Mattel Accuses MGA of Stealing Bratz Doll Idea as Second Trial Begins

Mattel Inc., the maker of Barbie, accused rival toymaker MGA Entertainment Inc. of stealing the idea for the pouty, multiethnic Bratz doll in 2000 when it made a deal with the designer who Mattel said worked for them when he made the initial sketches for the doll.

Opening statements started today in Santa Ana, California, federal court for a trial that U.S. District Judge David Carter has said may take as long as four months. Mattel is seeking damages for copyright infringement and trade-secret theft from closely held MGA, which in turn will ask the jury to hold Mattel liable for unfair competition and stealing its trade secrets.

“We will prove to you that Bratz was created at Mattel,” John Quinn, a lawyer for the company, told the jurors. “MGA took Mattel’s design and with it took Mattel’s sales.”

The case returned to court after a $100 million verdict in favor of Mattel was overturned on appeal. MGA said in court filings that Mattel may seek as much as $1.1 billion in damages for its trade-secret claims.

“MGA didn’t steal Bratz from anybody,” Jennifer Keller, a lawyer for the Van Nuys, California-based company, said today in her opening statement.

In 2008, a federal jury in Riverside, California, agreed with Mattel that designer Carter Bryant made most of the initial sketches for the Bratz dolls while he worked for El Segundo, California-based Mattel. The jury awarded the toymaker $100 million in damages and Stephen Larson, the judge presiding over the trial, awarded Mattel rights to most of MGA’s Bratz products.

Retrial Ordered

The U.S. Court of Appeals in San Francisco 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 gave Mattel ownership of later Bratz dolls that MGA developed. Carter, who got the case after Larson left the bench, said last year that all of Mattel’s claims needed to be retried.

Bryant has said he came up with the Bratz idea and made the first sketches in 1998, while he was living with his parents in Missouri and wasn’t working at Mattel, Keller told jurors today. He was a doll-fashion designer and not a doll designer, Keller said. Bryant always maintained that, while he came up with the idea for Bratz, MGA created the doll, she said.

MGA asked Bryant in 2000 whether he made the sketches as part of his work at Mattel and whether Mattel had any rights to his sketches and did due diligence to verify that it didn’t, Keller said.

Inventions Agreement

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.

Carter last month ruled that Mattel can pursue copyright- infringement claims for only the first four Bratz dolls sold by MGA in 2001 and two later ones. Under the judge’s ruling, Mattel can still pursue its trade-secret claims against the entire line of Bratz dolls as well infringement claims for the production sculpt used for most of the dolls, Mattel’s lawyers said.

2004 Lawsuit

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. Bryant settled with Mattel before the start of the 2008 trial.

Quinn said in his opening statement that Mattel will also argue that some of its employees who were recruited by MGA in the U.S., Mexico and Canada took confidential Mattel information with them to help MGA grow its business in the wake of the success of Bratz.

“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 last week. “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.”

Keller also told the jury that Mattel used its size and power to pressure retailers not to carry Bratz and that it had its employees use fake identities to gain access to MGA’s showrooms at toy fairs.

Quinn said earlier that the information MGA shared with retailers and media at toy fairs aren’t trade secrets and that the company wasn’t entitled to as much as $475 million in damages that it may seek for trade-secret theft.

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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