Barbie vs. Bratz: What Was the Mattel and MGA Lawsuit?

The dispute was a decade-long set of lawsuits between two California toy companies over who owned the Bratz doll concept. Mattel, maker of Barbie, argued that designer Carter Bryant came up with Bratz while still working for it. MGA Entertainment, which sold Bratz, disagreed. Mattel won a large verdict in 2008, an appeals court threw it out in 2010, and a retrial in 2011 went MGA's way. [1] [2]

Within five years Bratz had captured about 40 percent of the market, giving Barbie a formidable competitor. In 2000, while employed in Mattel's Barbie Collectibles department, Bryant pitched the Bratz idea to MGA with sketches and a crude mock-up. He signed a consulting agreement with MGA, told Mattel he was resigning, gave two weeks' notice, and began building a prototype for MGA. Once Bratz became a success, Mattel discovered his involvement and sued in 2004, claiming he had violated his employment agreement. Bryant settled before trial, but the two companies kept fighting. The core problem was an employment agreement that was ambiguous about intellectual property rights. [1]

In July 2008 a jury found that Bryant's ideas for the names Bratz and Jade, along with the sketches and prototype, were created within the scope of his Mattel employment. It found MGA liable for copyright infringement and awarded Mattel US$100 million. The district court then imposed a constructive trust over all Bratz trademarks, effectively handing the business to Mattel, and barred MGA from selling any Bratz dolls. [1]

On July 22, 2010, the Ninth Circuit reversed, vacating the trust and the injunction. It found Bryant's agreement ambiguous on whether it covered ideas, and on whether it covered works made in his own time. Those questions belonged with a jury. Chief Judge Alex Kozinski wrote that it was not equitable to transfer a billion-dollar brand, its value overwhelmingly the result of MGA's own efforts, because it may have started with two misappropriated names. The court also said the prototype received only thin copyright protection, and that later generations of dolls differed markedly from the original sketches. [1] [3]

The district court granted a new trial on all claims, and trade secret claims were added. In April 2011 the jury unanimously rejected Mattel's copyright claims and found Mattel did not own the rights. The jury did not find a Mattel trade secret in any Bratz materials. MGA had accused Mattel of stealing 114 of its trade secrets, and the jury awarded damages on 26 of them: Mattel had run a market intelligence group whose staff posed as retailers or reporters to enter competitors' private showrooms at toy fairs. The jury found this willful and malicious and awarded US$88.5 million. It also awarded Mattel US$10,000 for MGA's interference with Bryant's contract. [1] [2]

In August 2011 the judge reduced the trade-secret award to US$85 million because of a mathematical error and possible double counting. He added US$85 million in punitive damages, US$2.5 million in fees and costs, and US$137.4 million in fees for MGA's defense against Mattel's claims. The total was about US$309.9 million. [4]