Toy Wars: Marketing for 3-D Kid Kit Triggers Federal Lawsuit

A Bentonville-based toymaker has accused a Canadian competitor of underhanded marketing practices and is asking the court to bring the dispute to a speedy end as summer gives way to holiday shopping season.

Andy Wiseman, through his Redwood Ventures LTD and Redwood Ventures LLC, in July sued Irwin RX LTD, iToys USA LTD, and Tech 4 Kids Inc., Irwin RX’s North American manufacturing partner, on two counts of copyright infringement, one count of trade dress infringement, one count of trademark infringement and one count of unjust enrichment.

Among other things, the Redwood suit in U.S. District Court for the Western District of Arkansas, with district judge Timothy L. Brooks presiding, is asking that all of Tech 4 Kids’ packaging, printed materials, product materials and other infringing articles be turned over to Redwood and destroyed.

“We want them to stop using our intellectual property,” Wiseman said. “We did not want to go to court, but what we could not tolerate is that our product would be diluted.”

Meanwhile, Tech 4 Kids and Irwin RX are defiant.

“We are confident that Redwood’s claims are disingenuous and have no basis in law or fact,” said Brad Pedersen, president and CEO of Tech 4 Kids, in a press release issued Aug. 4. “We believe Redwood’s claims are a form of scare tactics.”

At stake are competing 3-D systems that allow kids to draw and build set pieces like a pair of glasses or a clown fish — or something straight out of their imaginations — using a pen that extrudes a rapidly drying structural ink. While the pen and the ink are not at issue, the marketing of the products is.

Redwood’s toy, IDO3D, and the Canadian toy, 3D Magic 3D Maker, are both set to hit the shelves this fall with important retailers like Wal-Mart Stores Inc., Target and Toys “R” Us. But in its suit, Redwood contends that Tech 4 Kids is trying to piggyback on its marketing by creating a promotional package that looks and sounds too much like Redwood’s.

And when it comes to selling a product at over 27,000 points of distribution in 40 countries, and doing so in tandem with a multi-million dollar ad campaign through outlets like the Disney Channel, Nickelodeon and the Cartoon Network, a cloudy brand can be problematic.

“This is different from two people having a teddy bear,” Wiseman said. “What it says to us is that they were not creative enough to come up with their own product.”

Redwood is represented by Meredith Lowry, Eric Berger and Gregory Jones of Wright Lindsey & Jennings LLP in Rogers. Tech 4 Kids is represented locally by Mark Henry of the Henry Law Firm in Fayetteville and Clifford Plunkett of Friday Eldredge and Clark LLP in Fayetteville.

 

Maker Movement

In addition to the lawsuit, the toy trouble also includes a war of words in the print and online media distributed to those who follow the $84 billion global toy industry.

In a July 28 press release, Redwood announced its suit and its effort to “prevent the continuing infringement and use of copyrighted works, materials and trademarks ….” On Aug. 4, Tech 4 Kids responded with a press release of its own, calling the Redwood filing “troll-like” and vowing to defend itself against the “baseless” lawsuit.

Both the Redwood toy and the Tech 4 Kids toy are part of what’s called the “maker movement” — toys that allow and encourage kids to build something of their own rather than play a game. Earlier this year, the Toy Industry Association announced the top trends of 2015, and “maker movement” toys were on the list.

“Open-ended forms of play will reign supreme in 2015, with an abundance of toys and games that allow kids to build, customize, create, and develop important skills through play,” said Adrienne Appell, a toy association trend expert, speaking at the New York Toy Fair in February.

And according to the NPD Group, the world leader in research on consumer spending, “maker movement” toys are already proven performers in the marketplace. Based on 2014 point-of-sales data, NPD reports that the Building Sets and Arts and Crafts categories — categories in which 3-D toys can be included — grew by 13 percent and 3 percent, respectively.

 

High Stakes

The battle between Redwood and Tech 4 Kids might be about a toy, but the litigants are not children. Wiseman is a 10-year veteran of the toy industry who has been associated with Bratz dolls, Zhu Zhu Pets and, more recently, Lil’ Fishys. Tech 4 Kids, with operations in over 80 countries, is behind such brands as Mash’Ems, Fash’Ems, Squishy Pops, and Storytime Theater.

That the two companies would fight for primacy, or at least market share, in the growing 3-D pen category is no surprise, said Richard Gottlieb, a leading toy industry consultant and observer who is owner of Global Toy Experts and publisher of Global Toy News. Speaking to the overall climate surrounding the business side of toys, he said, “The industry has a history of disputes over intellectual property.”

A lot goes into putting a product on the shelf — research and development, beta testing, marketing, brand equity, personnel, and most importantly, the ability to execute an idea. With all that on the line, someone will win, and win big, and proportionally, someone will lose.

“The stakes are high,” Gottlieb said.

He did not speak directly to the lawsuit between Redwood and Tech 4 Kids, but in his years of experience within the toy industry, he said he understands what’s wrapped up in a complaint filed on the brink of holiday season.

“It’s personal,” he said. “People invest their heart and their intellect into these things. This is about people’s hopes, dreams and ideas. These are not companies, they are people.”

 

Palm Trees and Monkeys

Redwood contends that Tech 4 Kids copied some of its marketing ideas for packaging, instructions and a commercial, during the New York Toy Fair in February, as well as during the spring when Redwood submitted copyright-pending marketing materials to retail test facilities.

In mid-June, when Tech 4 Kids provided retailers with updated marketing materials of its own, according to the Redwood suit, they looked and sounded awfully familiar to Redwood’s.

“This presentation included new themes such as animals, dinosaurs, butterflies, and sea creatures, just as Redwood’s sales presentation included in January 2015,” says the lawsuit. “Defendants unlawfully and willfully copied all or part of Redwood LTD’s copyrighted materials, in violation of Redwood LTD’s copyrights.”

Specifically, Redwood says Tech 4 Kids copied the Redwood TV commercial by using similar dialogue and a similar set design, that Tech 4 Kids mimicked the Redwood logo, and that Tech 4 Kids used a knockoff of Redwood’s palm tree with pink monkeys hanging from the fronds, a piece copyrighted as VA 1-961-509.

In addition to having the Tech 4 Kids materials destroyed, Redwood is also seeking permanent injunctive relief, an equitable accounting from Tech 4 Kids, compensation for damages and lost profits, expedited discovery and attorney’s fees.

In its Aug. 4 press release to the toy industry, Pedersen said Tech 4 Kids is undeterred by the lawsuit, and is charging toward the Christmas retail bonanza.

“Our product is shipping; the marketing is now in full roll out, and our customer service is being inundated with customer inquiries,” he said. “Many industry experts have already picked the 3D Magic 3D Maker to be one of the most sought after children’s activity toys in the coming holiday season and we are ramping [up] our production to meet the anticipated demand.”