The Bratz range of dolls have affected the sale of Mattel's leading fashion doll, Barbie. In 2004, sales figures showed that Bratz dolls outsold Barbie dolls in the United Kingdom, although Mattel maintained that in terms of the number of dolls, clothes and accessories sold, Barbie remained the leading brand. In 2005, figures showed that sales of Barbie dolls had fallen by 30% in the United States, and by 18% worldwide, with much of the drop being attributed to the popularity of Bratz dolls.
In April 2005, MGA Entertainment filed a lawsuit against Mattel, claiming that the "My Scene" line of Barbie dolls had copied the doe-eyed look of Bratz dolls. The lawsuit is currently pending in the court system of California.
Mattel sued MGA Entertainment for $500 million, alleging that Bratz creator Carter Bryant was working for Mattel when he developed the idea for Bratz. On July 17, 2008, a federal jury ruled that Bryant had created the Bratz while he was working for Mattel, despite MGA's claim that Bryant had not been employed by Mattel at the time and Bryant's assertion that he had designed the Bratz between two separate periods of employment at Mattel. The jury also ruled that MGA and its Chief Executive Officer Isaac Larian were liable for converting Mattel property for their own use and intentionally interfering with the contractual duties owed by Bryant to Mattel. On August 26, the jury decided that Mattel was to be paid just US $100 million in damages, citing that only the first generation of Bratz had infringed on Mattel property and that MGA had innovated and evolved the product significantly enough that subsequent generations of Bratz could not be conclusively found to be infringing.
On December 3, 2008, U.S. District Judge Stephen G. Larson granted a permanent injunction requested by Mattel against MGA. The injunction was to have been enforced on February 11, 2009, at the earliest, the same date that Mattel and MGA would once again be in court to present their cases for appeal, and mandated that MGA must remove, at its own cost, all Bratz product from store shelves, reimburse retailers for the product, turn over the recalled product to Mattel for disposal, and destroy all marketing materials and molds and materials used in the production of the dolls. Judge Larson made exceptions for a very limited number of products, under the condition that they be packaged separately from the allegedly infringing toys. MGA immediately filed an appeal, seeking appeal of the 2008 judgement, claiming numerous errors on Larson's part during the initial trial. MGA also sought a permanent stay of injunction and were granted a stay in the enforcement of the injunction through at least the end of the 2009 holiday season.
On December 10, 2009, the U.S. Court of Appeals for the Ninth Circuit granted MGA an immediate stay of the injunction, thereby halting the impending recall of all Bratz products, ensuring that retailers would be allowed to continue to sell MGA-produced Bratz product through at least the Court's final ruling on the matter. In their initial statement, the Court suggested Larson's previous ruling was "draconian" and had gone too far in awarding ownership of the entire Bratz franchise to Mattel. The Court of Appeals also ordered MGA and Mattel to resolve their dispute out of court. In a statement from MGA, Isaac Larian states that “the Court’s stay is good news for all Bratz fans and for anyone who cares about fair competition.”
On July 22, 2010, the Ninth Circuit Court of Appeals declared that ownership of the Bratz franchise belonged to MGA Entertainment. The Court Of Appeals rejected the District Court's original ruling for Mattel, where MGA Entertainment was ordered to forfeit the entire Bratz brand – including all registered copyrights and trademarks of the Bratz name – to Mattel. The panel from the Court of Appeals said Judge Larson had abused his discretion with his ruling for Mattel, concluding that Bryant's employment agreement could have, but did not necessarily, cover ideas as it did designs, processes, computer programs and formulae, which are all more concrete.
In addition to the litigation for ownership and control of the Bratz property, on October 20, 2009, artist Bernard "Butch" Belair filed a new design infringement lawsuit against both Mattel and MGA in Manhattan federal court, seeking unspecified damages. Belair claimed that his copyright designs of young women with "large heads, oval eyes, small bodies and large feet," which he had created for shoe designer house Steve Madden, were "pilfered" when Carter Bryant, during his 2008 court testimony, testified that he had been inspired by Steve Madden shoe ads which he saw in Seventeen magazine. Belair says neither MGA nor Mattel "sought or obtained permission... to copy, reproduce, create derivative works from or distribute" his "copyrighted" work. To date, neither Mattel nor MGA have responded to Belair's claims.
Mattel Inc. and MGA Entertainment Inc. returned to court on January 18, 2011 to renew their battle over who owns Bratz, which this time includes accusations from both companies that the other side stole trade secrets. On April 21, 2011 a federal jury returned a verdict supporting MGA. On August 5, 2011 Mattel was also ordered to pay MGA $310 million for attorney fees, stealing trade secrets, and false claims rather than the $88.5 million issued in April.
In July 2012 MGA Entertainment sued Lady Gaga for $10 million for causing, according to the BBC, "'deliberate' delays to the release of a doll based on her image."
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