MGA Entertainment - Lawsuit

Lawsuit

On July 17, 2008, the U.S. District Court in Riverside ruled against MGA Entertainment and for Mattel Inc. in a battle over the creation rights of the Bratz doll line. The jury in the case determined that Carter Bryant, creator of the Bratz doll line, had violated his exclusivity contract and had designed the dolls while he was still working at Mattel. Mattel was awarded $100 million US in damages, far less than the $1 billion they were seeking.

On December 3, 2008, U.S. District Judge Stephen Larson granted an injunction requested by Mattel, which effectively banned MGA from manufacturing and selling Bratz dolls, though he allowed MGA to continue selling Bratz through the end of the 2008 holiday season. Larson determined that all of MGA's Bratz produced from 2001 through 2008, except for the Kidz and Lil Angelz lines, infringed on Mattel's intellectual property. Larson allowed MGA to continue to manufacture the Kidz and Lil Angelz lines, provided that they not be promoted under the Bratz brand. He also stipulated that MGA must, at their own cost, remove all Bratz merchandise from retailers' shelves, reimburse retailers for said merchandise, and turn all recalled product over to Mattel for disposal. In addition, MGA was to destroy all marketing materials, molds, and other materials that had been used in the manufacture and sale of Bratz. MGA immediately filed for a permanent stay of the injunction and, on February 11, 2009, was granted a stay through at least the end of 2009.

On December 10, 2009, the U.S. Court of Appeals for the Ninth Circuit granted MGA an immediate stay of the injunction, effectively halting the recall of Bratz product, which was to have begun on January 21, 2010. In their initial ruling, the Court found Larson's previous ruling to be unusually "draconian," questioned why Mattel had simply been handed ownership of the entire franchise rather than be awarded a stake in the ownership of the franchise or a share of the royalties from future Bratz sales, and ordered MGA and Mattel into mediation.

In April 2011, a federal court jury in Santa Ana, California, awarded MGA $88.4 Million and ruled that MGA didn't steal the idea for Bratz dolls from Mattell or infringe its copyright. Additionally, the jury found Mattel liable for stealing closely held trade secrets from MGA and other toymakers.