In the battle of the doll makers, the house that Barbie built won a sweeping court victory Thursday, accessories and all.
A federal jury found that a Mattel Inc. designer created the lucrative Bratz doll concept while he worked at Mattel under an exclusivity contract.
It was a scathing defeat for MGA Entertainment Inc., which introduced the dolls -- known for big heads, pouty lips and bare-midriff outfits -- in 2001.
The jury found that Van Nuys-based MGA, which was a minor player in the toy world pre-Bratz, aided the designer's breach of the Mattel contract.
And in a personal blow to MGA's colorful chief executive, Isaac Larian, the jury decided that he specifically played a role in the contract breach.
"I was very disappointed," Larian said. He blamed the verdict, in part, on the seven-page form the jury had to fill out, calling it "very, very confusing."
The decision in U.S. District Court in Riverside opens the door for Mattel to claim damages or even an ownership stake in the doll, with annual sales estimated at $500 million by Mattel and as high as $2 billion by industry analysts.
The next phase of the trial, which begins Wednesday with the same 10-person jury, will determine how much Mattel could reap from its victory.
MGA is expected to claim that the final versions of the dolls were different from the drawings and other materials the jury considered.
The next phase could be averted if the two sides reach a settlement. Mattel lawyer John Quinn wouldn't comment on that possibility. After the bitter copyright infringement battle, Larian said he wasn't inclined to talk with Mattel.
"I need to sleep good at night," he said. "I can't be in bed with them."
Mattel Chief Executive Robert A. Eckert issued a statement saying, "Regardless of the amount of damages awarded . . . this important principle has been confirmed by the jury: What MGA did was wrong."
Quinn wouldn't say how much the company would ask for, but that "the damages here are very, very substantial," based on sales of the Bratz line.
MGA is a privately owned company and hasn't disclosed its earnings. Judge Stephen Larson said the company would be required to show how much it has made from Bratz.
The verdict couldn't have come at a better time for Mattel, which in the first quarter of the year lost $46.6 million. Its Barbie sales fell 12% in the U.S.
The jury in the Bratz trial agreed in Mattel's favor on every point except for the origination date of four groups of drawings said to be among the first done by designer Carter Bryant. On those, the jury couldn't come to the unanimous decision needed in federal civil trials.
Bryant and MGA contended during the trial that the Bratz concept was created in 1998 when he wasn't covered by the contract that gave Mattel ownership of his designs and banned him from working for a competing firm.
Much evidence was introduced during the trial that Bryant developed the doll while at Mattel, including building a mock-up out of a discarded Barbie body and Ken boots.
Bryant, who made more than $30 million in royalties from Bratz, wasn't included in the verdict. Shortly before the trial began on May 27, he settled with Mattel. The terms of that settlement were sealed.
Shares of El Segundo-based Mattel rose as much as 7% in after-hours trading.