A federal jury in Santa Ana on Thursday handed a stunning blow to Mattel Inc.’s efforts to claim rights to the Bratz doll franchise. The jury in the second trial of the long-running corporate dispute ruled that MGA Entertainment Inc. is the rightful owner of the provocative doll line.
El Segundo-based Mattel sued Van Nuys-based MGA in 2004, contending that Carter Bryant, a Barbie designer, came up with the concept for Bratz dolls while he was still working for Mattel in the late 1990s. He went to work for MGA and gave the concept to his new employer.
Bratz dolls were a hit in the mid-2000s, making $1 billion in annual revenue for privately held MGA at the height of their popularity and stealing market share from the Barbie franchise. Mattel has claimed that it lost more than $300 million in potential profits. But Barbie has since bounced back, with a 14 percent jump in global sales in the first quarter, the line’s first double-digit-percentage sales increase for that period since 1997.
In the first trial in 2008, a federal jury in Riverside found in favor of Mattel. It awarded the company $100 million in damages, and the trial judge ordered MGA to turn over the Bratz franchise to Mattel. But the Ninth U.S. Circuit Court of Appeals unanimously overturned the ruling in July, finding the decision to give Mattel ownership of the copyright was overly broad and that the judge erred in ruling Bryant’s employment agreement with Mattel covered his ideas.
The four-man, four-woman jury in the new trial deliberated for eight days before reaching the decision in a 28-page verdict that was still being read in court at mid-morning.
MGA’s attorney successfully argued Mattel didn’t prove during the trial that Bryant created the dolls during his stint with Mattel, and accused the toy giant of trying to squash a smaller competitor. Bryant has maintained that he created the idea and original drawings for Bratz in 1998, when he was living in Missouri with his parents.
High litigation costs in the case were a contributor to a 33 percent decline in first-quarter earnings that Mattel reported last week.
Mattel shares closed down 26 cents, or 1 percent, to $26.67 on the Nasdaq.
Alexa Hyland contributed to this story.
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