In an April conference call to investors, Mattel Chief Financial Officer Kevin Farr said U.S. Barbie sales fell in the first quarter by 12 percent.
Bratz sales haven't been spectacular lately, either, losing ground to Disney's new dolls based on Hannah Montana and the popular High School Musical franchise.
"Bratz is a huge money maker, but it is not at the level it once was," Silver said. "They have fallen off in the last 15 months because of the success of Hannah Montana and High School Musical dolls."
MGA lawyer Thomas J. Nolan said Mattel's lawsuit is a desperation play to get a piece of the popular brand, which has eroded Mattel's market share. Regardless of the question of the drawings, MGA made the dolls, distributed them and marketed them successfully.
"MGA invested millions of dollars to create a 3D object that turned into Bratz," said Nolan, a partner in the Los Angeles office of Skadden Arps Slate Meagher & Flom LLP. "They took the risk and brought it to the market, knocking Barbie off of her perch while Mattel was sitting back."
U.S. District Court Judge Stephen Larson is scheduled to rule on May 19 whether Mattel waited too long to file its lawsuit against MGA. Larson is also expected to address whether there are factual disputes regarding the timing of the Bratz drawings and the Bratz model creation, and whether the initial Bratz doll line looks similar to Bryant's drawings and blueprint.
In the event Larson rules that Mattel did not file the suit in a timely manner, the war is over.
Nolan said internal Mattel documents from 2003 and 2004 state that Barbie was "a brand in crisis" and that Mattel needed to "kill Bratz." That, he said, shows the company only took legal action after Barbie began to lose market share, and not when they became aware of a potential copyright infringement by MGA.
"In 2004, Mattel needed to aggressively implement a business strategy to kill Bratz, and part of that was filing this lawsuit," Nolan said.
But Mattel claims Bryant pitched his Bratz designs to MGA while working for Mattel. Mattel alleges MGA was aware of Bryant's contractual relationship with Mattel but continued to work with the designer, and in doing so, aided Bryant in breaching his contract.
Bryant's lawyer, John Keker of San Francisco-based Keker Van Nest LLP, claimed Bryant's sketches were not considered inventions, as specified by an inventions agreement Mattel has with its employees that gives the company rights to the employees' designs and other copyrightable material.
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