Mattel Wins $100M In Copyright Lawsuit

Feelin' Pretty" Bratz dolls to be shown at the American International Toy Fair in New York. A jury awarded Mattel Inc. $100 million in copyright case on Aug. 26, 2008, against the maker of Bratz dolls. AP PHOTO

A federal jury awarded Mattel Inc. $100 million in damages on Tuesday in a copyright lawsuit that pitted the house of Barbie against MGA Entertainment Inc., the maker of the saucy Bratz dolls.

MGA and its chief executive officer, Isaac Larian, were told to pay a total of $90 million in three causes of action related to Mattel's employment contract with designer Carter Bryant, who developed the Bratz concept.

The jury also ordered MGA, Larian and subsidiary MGA Hong Kong to pay a total of $10 million for copyright infringement.

MGA contends the three awards related to the contract were duplicative and said it plans to ask a judge to set total damages at no more than $40 million.

In a victory for MGA, the jury did not award any punitive damages and found that neither Larian nor MGA acted willfully when they employed Bryant, a finding that could have dramatically increased the damages.

U.S. District Judge Stephen G. Larson will now consider the awards and make a final decision on how much MGA owes Mattel. MGA plans to argue that some of the awards are duplicative.

MGA hailed the jury decision as vindication in the long-running case.

"This jury found there was no guilt," Larian said.

MGA attorney Thomas Nolan said the jury had awarded a fraction of the damages Mattel had sought.

"We are thrilled that this jury sent a strong message that they want these companies to compete in the marketplace and not the courtroom," Nolan said.

Mattel attorney Bill Price declined to comment after the verdict.

"Mattel has pursued this case first and foremost as a matter of principle," Mattel CEO Robert A. Eckert said. "We have an obligation to defend ourselves against competitors who choose to engage in fraudulent activities against us."

The same jury that decided the damages phase concluded last month that Bratz designer Carter Bryant came up with the Bratz concept while working at Mattel. Jurors placed the value of Bryant's drawings at $31,500, and awarded that plus interest to Mattel.

In his closing arguments, Mattel attorney John Quinn said MGA owed Mattel at least $1 billion in Bratz profits and interest, while chief executive Isaac Larian aided in the breach of contract and owed nearly $800 million for his complicity.

MGA attorneys countered that the jury should award Mattel as little as $30 million because the company had built the doll line's value with smart additions, branding and packaging.

The jury awarded damages of $20 million against MGA and $10 million against Larian in each of three causes of action - intentional interference with contractual relations, aiding and abetting breach of fiduciary duty, and aiding and abetting breach of the duty of loyalty.

The amount of damages turned on the question of whether jurors believed MGA should only be held responsible for profits derived from the first four Bratz dolls - which came from Bryant's drawings - or from all the subsequent Bratz dolls and related products.

The four original dolls made just $4 million in profit their first year and comprised only 2.5 percent of MGA's entire Bratz revenue, said Raoul Kennedy, one of MGA's attorneys.

In the past seven years, MGA has built the popular brand to include more than 40 characters and expanded it with spin-offs such as Bratz Babyz, Bratz Petz, Bratz Boyz and items like helmets, backpacks and bedsheets.

Quinn said MGA owed Mattel for the entire Bratz empire, amounting to at least $1 billion in Bratz profits and interest. Quinn argued that Larian, too, personally gained nearly $800 million in stock value and distributions flowing from the success of the dolls.

After their introduction in 2001, the Bratz line exploded in popularity among "tweens" - girls 7 to 12. The highly stylized fashion dolls have oversized feet, heads and hands, curling lashes and huge, almond-shaped eyes daubed with exotic-colored eyeshadow.

Sales of Barbie - a near rite-of-passage in American girlhood - have slid since Bratz's Yasmin, Cloe, Jade and Sasha came on the scene. Domestic sales of Barbie were down 15 percent in 2007 and 12 percent in the first quarter of 2008, while international sales increased 6 percent in 2008 as opposed to 12 percent the previous year.

Bryant, the Bratz designer, settled with Mattel on the eve of trial. The terms of that settlement have not been made public.
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