Mattel, MGA Take Bratz Doll Copyright Fight Before Jury in Second Trial
Mattel, MGA Take Bratz Doll Fight Before Jury
Daniel Acker/Bloomberg
An MGA Entertainment Co.'s 'Bratz Diamondz' doll.
An MGA Entertainment Co.'s 'Bratz Diamondz' doll. Photographer: Daniel Acker/Bloomberg
Mattel Inc., the Barbie-doll maker whose $100 million verdict against MGA Entertainment Inc. was thrown out on appeal last year, is taking its fight over the origins of its rival’s Bratz dolls back before a jury.
Jury selection is set to start today in Santa Ana, California, for a trial that U.S. District Judge David Carter has said may take as long as four months. Mattel claims Carter Bryant, the designer who created Bratz, was a Mattel employee when he came up with the idea and made the first sketches and that he secretly took the doll design to MGA.
Mattel may seek as much as $1.1 billion in damages for trade-secret theft, according to a court filing by closely held MGA. The judge, citing the July decision by the U.S. Court of Appeals for the Ninth Circuit in San Francisco, ruled that Mattel can pursue copyright-infringement claims for only the first four Bratz dolls sold by MGA in 2001 and two later ones.
“Not only do the vast majority of the subsequent generations of Bratz dolls differ in their hair styles and fashions, the two elements identified by the Ninth Circuit, but they lack any meaningful similarities outside of ideas,” Carter said in his Dec. 27 ruling.
Under the judge’s ruling, Mattel can still pursue its trade-secret claims against the entire line of Bratz dolls, Mike Zeller, a lawyer for Mattel said in an e-mailed statement. The jury will also decide whether a sculpt, a three-dimensional design used for most of the dolls, infringes Mattel’s rights and what damages MGA should pay if it does, Zeller said.
Bratz Sculpt
The judge is allowing Mattel, the world’s largest toymaker, to argue at the trial that an MGA production sculpt for the Bratz dolls infringes a concept sculpt that Bryant allegedly made while working at Mattel.
Bryant settled with El Segundo, California-based Mattel before the start of the first trial in 2008 and is no longer part of the case.
Opening arguments are scheduled for Jan. 18. In addition to the copyright claims from the first trial, Mattel will argue that MGA, based in Van Nuys, California, stole trade secrets when it recruited Bryant and other Mattel employees in the U.S., Mexico and Canada. Carter ruled that neither Mattel nor MGA can seek damages based on their civil racketeering allegations.
“Mattel’s allegations that we instructed Mattel employees to steal documents is nonsense,” Isaac Larian, MGA’s founder and chief executive officer, said in an e-mailed statement. “To the contrary, we told them, in writing, don’t bring anything from Mattel, please. Not even a paper clip. We look forward to the judicial system to correct the wrongs Mattel has done to MGA over the years.”
Doll Hair
In his ruling, Carter rejected Mattel’s request to throw out MGA’s unfair-competition claims against it. MGA alleges that Mattel threatened licensees, distributors and retailers that did business with MGA and that Mattel attempted to deplete the supply of doll hair by buying excess quantities in an effort to crowd MGA out of the market.
“MGA has easily raised a triable issue about whether Mattel unfairly competed,” Carter said. “For example, Mattel may have routinely conditioned its contracts with retailers on the retailers not carrying MGA’s products, classic anti- competitive behavior that potentially deprived consumers of valuable products.”
Zeller said MGA’s unfair-competition claims are confused and wrong and that MGA admitted it suffered no damages.
In 2008, a federal jury in Riverside, California, agreed with Mattel that Bryant made most of the initial sketches for the pouty, multiethnic Bratz dolls while he worked for Mattel. The jury awarded the toymaker $100 million in damages. U.S. District Judge Stephen Larson, who has since returned to private practice, awarded Mattel the rights to most of MGA’s Bratz products.
Flawed Ruling
The appeals court found that Larson had wrongly ruled that Mattel automatically owned Bryant’s design under the terms of an invention agreement and that the judge incorrectly had given Mattel ownership of Bratz dolls that MGA developed after 2001. Carter, who got the case after Larson left the bench, last year said all of Mattel’s claims needed to be retried.
The new jury, unlike the one in 2008, will have to decide whether the inventions agreement that Bryant signed in 1999 entitles Mattel to his ideas for the names “Bratz” and “Jade,” one of the first-generation dolls, and whether the agreement entitles Mattel to the inventions that the designer conceived of during his off-hours on nights and weekends.
Designer’s Contract
“There’s a big issue with respect to what Carter Bryant’s employment contract with Mattel covers and doesn’t cover,” Carole Handler, an intellectual property lawyer who isn’t involved in the case, said in a phone interview. “That issue was a significant part of” the opinion written by Alex Kozinski, the chief judge of the appeals court in San Francisco, she said.
Also, unlike the previous trial, Mattel will be able to argue that MGA is liable for misappropriation of its trade secrets, including the concept for Bratz. Those claims had been reserved for a second phase of the 2008 trial, which didn’t take place because of the appeals court’s ruling on that trial’s first phase.
Mattel “invests a tremendous amount of material and human resources into the development of product concepts and ideas, including product names,” Carter said in his December ruling. “Mattel’s design center houses hundreds of employees who experiment with doll names, fashions, and accessories.”
‘Swapping Styles’
Mattel will argue that MGA stole its trade secrets when it recruited Mattel employees, including three from its Mexican unit who helped set up MGA’s business in Mexico. Others include a former Mattel marketing director, who Mattel said told MGA about an unreleased “swapping styles” theme that MGA used for a line of Bratz dolls.
Other claims Mattel will argue include, to the extent they don’t involve the same activities underlying the trade-secret misappropriation claims, allegations that MGA intentionally interfered with Mattel employees’ contracts, and allegations that MGA aided and abetted breaches of some of those employees’ duty of loyalty to Mattel.
Carter barred Mattel from pursuing claims that MGA aided and abetted breaches of fiduciary duty by former Mattel employees because those were superseded by trade-secret theft allegations.
MGA is being allowed by Carter to pursue its own trade- secret theft claims based on allegations that Mattel had members of its “market intelligence group” pose as retailers and journalists at toy fairs to gain access to competitors’ showrooms.
Mattel first sued Bryant in 2004, alleging he secretly worked for a competitor while still employed at Mattel. Two years later Mattel filed its copyright-infringement and trade- secret theft claims against MGA.
The case is Bryant v. Mattel, 04-09049, U.S. District Court, Central District of California (Santa Ana).
To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.
To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.
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