Barbie maker Mattel Inc. on Monday settled with a former employee who the company alleged drew sketches for the popular Bratz line while working at Mattel and then took the drawings to rival MGA Entertainment.

Despite the confidential settlement between the doll designer, Carter Bryant, and Mattel, a lawsuit that the El Segundo-based toy maker has filed against MGA is still going forward.

A federal jury in Riverside is scheduled to hear opening arguments May 27 regarding Mattel's allegations that the private toy company in Van Nuys illegally obtained the rights to the hip hop-inspired Bratz.

Mattel lawyer John Quinn, of Los Angeles-based Quinn Emanuel Urquhart Oliver & Hedges LLP, will argue that the company 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.

A win for Mattel could result in damages of up to $360 million against MGA and the company could recover $500 million in annual sales and licensing fees. Mattel could also ask for a permanent injunction, stopping MGA from selling the Bratz line.

Although terms of Mattel's settlement with Bryant are confidential, according to court documents Bryant is subject to any injunction Mattel obtains that prevents MGA from profiting from the Bratz line.

Bryant also waived his rights to appeal prior or future orders in the case, and both sides agreed to pay their own attorney's fees.

The designer is still scheduled to testify in the trial between Mattel and MGA. And according to court documents, there is no agreement between Mattel and Bryant regarding how he will testify during the proceedings.

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