MGA/Mattel trial ends in $100 million whimper
NEW YORK It was touted as the trial of the century for the licensing industry. In one corner was toy giant Mattel, intent on penalizing the maker of the hugely popular Bratz doll for copyright infringement. In the other corner was Bratz parent MGA, which turned the now ubiquitous doll into a veritable billion-dollar licensing sensation. In the balance was the future of literally millions of Bratz products adorning the shelves of retailers from coast to coast.
Alas, the drama was not to be.
Instead of awarding Mattel with $2 billion in damages, as its lawyers had requested, and causing what would likely have been a crippling blow to both Bratz and MGA, a California jury settled the case late Tuesday by awarding Mattel with $100 million—more than the $30 million that MGA’s lawyers had asked the court to consider, but significantly less than the $1 billion penalty Mattel had sought.
Furthermore, none of the nearly $800 million in punitive damages sought by Mattel were ordered against MGA.
In an interview with the Associated Press immediately following the outcome, outspoken MGA ceo Isaac Larian said, "This jury found there was no guilt." His lawyer Thomas Nolan added, "We are thrilled that this jury sent a strong message that they want these companies to compete in the marketplace and not the courtroom.”
Damages were awarded for contract interference and copyright infringement. No punitive damages were ordered against MGA. The same jury that decided the damages phase concluded last month that Bratz designer Carter Bryant came up with the Bratz concept while working at Mattel.
In his closing arguments, Mattel attorney John Quinn said MGA owed Mattel at least $1 billion in Bratz profits and interest, while MGA chief executive Isaac 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.
MGA hailed Tuesday's decision as vindication in the long-running case.
"This jury found there was no guilt," MGA's ceo Larian said.
MGA attorney Thomas Nolan said the jury had awarded just 2 percent of the damages Mattel had sought.
"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.
The amount of damages turned on the question of whether jurors believed MGA should only be held responsible for profits derived from the first four Bratz dolls — which came from Bryant's drawings — or from all the subsequent Bratz dolls and related products. The four original dolls made just $4 million in profit their first year and comprised only 2.5 percent of MGA's entire Bratz revenue, said Raoul Kennedy, one of MGA's attorneys.
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 like helmets, backpacks and bedsheets.
Quinn said MGA owed Mattel for the entire Bratz empire, amounting to at least $1 billion in Bratz profits and interest. Quinn argued that Larian, too, personally gained nearly $800 million in stock value and distributions flowing from the success of the dolls.
After their introduction in 2001, the Bratz line 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.
Sales of Barbie — a near right-of-passage in American girlhood — have slid since Bratz's Yasmin, Cloe, Jade and Sasha 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, the Bratz designer, settled with Mattel on the eve of trial. The terms of that settlement have not been made public.