailed agreement can be considered a legally binding document.
Stuart Lamle, who is suing toy maker Mattel for allegedly backing out of an agreement that would have made him millions of dollars, has convinced the federal circuit court of appeals that the case should be heard by a jury.
Lamle has been battling Mattel in court since 1999, claiming the company owes him $28 million in lost sales after they backed out of an agreement two years earlier. He’s suing for contract and patent infringement.
After five years of legal wrangling, a federal circuit court of appeals in January ruled that an e-mailed summary of the unsigned contract Mattel sent Lamle could be interpreted as a written contract. Mattel never signed a formal written agreement with Lamle.
The federal appeals court ordered that the case must be heard by a jury in the U.S. District Court.
Lamle invented a game called Farook, which resembles tic-tac-toe and is marketed as “the world’s first high-level strategy game since chess.”
Lamle said in 1997 he entered into a three-year verbal agreement with Mattel, which would give the company the rights to sell Farook. Shortly after, the toy company paid Lamle a $25,000 advance and took the game to its pre-toy fair, where it sold Farook as a Mattel product, packaging it in Mattel boxes. Lamle contends those actions demonstrate Mattel’s intent to enter into a written contract with him.
Days after the fair, company officials sent him a facsimile explaining they were no longer interested in purchasing his game. Mattel gave Lamle notice while meeting with his investors.
“It was certainly the most memorable day of my life,” Lamle said. “My investors all said good-bye after that.”
Company officials said they decided not to go forward with their plans to market Farook because it performed poorly at the fair, according to court documents.
Lamle said Mattel’s decision left him broke and without any options.
“They destroyed my reputation in the game industry,” he said.
Lamle then turned to the U.S. District Court to settle the matter. A panel of judges in 2001 tossed out the lawsuit, ruling that Mattel didn’t violate a contract because one was never formally signed. The court pointed to an agreement Lamle signed before going into negotiations that said the company had no obligation to him unless “expressed in the formal, written contract.”
The court also decided Lamle didn’t have a case because of the federal Statute of Frauds, which stipulates that any binding legal agreement that goes beyond the scope of one year must be documented in writing. Lamle’s contract with Mattel was set for three years with an additional two-year option.
Lamle appealed the decision to the federal circuit court of appeals on the grounds that the e-mail shows that an agreement was made between the two parties. The e-mail, written by a Mattel employee who had handled most of the negotiations, summarized the terms of the contract, pricing and product details, Lamle said.
The higher court remanded the case back to the U.S. District Court for review, stating the lower court hadn’t sufficiently articulated its reasons for dismissing the lawsuit. The lower court once again ruled that the lawsuit had no merit, forcing Lamle to appeal the case a second time.
He finally gained a victory on Jan. 5 when the federal circuit court of appeals decided the e-mail could be construed as a contract and met the Statute of Fraud terms. However, a jury must decide if the details of the e-mail are sufficient for it to be a binding contract.
Lamle, who is representing himself, will have to prove that he had an oral contract with Mattel, that the e-mail contained the “material terms” of that oral agreement, and that Mike Bucher, the employee who wrote the e-mail, had authority to do so.
Manhattan Beach patent attorney Robert Lauson agrees with the federal court that Lamle has a case. While Mattel had Lamle sign a standard product disclosure form, the company “proceeded to act otherwise” by selling the game at the fair and sending out the e-mail, Lauson added.
While not a “major groundbreaking patent law case,” it has set a precedent for how e-mails are interpreted and whether or not they can be binding in court.
Lauson said with the advent of the Internet and electronic communication, the issue is increasingly being debated in the courts.
“We see things like this happening all the time with the Internet,” he said, adding issues surrounding the validity of e-mails are bound to come up. “E-mail is how we communicate now.”
Of the $28 million Lamle is suing Mattel for, $1.8 million covers the guaranteed sales he said the company promised him.
The terms of Mattel’s agreement with Lamle gave it the rights to sell Farook in Europe, while Lamle would have kept sole rights to sell the game in the United States and Japan, said Lamle. But according to the e-mail, Mattel agreed to manufacture Farook for both Mattel and Lamle to sell.
Lamle argues that, based on game industry standards, he would have stood to make more than $18 million in the United States had Mattel manufactured the game for him. The other $26.2 million is for lost sales in the United States and Japan, plus interest.
Lauson said Lamle will have “an uphill battle” trying to convince a jury to award him $28 million simply because it’s an enormous amount.
Lamle is confident he can demonstrate the conditions set fourth by the court, but acknowledged he doesn’t know if the jury will give him all of what he has asked for.
“You never know what the jury is going to do,” he said.
Lamle said after all the time spent in court, he would still enter into an agreement with a toy company, that is “if the conditions were right, and it isn’t Mattel.”
Originally published in the Santa Monica Daily Press print edition on February 9, 2005. Read the original PDF.