The business of toys is no child's play. A federal jury yesterday awarded toymaker Mattel Inc. $100 million in damages in a copyright lawsuit that pitted the house of Barbie against MGA Entertainment, the maker of the popular Bratz dolls.
In its lawsuit, Mattel contended it owned rights to the drawings and models upon which the big-headed, pouty-lipped Bratz dolls were based because former Barbie designer Carter Bryant made them while he was under contract to Mattel. Bratz dolls are currently locked in a fierce fight for market share with Mattel's iconic Barbie.
MGA and its CEO Isaac Larian were told to pay a total of $90 million in three claims related to Mattel's employment contract with Bryant. The jury also ordered MGA, Larian and subsidiary MGA Hong Kong to pay a total of $10 million for copyright infringement.
MGA attorneys said they would argue that the jury meant the damages to total just $40 million when it awarded $30 million against Larian and MGA on each of three counts of interfering in Bryant's contract with Mattel, plus $10 million for copyright infringement.
News of the award, which fell far short of the $1.8 billion in damages that Mattel had asked the jury to award, sent the toy maker's shares down 3.7 per cent in after-hours trade.
In the first phase of the trial, the jury awarded all but four of the dozens of drawings and models Bryant made of the four Bratz prototypes to Mattel. In the damages phase, jurors were tasked with deciding whether Bratz dolls and accessories infringed on those drawings and models.
The panel found that while Larian and his company were liable for copyright infringement, the infringement was not willful, and the jury awarded no punitive damages.
Mattel Chairman and CEO Robert Eckert said in a statement the company was "pleased that the jury agreed with Mattel that what MGA did was wrong and that damages were awarded."
The trial has been closely watched because a different outcome could have put MGA into dire financial straits and handed control of its $1 billion-plus Bratz franchise to Mattel. US District Judge Stephen G Larson will now consider the awards and make a final decision on how much MGA owes Mattel.
Mattel Inc. is the world's largest toy importing company based on revenue. The products it imports, mostly from China, include Barbie dolls, Hot Wheels and Matchbox cars, American Girl dolls, board games, and, in the early 1980s, video game consoles.
It was founded in 1945 by Harold "Matt" Matson and Elliot Handler (hence the name "matt-el"). Handler's wife, Ruth Handler, later became president, and is credited with establishing the Barbie product line for the company in 1959.
Today the Barbie line is responsible for more than 80 per cent of Mattel's profits. Mattel closed its last American factory, originally part of the Fisher-Price division, in 2002. The company, which employs around 30,000 people, had revenues of $5.97 billion last year.
MGA Entertainment (Micro-Games America Entertainment) is a manufacturer of children's toys and entertainment products founded in 1997. Its products include the Bratz fashion doll line. With an employee count of 1,000, the company declared revenue of $2 billion last year.