Bratz maker faces big Barbie smack-down

Mattel has been awarded up to $100m in damages against MGA - but both sides are claiming victory...

Last Updated: 31 Aug 2010

Mattel, the maker of Barbie, has been awarded damages of somewhere between $20m and $100m (depending who you believe), following a jury’s decision that Bratz maker MGA Entertainment was indeed guilty of copyright infringement. Good news, you’d have thought – but since Mattel was seeking $2bn (and Bratz is estimated to make $500m profit a year), MGA has still been able to claim a moral victory…

As regular MT readers will recall, the ongoing row centred on Bratz creator Carter Bryant, and his precise employment status when he came up with the original designs. Mattel argued that he was actually employed by them, not MGA, so they owned the rights to his designs – and after relentlessly pursuing its smaller rival through the courts, a jury decided in their favour last month (Bryant had already settled with Mattel in advance).

The $100m compensation that Mattel is claiming actually breaks down into various constituent parts. The jury awarded $30m for three separate claims relating to Bryant’s contract (intentional interference with contractual relations, aiding and abetting breach of fiduciary duty, and aiding and abetting breach of the duty of loyalty) plus a total of $10m for copyright infringements. However, MGA and its CEO Isaac Larian (who’s personally liable for about a third of this) insist that the bill will actually be closer to $20m, since the first three claims overlap (and it can’t be punished three times for the same thing). This is likely to bring the total damages down by as much as $80m – and the final bill could be even less, if the inevitable appeal is successful.

Mattel CEO Bob Eckert was busily trying to take the moral high ground today, arguing that it ‘pursued this case first and foremost as a matter of principle’ and saying that his company was ‘pleased that the jury agreed with Mattel that what MGA did was wrong’. But MGA insisted that the size of the payment – and the fact that the jury didn’t award punitive damages – was a vindication for them. ‘We are thrilled that this jury sent a strong message that they want these companies to compete in the marketplace and not the courtroom,’ its lawyer Thomas Nolan told the Associated Press. Which seems a bit rich, in the circumstances...

On the other hand, if Bratz really is that profitable, the fine will be a relative drop in the ocean. That’s why Mattel is hoping the court will force MGA to pay royalties on every Bratz sale – with Barbie sales on the slide, that might be Mattel’s best chance of keeping up...

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