Barbie has a black eye.
In yet another twist in the epic Barbie-vs.-Bratz brawl, a U.S. District
Court slapped Mattel Inc. with $88 million in damages after tossing out its
claims that rival MGA Entertainment stole the idea for its blockbuster
Bratz dolls, an embarrassment for the blond teen queen, to
say the least.
After a two-week deliberation, the jury in Santa Ana, Calif., also
found that Mattel was guilty of misappropriation of trade secrets, a
serious ethical blow to the venerable toy giant that tacks on the
possibility that more damages might awarded to MGA. But don’t count on this
being the end of one of the longest court fights in toy-industry history. If
you include a Mattel’s victory in 2008, when a federal judge upheld its $500
million claim against Bratz, the two sides are now tied with one victory
apiece. And Mattel is almost sure to appeal the case.
“It really is a basketball tournament. It’s one-all now,” says Jim Silver,
editor of the industry trade publication Time to Play. “If is appealable, which it seems to be, then it’s meaningless.”
The initial suit began in 2005 over the rights to a particular aspect of
the Bratz design, when MGA filed against Mattel for allegedly copying the distinct
Bratz eye feature in its new line of Barbies. Later that year, Mattel countersued for $500 million, claiming
that designer Carter Bryant, who created the racier, trendier Bratz dolls for MGA, had come up
with the idea while he was employed by Mattel to design the more demure Barbies. Bryant
joined MGA in 2000, and the company launched Bratz one year later.
According to Mattel, the company is entitled to a stake in Bryant’s
original drawings because of an intellectual-property agreement in his
contract, a version of events upheld by a U.S. district court judge in
2008. MGA claimed that Bryant was not working for Mattel at the time
he created the sketches.
In July 2008 a federal judge ruled that MGA would pay just $100
million to Mattel, saying that only the first generation of Bratz fell
under Bryant’s breach of contract. That December, Mattel was granted a
permanent injunction against MGA, which meant the latter must stop production
and sales of certain Bratz toys. But the injunction was overturned in
December 2009, when yet another judge ruled that stores would be able to
sell Bratz products until a final decision in the case was reached.
That same year,
Barbie sales had dropped 30% from 2004, no doubt affected
by MGA’s newer, hipper doll. By 2006, Bratz had captured about 40% of the
fashion-doll market and posed the biggest threat to Barbie since her debut
in 1959.
Mattel’s strategy appeared to be that of any threatened corporation: try to bury the competition in litigation. The only problem: Mattel isn’t the only
toymaker with seriously deep pockets. MGA founder Isaac Larian is one of
the richest men in the business, and the egos involved, possibly even more
so than the hundreds of millions of dollars at stake, could tie up both
companies in court for years to come.
Today it’s Larian who may be fighting the losing battle. Bratz sales are
way down from their 2006 highs. Time to Play’s Silver
now estimates the line is driving in $30 million to $40 million a year, based on toy-store shelf space dedicated to the brand. “I don’t think the lawsuit had
anything to do with Bratz dying at the marketplace,” he said. “There were
very strategic errors made. Those, along with the parents speaking out
about how risqu the dolls were,
did it.”
One of these “strategic errors” was the disastrous Bratz: The Movie,
released in theaters in 2007. “There’s a reason Mattel has never done
a Barbie movie until now,” Silver said. “Barbie goes for the safe
choice.” Long term, that seems to be a winning strategy. Right now,
Silver estimates Barbie has probably 90% of the fashion-doll aisle, up
from a low point of 60% five years ago.
So instead of bleeding money in courts, the companies would be better off
spending every dime on market research, as the real winner of the doll-vs.-doll battle will be decided by their customers. “The consumers who
are buying dolls don’t know anything about a lawsuit,” Silver said.
“Ninety-nine percent
don’t know or don’t care. They just want to buy the doll their kid is
asking for.”
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