Why Should Mattel Get Future Plans For New Bratz Dolls?

from the gross-injustice dept

Last year, we wrote about a somewhat horrific court ruling against MGA Entertainment, the makers of Bratz dolls, after getting sued by Mattel. If you don't follow the doll business, Bratz is really the first doll to successfully compete against the massively successful Barbie franchise in ages. However, the guy who came up with Bratz had worked at Mattel prior to going off on his own. Of course, this is the history of many different innovative companies. If you come up with a better idea while working at one company, it's a good thing that you can go off and build your own company. As we pointed out at the time, this is the story of plenty of successful tech companies. Steve Wozniak was at HP when he built the first Apple computer (and continued to work there for some time after Apple was moving forward). Robert Noyce helped found Fairchild (and later Intel) after growing frustrated at Shockley Transistor. Hell, William Shockley founded Shockley Transistor after feeling he didn't get enough respect at Bell Labs. Yet, here's a toy designer at Mattel who's entire operation is getting shut down because he came up with the idea while still employed at Mattel?

Even if you grant the somewhat troubling premise that the concept for the dolls was created at Mattel, at best you could make an argument that Mattel had some rights to an injunction and profits from the first generation of those dolls. Yet, the judge not only ruled that, but also that MGA had to give up all such dolls, and hand over all sorts of confidential info, including "all related products, designs, customer information and 'know-how' for a planned 2010 Bratz line." It's difficult to see any justification at all for forcing them to hand over future plans that had nothing to do with what the guy created while still at Mattel. MGA has now filed an emergency appeal, noting that if it does hand over such info and assets, it would have "devastating and irreversible consequences," which seems quite accurate. All in all, this seems like Mattel simply trying to stop competition, and it's a shame that the US court system seems to be helping.

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  1. identicon
    Reader, 29 Jun 2009 @ 11:49am

    Interesting Article

    This Goliath had been genuinely wronged; Mattel couldn't let jurors think that it was beating up an honest competitor. WINNING
    BY JEFF JEFFREY
    1097 words
    22 June 2009
    The National Law Journal
    NLJ
    S11
    Volume 31; Issue 42
    English
    Copyright 2009 ALM Properties, Inc. All Rights Reserved.

    William Price knew that jurors wouldn't take kindly to a lawsuit filed by Mattel Inc. against a competitor if it appeared to be a case of Goliath bullying David out of the marketplace. Mattel makes Barbie, for crying out loud, the world's most famous doll.

    That's why Price, 52, a Los Angeles partner at Quinn Emanuel Urquhart Oliver & Hedges, devised a legal strategy for Mattel that cast the toy manufacturing giant as simply one Goliath trying to collect what had been stolen by another Goliath.

    The other company, MGA Entertainment Inc., sold Barbie's more risque rival, the Bratz dolls. Mattel believed that the Bratz dolls were based on a design originally developed by a Mattel employee who illegally turned it over to MGA when he joined that company. During the course of a seven-week trial last year, Price was able to prove that doll designer Carter Bryant had created the original drawings and sculpts of what became the Bratz when he worked for Mattel.

    Those dolls, introduced by MGA in 2001, went on to become the company's most profitable product, bringing in more than $1 billion a year. In July 2008, a federal jury in the Central District of California awarded Mattel $100 million in damages. In December 2008, U.S. District Judge Stephen Larson ordered MGA to turn over all Bratz dolls, their associated products and the Bratz name to Mattel and permanently barred MGA from making, producing or licensing the dolls in the future. "Look, competition is fine," Price said. "But Mattel's whole point was that if you're going to compete with us, do it with your ideas, not ours."

    KICKING AN UNDERDOG?

    Clearly, Bryant, who had already reached a confidential settlement with Mattel before the trial, would be the single most important witness. Price feared the jury would see Bryant as an underdog being kicked around by a multibillion-dollar company. He wanted to keep the focus on MGA, which was represented by a team led by Thomas Nolan and Raoul Kennedy of New York's Skadden, Arps, Slate, Meagher & Flom. "What we wanted to do was show what kind of company Mattel was versus what kind of company MGA was," Price said.

    Instead of starting the trial with Bryant, Price decided to work through the other witnesses first. The Quinn Emanuel team led off with two doll designers from Mattel, who were questioned by Price's co-counsel, John Quinn, about the day-to-day work of developing a new toy. "We were trying to get the jury to see that Mattel is a company that prides itself on creativity and what it takes to make an inventive product," Price said.

    From there, Price took over, saving for himself the most hostile witnesses. He took the lead on questioning Paula Garcia, the MGA employee who lured Bryant away from Mattel. She testified that she didn't know that he worked at Mattel. "We were quickly able to disprove [that] through the testimonies of other employees whom she had told otherwise," Price said.

    Price also called MGA Chief Executive Officer Isaac Larison. He got Larison to admit that Larison had hidden Bryant's role in the development of the Bratz line for years to avoid tipping off Mattel. "We showed the jury that he had behaved dishonestly," Price said. According to Quinn, Price "eviscerated" MGA's key witnesses. "There were 'Perry Mason' moments during each cross," Quinn said.

    In addition to painting MGA as less than honest, Price used physical evidence to show that Bryant had cheated Mattel. Price introduced an employment agreement mailed by Larison and signed by Bryant. "We knew Bryant was working at Mattel at the time because it was faxed from the Mattel offices. It had the Mattel fax header on it," Price said.

    The truly critical timing issue involved when the first Bratz-like dolls and sculpts were created. A forensic expert demonstrated that the original drawings came from a notebook that Bryant used while still an employee at Mattel. The pages with the drawings had been torn out of the notebook. But the expert pointed to the impressions left by the drawings on subsequent pages of the notebook, and to bank account calculations on other pages that also traced to Bryant's period of employment with Mattel.

    By the time Price called Bryant to the stand, he hardly stood a chance with the jury. Price called Bryant as a hostile witness to explain a letter he mailed to a doll-hair manufacturer in which he identified himself as an MGA employee while still working at Mattel. "Bryant testified he did not intend to imply in the letter that he worked for MGA. I then pointed out that his letter had a return address of 'Carter Bryant, c/o MGA, etc.' He then said that now he couldn't remember what he intended," Price said. "That's the kind of stuff which impressed the jury—his general dishonesty."

    MGA is seeking to appeal the case. Larson gave the company a one-year transition period to turn over the Bratz line to Mattel.

    Despite the loss, Skadden's Nolan said that he was pleased by the way the jury structured its award for Mattel. The jury awarded Mattel only $10 million for copyright infringement, Nolan said, a fraction of the $1.7 billion the company had asked for. The other $90 million was for contract violations.

    "We were also pleased that they found that neither MGA or Larison had willfully engaged in copyright infringement," Nolan said.

    Price is off to a good start this year, as well. In January, he scored a win for Micron Technology Inc. in a lawsuit that blocked Rambus Inc., a technology licensing company, from enforcing 12 patents against his client. The judge cited Rambus' document-destruction policy. Rambus argued that the policy—which called for regularly scheduled "shred days"—was not designed to destroy troublesome documents in anticipation of litigation. Judge Sue Robinson of the U.S. District Court for the District of Delaware didn't buy it. Robinson held that "the very integrity of the litigation has been impugned."

    If the U.S. Court of Appeals for the Federal Circuit upholds the ruling on appeal, Price said, Rambus could stand to lose out on billions of dollars in licensing royalties.

    Contact Jeff Jeffrey at jeff.jeffrey@incisivemedia.com.

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