Jury awards Mattel $100 million in Riverside-based Bratz suit
RIVERSIDE (AP) -- Barbie may have taken some of the sass out of her pouty-lipped rivals
Yasmin, Jade, Cloe and Sasha with a $100 million verdict against Bratz-maker MGA Entertainment Inc., but no one's left the playground yet.
A federal jury awarded toy giant Mattel Inc. the damages Tuesday in their copyright infringement lawsuit against MGA, but lawyers for the two playtime powerhouses are still wrangling over whether MGA can continue to make the saucy Bratz line. U.S. District Judge Stephen Larson must also consider whether any of the damages are duplicative before setting a final amount to be paid to Mattel.
Still, Mattel hailed the jury's unanimous decision as a victory Tuesday, although the amount fell far short of the $1.8 billion that its attorneys had asked for.
Yasmin, Jade, Cloe and Sasha with a $100 million verdict against Bratz-maker MGA Entertainment Inc., but no one's left the playground yet.
A federal jury awarded toy giant Mattel Inc. the damages Tuesday in their copyright infringement lawsuit against MGA, but lawyers for the two playtime powerhouses are still wrangling over whether MGA can continue to make the saucy Bratz line. U.S. District Judge Stephen Larson must also consider whether any of the damages are duplicative before setting a final amount to be paid to Mattel.
Still, Mattel hailed the jury's unanimous decision as a victory Tuesday, although the amount fell far short of the $1.8 billion that its attorneys had asked for.
"Mattel has pursued this case first and
foremost as a matter of principle," Mattel CEO
Robert A. Eckert said in a printed statement. "We have an obligation to defend ourselves against competitors who choose to engage in fraudulent activities against us."
Analysts, however, said the decision was relatively neutral to the toy company and urged investors to snap up the stock on any weakness.
Shares fell 59 cents, or 2.9 percent, to $19.65. The stock has traded between $16.42 and $24.50 during the past 52 weeks.
Stifel Nicolaus analyst Drew E. Crum said in a note to investors today that the outcome would be somewhat disappointing for Mattel because it "does not weaken a key competitor in the fashion doll category where Barbie's market share has contracted."
MGA and its chief executive officer, Isaac Larian, were told to pay a combined $90 million in three causes of action related to Mattel's employment contract with designer Carter Bryant, who developed the Bratz concept. The jury also ordered MGA, Larian and subsidiary MGA Hong Kong to pay $10 million for copyright infringement.
Larian said he would appeal the verdict and MGA attorney Thomas Nolan contended that the three awards related to the contract dispute were duplicative. Nolan said he planned to ask Larson at the upcoming hearing to set total damages at no more than $40 million.
Still, Nolan and Larian said they were pleased that the jury did not award any punitive damages and found that neither Larian nor MGA acted willfully when they used Bryant's drawings, which could have increased the damages.
"We are thrilled that this jury sent a strong message that they want these companies to compete in the marketplace and not the courtroom," Nolan said.
Larian said he felt confident that MGA could continue to produce Bratz dolls despite the verdict.
The same jury that decided the damages phase concluded last month that Bryant came up with the Bratz concept while working at Mattel. Jurors placed the value of Bryant's drawings at $31,500, and awarded that plus interest to Mattel.
In his closing arguments, Mattel attorney John Quinn said MGA owed Mattel at least $1
billion in Bratz profits and interest, while Larian aided in the breach of contract and owed nearly $800 million for his complicity.
MGA attorneys countered that the jury should award Mattel as little as $30 million because the company had built the doll line's value with smart additions, branding and packaging.
The jury awarded damages of $20 million against MGA and $10 million against Larian in each of three causes of action -- intentional interference with contractual relations, aiding and abetting breach of fiduciary duty, and aiding and abetting breach of the duty of loyalty.
They also found that MGA owed Mattel $6 million for copyright infringement, while Larian owed $3 million in distributions he'd received from Bratz-related sales, and MGA Hong Kong owed $1 million.
After their introduction in 2001, the Bratz dolls exploded in popularity among "tweens" -- girls 7 to 12. The highly stylized fashion dolls have oversized feet, heads and hands, curling lashes and huge almond-shaped eyes daubed with exotic-colored eyeshadow.
In the past seven years, MGA has built the popular brand to include more than 40 characters and expanded it with spin-offs such as Bratz Babyz, Bratz Petz, Bratz Boyz and items such as helmets, backpacks and bedsheets.
Sales of Barbie -- a near rite-of-passage in American girlhood -- have slid since Bratz came on the scene. Domestic sales of Barbie were down 15 percent in 2007 and 12 percent in the first quarter of 2008, while international sales increased 6 percent in 2008 as opposed to 12 percent the previous year.
Bryant settled with Mattel on the eve of trial. The terms of that settlement have not been made
public.
Robert A. Eckert said in a printed statement. "We have an obligation to defend ourselves against competitors who choose to engage in fraudulent activities against us."
Analysts, however, said the decision was relatively neutral to the toy company and urged investors to snap up the stock on any weakness.
Shares fell 59 cents, or 2.9 percent, to $19.65. The stock has traded between $16.42 and $24.50 during the past 52 weeks.
Stifel Nicolaus analyst Drew E. Crum said in a note to investors today that the outcome would be somewhat disappointing for Mattel because it "does not weaken a key competitor in the fashion doll category where Barbie's market share has contracted."
MGA and its chief executive officer, Isaac Larian, were told to pay a combined $90 million in three causes of action related to Mattel's employment contract with designer Carter Bryant, who developed the Bratz concept. The jury also ordered MGA, Larian and subsidiary MGA Hong Kong to pay $10 million for copyright infringement.
Larian said he would appeal the verdict and MGA attorney Thomas Nolan contended that the three awards related to the contract dispute were duplicative. Nolan said he planned to ask Larson at the upcoming hearing to set total damages at no more than $40 million.
Still, Nolan and Larian said they were pleased that the jury did not award any punitive damages and found that neither Larian nor MGA acted willfully when they used Bryant's drawings, which could have increased the damages.
"We are thrilled that this jury sent a strong message that they want these companies to compete in the marketplace and not the courtroom," Nolan said.
Larian said he felt confident that MGA could continue to produce Bratz dolls despite the verdict.
The same jury that decided the damages phase concluded last month that Bryant came up with the Bratz concept while working at Mattel. Jurors placed the value of Bryant's drawings at $31,500, and awarded that plus interest to Mattel.
In his closing arguments, Mattel attorney John Quinn said MGA owed Mattel at least $1
billion in Bratz profits and interest, while Larian aided in the breach of contract and owed nearly $800 million for his complicity.
MGA attorneys countered that the jury should award Mattel as little as $30 million because the company had built the doll line's value with smart additions, branding and packaging.
The jury awarded damages of $20 million against MGA and $10 million against Larian in each of three causes of action -- intentional interference with contractual relations, aiding and abetting breach of fiduciary duty, and aiding and abetting breach of the duty of loyalty.
They also found that MGA owed Mattel $6 million for copyright infringement, while Larian owed $3 million in distributions he'd received from Bratz-related sales, and MGA Hong Kong owed $1 million.
After their introduction in 2001, the Bratz dolls exploded in popularity among "tweens" -- girls 7 to 12. The highly stylized fashion dolls have oversized feet, heads and hands, curling lashes and huge almond-shaped eyes daubed with exotic-colored eyeshadow.
In the past seven years, MGA has built the popular brand to include more than 40 characters and expanded it with spin-offs such as Bratz Babyz, Bratz Petz, Bratz Boyz and items such as helmets, backpacks and bedsheets.
Sales of Barbie -- a near rite-of-passage in American girlhood -- have slid since Bratz came on the scene. Domestic sales of Barbie were down 15 percent in 2007 and 12 percent in the first quarter of 2008, while international sales increased 6 percent in 2008 as opposed to 12 percent the previous year.
Bryant settled with Mattel on the eve of trial. The terms of that settlement have not been made
public.
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