Given that I have spent what seems like $500,000 on Thomas the Tank Engine stuff over the past few years, this case was extremely disturbing.
Two guys made wooden trains and track. They are encouraged to go to the NY Toy Fair where they are immediately met by Learning Curve, holders of the licensee for Thomas the Tank Engine trains and track. Learning Curve likes the guys’ stuff and sends people to meet with th right emafter the Toy Fair. The meeting takes place purusant to a confidentiality agreement.
At the meeting Learning Curve complains that it is doing poorly selling track. Some toy stores would carry the Thomas trains but not the track, carrying their competitor, Brio’s stuff only. The guys suggest that maybe the tracks should make noise, and they demonstrate to the Learning Curve people that if you cut grooves in the track, they make a ‘clickedy clack’ sound. They suggest that they call it clickedy clack track (those of you with kids know where this story is heading now). The Learning Curve guys take the prototype track back with them.
Two years of failed negotiations later, the guys are in a toy store one day and see Learning Curve’s Clickedy-Clack Track.
The Seventh Circuit has now held that this may be appropriate for exemplary damages under Illinois trade secret law.
From now on I am buying Brio or some other compatible track.
Learning Curve v. Playwood, 02-1916 (7th Circuit August 18, 2003)