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TOYS

Mattel aims to stop the Bratz

It wants to bar MGA from making the dolls, to seize inventory and get rights to the name.

November 11, 2008|David Colker | Colker is a Times staff writer

The Barbie vs. Bratz case was back in federal court Monday, and it was clear Barbie-maker Mattel wanted all the dolls in the toy box.

Based on a trial victory in July, Mattel Inc. asked the court not only to stop MGA Entertainment Inc. from making the sassy Bratz, but also to require the Van Nuys company to turn over all its dolls, including those already in stores.

Mattel, which won the rights to early drawings of the rival doll after weeks of contentious testimony, even wants the Bratz name.

"The benefit that was developed belongs to Mattel," said Judge Stephen Larson at the beginning of Monday's hearing.

The loss of the Bratz name could be especially devastating to MGA, which has built its toy empire on the doll it launched in 2001.

But like everything else in this four-year legal battle, the issues were complex. At the hearing in U.S. District Court in Riverside, the basic question came down to just how much Mattel was owed -- even after a copyright infringement win -- for a brand it didn't develop.

Mattel argued that MGA's success with the Bratz line all stemmed from the fact that it lured away a Barbie designer, Carter Bryant, who came up with the doll concept and name while working under an exclusive contract.

"Anything that Carter Bryant created while he was in the employ of Mattel" belonged to the company, argued Mattel attorney Michael Zeller.

"We ask that our property be returned."

MGA didn't dispute the jury decision, including that the company and Chief Executive Isaac Larian played a role in the contract breach. But the company argued that by developing and marketing the doll, it made Bratz a hit.

"The value was created lawfully," said attorney Jason Russell for the Bratz maker.

"The value was all created by MGA."

Larson, who peppered lawyers for both sides with questions, indicated that he was at least partially swayed by the argument, giving hope to MGA.

"The measurable value to Bratz," the judge said from the bench, "is so very much a function of what Isaac Larian and his team put into it." The argument that MGA should be left with nothing, Larson said, "is quite a leap."

Larson said he would issue his decision within the next couple of weeks. But either way, it wouldn't take effect until January, thus sparing retailers the possibility that the dolls would be seized from their shelves in front of crying children. Larson said he wanted to ensure retailers that during the holiday shopping season, "nothing is going to happen in respect to this."

This latest chapter in the legal battle over the Bratz dolls comes at a rocky financial time for both companies. On Thursday Mattel said it was eliminating 1,000 jobs -- about 3% of its worldwide workforce -- including 170 positions at company headquarters in El Segundo.

MGA cut 70 jobs in October. Larian blamed the 4% cutback in his workforce on legal expenses incurred in the Mattel case. He said the company, which is family owned, has spent about $80 million on the case so far.

Publicly owned Mattel wouldn't disclose how much it has spent total on the case. But the world's largest toy maker has disclosed that it spent nearly $30 million in the first nine months of this year.

In August, the jury in the copyright infringement case awarded Mattel damages of up to about $100 million, but that was only about 6% of what the company requested. The injunction, if approved, could prove to be far more injurious to MGA.

Barbie, created in 1959, remains the dominant force in the fashion doll business. But analysts say it was hit hard by the popularity of Bratz.

In the third quarter of this year, Mattel reported that worldwide Barbie sales slipped 1% (including a 3% boost from currency fluctuations) compared with the same period in 2007.

That was a relatively good quarter for Barbie compared with some. In the previous quarter, worldwide sales of the doll were down a whopping 21% compared with the year-earlier period.

MGA doesn't disclose its earnings, but analysts have said that sales of Bratz also have waned.

The injunction is far from the last matter scheduled to be decided between Mattel and MGA. But it's so key, people close to the situation say, that until it's decided there's little chance either company will do what little girls know dolls would do -- sit down for a nice chat. Perhaps over tea.

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david.colker@latimes.com

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