Mattel Hails Success in First Phase of Bratz Legal Dispute

RIVERSIDE, July 21: Mattel
is celebrating an initial legal win in its dispute with MGA, with a federal
jury ruling that the majority of Bratz design drawings, prototypes and sculpts
were created by doll designer Carter Bryant while he was still employed by
Mattel.

The jury has upheld
Mattel’s contention that Bryant designed the successful Bratz toy line while he
was still under contract with an “Inventions Agreement” with Mattel. A Mattel
statement says that Judge Stephen Larson, the federal judge presiding over the
case, previously ruled that the Inventions Agreement is enforceable and it
applies to any Bratz-related “inventions”—including “designs,
improvements, ideas, concepts and copyrightable subject matter”—that
Bryant created during the period of his employment with Mattel. The jury
maintained that Bryant breached his “duty of loyalty” to Mattel by “entering
into a contract with Mattel’s competitor, while still employed by Mattel, to
produce a line of fashion dolls to be marketed in direct competition with
Mattel’s products.”

A Mattel statement notes
that the ten-person jury also determined that MGA and its CEO, Isaac Larian,
“intentionally interfered” with Bryant’s contractual duties to Mattel, as well
as “aided and abetted Bryant’s breach of his duty of loyalty; aided and abetted
Bryant’s breach of the fiduciary duties he owed to Mattel; and converted Mattel
property for their own use.”

The Bratz has become a
multibillion-dollar franchise for MGA, with a successful doll line,
direct-to-DVD specials, an animated series, a live-action feature and a host of
consumer products.

Announcing the legal win,
Robert A. Eckert, the chairman and CEO of Mattel, noted: “This is a victory for
all the hard-working people at Mattel who come together to create many of the
most beloved toys for children. It is also a victory for all those who believe
in fair play.”

He continued: “Mattel is
home to many of the world’s most talented toy designers—they are the
creative engine of the company. We want to ensure that Mattel’s Design Center
is a place where concepts are built upon and enhanced by the entire team—not
stolen for personal gain and to assist a competitor.”

The trial is far from
over—the jury will soon have to determine if the Bratz dolls or related
merchandise infringe on the Bratz drawings and sculpts that are now owned by
Mattel. If they do infringe, the jury will be asked to determine damages to be
paid by MGA. Bryant is no longer a defendant in the case, after reaching a
confidential settlement with Mattel in May.

Responding to the court’s
decision, MGA referred to Mattel as a “toy goliath.” An MGA statement notes
that in his closing arguments to the jury, the company’s lawyer, Tom Nolan,
stated: “Mattel wants to take ideas and drawings that they did not conceive of,
that they did not draw and that they did not make.”

MGA went on to stress that
this is only the first stage of the trial, with “significant issues that remain
to be tried.” Nolan emphasized that the verdict “does NOT entitle Mattel to any
rights whatsoever of Bratz. The verdict merely determined that certain drawings
by Carter Bryant were created while he worked at Mattel.”

“We at MGA remain
confident that we will ultimately be successful,” added Larian. “This is
because it is undisputed that MGA—not Carter Bryant—independently
created the Bratz dolls. Carter Bryant did not have anything to do with the
many Bratz-related products we created, such as Bratz Babyz, Lil’ Bratz and
Bratz Kidz to name a few.”

Larian continues that the
suit from Mattel is in regards to the “first generation” of Bratz dolls from
2001. “Under no circumstance will Mattel be able to assert ownership of the
Bratz franchise—which will always belong to MGA. Our customers,
retailers, vendors and suppliers can take comfort in knowing that there will be
no disruption in MGA’s manufacturing and sales of Bratz dolls or any other
products.”

Nolan added: “We are
confident that the jury or court will vindicate MGA and Isaac Larian of all of
Mattel’s claims, when they hear the ‘rest of the story.’ ”

MGA contends that Mattel
is “trying to hijack” seven years of work by the “family-owned company.” MGA
also states that Mattel, in internal marketing documents, admitted that it had
been “out thought and out executed” by the company. MGA also attests that
litigation is being used as a “business strategy” by Mattel. MGA cites one
unnamed former Mattel executive as testifying that Mattel intended to “litigate
MGA to death.”

—By Mansha Daswani