Mattel's Attempt To Claim Ownership Of Bratz Comes Back To Bite Them: Now They May Owe $88.5 Million

Wow. For years, we've been following the legal battle between toy giant Mattel and toy upstart MGA concerning the ownership of Bratz dolls -- the first dolls in years to seriously compete with Mattel's classic Barbie doll. If you haven't been following it, a guy who worked for Mattel came up with the idea for the Bratz dolls. At Mattel he was not involved in designing dolls, and he claims that he did all the work in his spare time, not on company time. He then left and went to MGA, which agreed to make the Bratz dolls, which quickly became a huge success story. Mattel claimed that, under the guy's contractual agreement with Mattel, anything he invented belonged to them. The original district court ruling sided with Mattel and the judge (amazingly) ordered that Mattel should get all Bratz dolls including future plans for dolls. That made absolutely no sense to us. At best, if the determination was that the original designs were Mattel's, the company should get access to the original designs, and maybe some early dolls. But everything after that had nothing, whatsoever, to do with Mattel.

Thankfully, Judge Kozinski on the 9th Circuit came to the rescue and wrote a fantastic ruling explaining all of this to the district court, and sending the case back for a new trial. As part of that, MGA also filed some counterclaims against Mattel, including the claim that Mattel illegally spied on MGA and copied trade secrets from the company through questionable means. When these counterclaims were filed, I actually suggested that it was silly and distracting from the larger point... which I still stand by.

However, from a karmic perspective, it's interesting to see that the new jury has rejected nearly all of the claims against MGA, but sided with MGA on the trade secrets claim, and suggested an award of $88.5 million from Mattel to MGA -- an amount that MGA is going to ask the court to double for punitive reasons.

To summarize: in the course of a few short years, Mattel went from losing in the marketplace to MGA, to winning a court case that gave it total control over the competing product... to now not having control and having to pay MGA potentially millions.

Of course, this isn't over yet. Mattel has already asked the court for a brand new trial, and if that doesn't work, it says it's going to appeal the case, even if some "industry analysts" are apparently telling Mattel the company should just drop it. I have a feeling we haven't yet seen the end of this case, however.

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