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Damages skimpy in Bratz case

Mattel is awarded as much as $100 million, but that's far less than the company sought.

August 27, 2008|David Colker | Times Staff Writer

Mattel won the big battles in the Barbie vs. Bratz trial, but it may have lost the financial war.

A jury in federal court Tuesday awarded Mattel Inc. as much as $100 million in a copyright infringement case against MGA Entertainment Inc., which brought out the hugely popular Bratz dolls in 2001.

But that's about 5.5% of the $1.8 billion that Mattel asked of the jury.

"MGA wins on this one, big time," said Margaret Whitfield, an analyst with Sterne Agee & Leach. "That amount maybe just covers Mattel's legal expenses, with a little left over."

Mattel's stock rose 10 cents to $20.24 before the verdict was read but fell as much as 3.8% in after-hours trading.

Last month, the jury in U.S. District Court in Riverside handed El Segundo-based Mattel a sweeping victory when it ruled that one of its Barbie designers created the sassy Bratz while working at Mattel under an exclusivity contract. The jury also found that MGA and its chief executive, Isaac Larian, secretly aided the designer in breaking his exclusivity contract with Mattel.

But when it came to figuring damages, the jury decided that MGA and Larian played a minor role compared with the doll's designer, Carter Bryant, who earned more than $30 million in royalties from the Bratz line.

"My own feeling was that Carter Bryant pulled the wool over everyone's eyes," said jury foreman Christopher Blazer, a retired school custodian who lives in Fontana.

Bryant settled with Mattel just before the trial began in May. Terms of that settlement were sealed by the court and not revealed.

Mattel Chief Executive Robert A. Eckert said in a statement that the company was "pleased that the principles of fair play and fair competition that prompted Mattel to bring the suit in the first place have prevailed."

Mattel's attorney, John Quinn, didn't discuss the damage amounts in a statement but noted: "After carefully weighing nearly three months of testimony and evidence, the jury arrived at a unanimous and undeniable conclusion that MGA engaged in illegal business practices."

Mattel hasn't said how much it spent on the case since it was filed four years ago. During this year's second quarter, the company spent more than $16 million on the case.

Larian was elated with the jury decision, saying that the damages that Mattel sought -- $1 billion from MGA and nearly $800 million from Larian -- weren't based on the case's facts.

"This, of course, shows that they were always overreaching," he said, "and that the jury saw through it."

Larian said the jury's first verdict would be appealed. "I want to clear my name and the company name," he said.

Van Nuys-based MGA already lost in appeals court when it tried to get the trial halted because of an ethnic slur uttered by a juror during deliberations.

The exact amount of the award to Mattel depended on who was doing the arithmetic. MGA called it $40 million; Mattel had it at $100 million.

The disagreement came from the fact that the jury weighed three claims concerning the Bryant contract, awarding $30 million for each, with $20 million to come from MGA and $10 million from Larian.

MGA lawyers said they believed that Judge Stephen Larson would, in further proceedings, rule those awards duplicative, giving Mattel a maximum of $30 million for all three claims. That, plus $10 million in other damages awarded by the jury, would bring the total to $40 million.

Mattel disagreed. Counting the three matters separately, it declared the award to be $100 million. In a statement, Mattel said: "The court will make the final determination."

MGA, whose Bratz dolls proved to be a feisty competitor to the more sedate Barbie, could have been crippled by the hefty damage award Mattel sought. MGA's Bratz sales total about $1 billion, compared with Mattel's $6 billion in revenue last year.

Mattel's signature dolls, Barbie and her pals, have been suffering. In the second quarter, U.S. sales of the line plunged 21% compared with the same period last year.

Just as in Hollywood, this court fight will have a sequel. Mattel and MGA are scheduled to be back in court later this year to argue a suit that encompasses trade secrets and other matters.

But not with this jury. It was set free after being on the doll case since May 27.

Asked what he would do with his time, Blazer laughed and said, "Right now, I'm having a cold one."

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david.colker@latimes.com

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Times staff writer Tony Perry contributed to this report.

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