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Mattel Wins Ruling in Barbie Dispute

The toy maker can proceed with a lawsuit seeking to enforce a settlement with a German firm.

December 23, 2003|From Bloomberg News

Mattel Inc., the world's largest toy maker, on Monday won a round in its court fight with a German company that seeks millions of dollars in royalties on Mattel's top-selling Barbie dolls.

The 9th U.S. Circuit Court of Appeals in San Francisco reinstated a lawsuit by Mattel that seeks to enforce a 1963 settlement with Greiner & Hausser. The German toy maker claims Barbie is a copy of its doll and seeks royalties on every Barbie sold since 1964.

The doll, Mattel's largest product line, has stiffer competition these days from rival dolls such as MGA Entertainment's Bratz. Barbie, introduced in 1959, accounts for about 25% of Mattel's $4.89 billion in total sales and, including licenses, about 50% of the company's profit, analyst Sean McGowan of Harris Nesbitt Gerard said.

"Barbie generates over $2 billion in wholesale revenues each year, a sum which helps to explain why Barbie comes to visit us so frequently. It presumably also helps to explain why a lawsuit was filed in Germany in May 2001 by G&H," the appeals court said in its written opinion.

The 9th Circuit ruled only that a federal judge in Los Angeles has jurisdiction over Mattel's lawsuit and did not rule on the merits of the case. Mattel sued as a defensive move to block Greiner & Hausser's suit in Germany.

Greiner & Hausser claims Mattel unfairly copied its Bild-Lilli doll, which was based on a cartoon series that appeared in the German newspaper Bild-Zeitung in the 1950s. The managing director of Greiner & Hauser in 1961 received a U.S. patent for the "doll hip joint" used on the Bild-Lilli doll, and then sued Mattel for infringement.

The parties settled out of court in 1963, and the next year Mattel purchased Greiner & Hausser's copyright and patent rights. Greiner & Hausser collapsed in 1983. The company's court-appointed liquidator sued in Germany in 2001, claiming Mattel defrauded the German company in the 1964 sale agreement.

Joseph Burton, an attorney who represented Greiner & Hausser, did not return a call for comment. Mattel spokeswoman Lisa Marie Bongiovanni also did not return a call.

Shares of El Segundo-based Mattel fell 25 cents to $19.17 in New York Stock Exchange trading.

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