Mattel Loses in Bratz Spat

A federal jury in California handed a stinging defeat to toy giant Mattel Inc., deciding that MGA Entertainment Inc. is the rightful owner of Bratz, a once-hot line of fashion dolls whose popularity has waned in recent years.

Not only did the jury reject Mattel's claim to ownership of the Bratz franchise, but it backed counterclaims by MGA that Mattel had stolen trade secrets from its smaller rival, awarding MGA damages of $88.5 million.

The verdict followed a three-month-long trial in federal court in Santa Ana, Calif., over who owned the designs that spawned the sultry, pouty-lipped Bratz dolls. The trial was the most recent chapter in a long-running dispute between the two Los Angeles-area toy makers, which may not be over.

In a copyright-infringement lawsuit, Mattel had alleged that Carter Bryant, a designer of its Barbie line, came up with the concept for Bratz when he worked at Mattel in the late 1990s. Mattel claimed that Mr. Bryant violated his "inventions agreement" by taking the drawings for the dolls to MGA when he went to work there.

Mattel argued that the contract entitled it to all of Mr. Bryant's ideas, even those he developed on nights and weekends.

MGA denied the allegations and countersued, accusing Mattel of engaging in corporate spying and unfair business practices when it realized it couldn't compete against the blockbuster toy. MGA claimed Mattel stole trade secrets, in part by sending spies with fake identification to toy fairs.

"After seven years of fighting with Mattel, I'm finally vindicated," said MGA Chief Executive Isaac Larian.

The verdict's message is "that companies need to write contracts that are clear, and not so overreaching," said MGA attorney Annette Hurst. "No single employer can lock up all the ideas of its work force and have a threat hanging over peoples' heads as they go from job to job."

"We are disappointed by the verdict, but we remain committed to protecting the intellectual property that is at the heart of business success," said Mattel Chief Executive Robert Eckert , in a statement.

Read more here: Wallstreet Journal


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