Wrench, LLC v. Taco Bell Corp.

Wrench (plaintiff) developed the 'Psycho Chihuahua' character; Taco Bell's (defendant) creative-services manager Alfaro repeatedly requested materials and licensing proposals about the character over many months of negotiations conducted through Wrench's licensing agent. Taco Bell never formally accepted or rejected the proposals but kept requesting more character materials even after hiring a new ad agency, which claimed to independently develop a similar feisty-Chihuahua concept; Taco Bell's wildly successful national Chihuahua campaign launched soon after. Wrench sued for breach of implied contract, misappropriation, conversion, and related claims; Taco Bell argued no implied contract existed and, alternatively, that any such claims were preempted by the Copyright Act.

Whether a contract between two parties may be implied in fact based solely on the parties' conduct, language used, actions, or other circumstances.