Shares of Mattel Inc. rose in morning trading after the Barbie doll maker won a permanent injunction banning rival toymaker MGA Entertainment Inc. from making and selling Bratz dolls, which were found to infringe on Mattel's copyrights.
U.S. District Judge Stephen Larson, in a late Wednesday filing in Riverside, granted El Segundo-based Mattel's request to stop Van Nuys-based MGA from making the trendy Bratz fashion dolls, which since their 2001 introduction have hurt Barbie sales.
MGA was ordered to turn over to Mattel all dolls, molds, marketing material and related items. Larson's injunction applies to all versions of the Bratz franchise, not just the first-generation line.
"Mattel has established its exclusive rights to the Bratz drawings, and the court has found that hundreds of the MGA parties' products, including all the currently available core female fashion dolls Mattel was able to locate in the marketplace, infringe those rights," Larson said in the ruling.
A jury earlier this year found that a Mattel designer came up with the Bratz name and characters while still working for the company and improperly took the idea to MGA. The jury awarded Mattel $100 million in damages, a fraction of the $2 billion the toymaker had sought. Mattel subsequently filed for the injunction.
"Today's ruling underscores what Mattel has said all along that MGA should not be allowed to profit from its wrongdoing," Mattel Chief Executive Robert Eckert said in a statement late Wednesday.
MGA argued that granting the injunction would essentially kill the company. Bratz sales from 2001 to June totaled $3.1 billion, it said during the trial.
MGA said early Thursday it plans an appeal to the U.S. Ninth Circuit Court of Appeals. "We believe the jury verdict was clear in denying 99 percent of Mattel's copyright infringement claim, and that issuing such a broad injunction is inconsistent with the limited jury verdict and the law," Chief Executive Isaac Larian said in the statement.
Steve Smith, an entertainment litigator for the L.A. law firm Greenberg Glusker, predicts MGA will have a hard time proving its case. The judge had the discretion to award Mattel full rights to the Bratz franchise despite the jury's low damages award.
"Everyone following the case wondered if the judge had the guts to give it all to Mattel instead of just 'splitting the baby.' This is a big, big thing," said Smith, who has successfully represented other clients in suits against MGA. "The jury in the litigation phase was clear in saying MGA stole from Mattel. Even if MGA did a very good job in exploiting that product and building it into a multi-billion business, it was the fruit of a theft of intellectual property."
Larson's order won't be enforced until after the judge has ruled on the parties' post-trial motions at a hearing scheduled for Feb. 11.
Mattel shares were up 90 cents, or 7 percent, to $14.10 in morning trading on the New York Stock Exchange.
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