Build-A-Bear, maker of Warren Buffett's Squishmallows face off in court

By Jonathan Stempel

NEW YORK (Reuters) - Warren Buffett is taking on Build-A-Bear.

Jazwares, the Berkshire Hathaway-owned maker of the popular Squishmallows plush toys, sued Build-A-Bear Workshop on Monday, calling its new Skoosherz plush toy line "knockoffs" that infringed its intellectual property rights.

Not to be outdone, Build-A-Bear filed its own lawsuit against Jazwares on Monday, saying Skoosherz are based on its existing plush animals, and that its advertising and marketing since last month's launch make clear who made them.

The dispute marks Jazwares' latest effort to protect Squishmallows from alleged knockoffs and counterfeits, including a lawsuit against online retail platform Alibaba.

Squishmallows joined the ranks of the world's hottest toys after becoming a viral sensation on TikTok, and winning devotees like Lady Gaga and Kim Kardashian.

They have been a part of Berkshire since Buffett's Omaha, Nebraska-based conglomerate bought Jazwares' parent, the insurance holding company Alleghany, in October 2022.

Jazwares sued Build-A-Bear in Los Angeles federal court.

It said Build-A-Bear "blatantly and intentionally" undermined its goodwill and created substantial confusion among consumers by copying Squishmallows' look and feel, including "shaped fanciful renditions" of animals, "simplified Asian style Kawaii faces," and "velvety velour-like" fabric.

"When it comes to intellectual property rights, imitation is not the sincerest form of flattery," Jazwares' lawyer, Moez Kaba, said in a statement.

According to Build-A-Bear's lawsuit in St. Louis federal court, however, Squishmallows lack a consistent look and feel, and Skoosherz are simply the most recent type of "soft, pillow-like squishie-type" toys that have been trending for years.

Build-A-Bear said it launched Skoosherz in anticipation of Valentine's Day, Feb. 14, to tap a market for plush toys that were "uniquely styled for optimal hugging benefits."

Neither Build-A-Bear nor its lawyers immediately responded to requests for additional comment.

Jazwares wants Build-A-Bear to stop selling Skoosherz and similar products, and pay unspecified triple damages.

Build-A-Bear wants a court declaration that it did not infringe Jazwares' "trade dress" rights in Squishmallows, and that any such rights are unenforceable.

Squishmallows were created in 2016 by Kelly Toys. Jazwares bought a majority stake in that company four years later.

The cases are is Kelly Toys Holdings LLC et al v Build-A-Bear Workshop Inc, U.S. District Court, Central District of California, No. 24-01169; and Build-A-Bear Workshop Inc v Kelly Toys Holdings LLC et al, U.S. District Court, Eastern District of Missouri, No. 24-00211.

(Reporting by Jonathan Stempel in New York; Additional reporting by Blake Brittain in Washington; Editing by Matthew Lewis)