Mattel Loses $88m in Battle Over Bratz

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The worlds largest toy maker Mattel, has lost its intellectual property claim against MGA Entertainment Incorporated of California over the Bratz range of dolls.

A California court jury recently ordered Mattel to pay $88m to MGA Entertainment Incorporated, rejecting Mattel's claim that the product idea for Bratz® was stolen from Mattel by an employee of MGA Entertainment Incorporated.

Mattel has around 90% of the market for fashion dolls, with its long running Barbie® doll range, and dominates the market. Significant investment is required, in the region of tens of millions of dollars to introduce a successful product in this market sector. However, the Bratz® range of dolls has taken market share away from Mattel's famous Barbie® dolls.

Mattel had alleged that Carter Bryant, an employee of Mattel came up with the idea and sketches for the Bratz® line, whilst working for Mattel in 1999 and then secretly took those sketches and ideas to MGA Entertainment Incorporated.

In 2008, a US jury supported Mattel's claims and awarded the company $100m. However the verdict was overturned last year by an appeal court.

MGA Entertainment Incorporated has always denied allegations of copying, and in retaliation has accused Mattel of misappropriating MGA Entertainment Incorporated's trade secrets.

The result of the latest turn around is now confirmed as being that Bratz® is finally owned by MGA Entertainment Incorporated.

The Bratz® doll is protected world wide by trade marks of the Bratz® name in various incarnations, and by registered designs.

In Europe, registered Community design numbers for Bratz® include the following:

EM 000117437-0001

EM 000117437-0002

EM 000117437-0003

EM 000117437-0004

EM 000117437-0005

EM 000117437-0006

EM 000117437-0007

EM 000117437-0008

EM 000117437-0009

EM 000121363-0001

EM 000121363-0002

EM 000121363-0003

EM 000121363-0004

There are corresponding rights in the US and many other countries. Although there are registered trade mark and registered design rights (in the US called "design patents") in the US and elsewhere registered by MGA Entertainment Incorporated, the crux of the dispute is over who owns the basic idea and concept, with the registered intellectual property rights merely being examples of the overall idea and concept.

Conventionally, a technical idea or concept is protected by patents. However, for an idea or concept such as a doll, where there is little or no technical innovation, this falls outside the scope of valid patent protection, and it is left to a bundle of peripheral rights such as trade marks, designs, copyright, confidential information, trade secret and employment rights to protect the specific expression of the idea. These rights do not protect the core marketable concept itself.

Once again, the reputation of inaccessibility of the legal system to normal businesses has been done no favours. The case is reported to have cost Mattel around $400m in legal fees since it commenced in 2004.

In contrast, the cost of settling a trade mark or design dispute in the UK Patents County Court, for similar rights in the UK or Europe would amount to perhaps £50,000 - £400,000 or less using a firm of UK or European registered patent attorneys (which is still expensive for most businesses but of a different magnitude to the MGA/Mattel case).

Article Published May 11, 2011