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Clickety-clack. Clickety-clack Clickety-clack. Ca-Ching! Overturning an Illinois federal judge’s post-trial ruling, the 7th U.S. Circuit Court of Appeals said on Aug. 18 that the maker of a popular children’s wooden toy train set owes royalties to the innovator of its distinctive “clickety-clack” train track for as long as the tracks are sold. Learning Curve Toys Inc. v. PlayWood Toys Inc., No. 02-1916. The decision reinstated a jury’s verdict that Learning Curve, the maker of the “Thomas the Tank Engine” train line, misappropriated PlayWood’s idea for grooved tracks that made a “clickety-clack” sound as a train rolled over them. The jurors awarded the two-man company 8% of Learning Curve’s track sales. According to the court, by April 2000 Learning Curve had sold $20 million worth of track alone, plus more in accessory packs. The court said that Learning Curve executives learned of PlayWood’s noisy track idea during a 1993 meeting with PlayWood’s principals. Operating under what both sides agreed was a confidentiality agreement, Learning Curve’s executives told PlayWood’s principals that they had struggled but failed to create a distinctive innovation to its chief competitor’s smooth train tracks. Hoping to do business with Learning Curve, PlayWood suggested grooving the track for a more authentic noise and bumpiness, came up with the name “Clickety-Clack Track” and gave the unpatented prototype to Learning Curve. The parties’ contract discussions, however, never really left the station. Learning Curve meanwhile began selling a “Clickety-Clack Track” similar to PlayWood’s prototype. Responding to a declaratory judgment action, PlayWood claimed that Learning Curve misappropriated its trade secret under Illinois law. Although the jury found for the up-start PlayWood, the trial judge was not on board, ruling instead that the concept was not a trade secret because PlayWood did not meet all six trade secret factors set forth in the Restatement (First) of Torts. Remanding the case for determination of exemplary damages and attorney fees, the 7th Circuit found that Illinois law does not require establishment of all six restatement factors. Rather, the factors are aids for applying Illinois’ statutory two-part test. The circuit court concluded that substantial evidence supported the jury’s verdict.

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