Bratz doll maker MGA Entertainment Inc. has sued Mattel Inc. in
a California court for alleged unfair business practices at
industry trade shows, the latest twist in a long-running legal saga
between the rival toy makers.
The legal battle between the companies appeared to come to a
close after Mattel paid nearly $138 million in legal fees related
to the ownership dispute over the Bratz dolls.
But with the latest lawsuit, MGA is pivoting from the U.S.
District Court to a California superior court. In MGA's filing, the
company is seeking damages it believes will "reach or exceed $1
billion."
A Mattel representative wasn't immediately available to comment
on the latest litigation.
MGA has alleged employees in Mattel's market intelligence
department misrepresented themselves to gain entry to the private
showrooms of their competitors, including MGA, at industry trade
shows from at least 1992 to 2009.
The company has claimed the Mattel employees stole competitive
information--including price lists, advertising plans and
unreleased product attributes--and then disseminated the stolen
information throughout the company to gain an illegal advantage in
the market.
The legal battle between the doll makers has been in the courts
for about a decade. Mattel began the tussle, filing a lawsuit in
2004 that alleged Carter Bryant, a designer in its Barbie line,
came up with the idea for Bratz while he was employed at Mattel in
the late 1990s.
That case--which alleged Mr. Bryant violated his "inventions
agreement" by taking the drawings for the dolls to MGA--took a turn
when a federal appeals court in California threw out more than half
of a $310 million verdict against Mattel over the rights to the
pouty-lipped dolls, leaving Mattel only on the hook for fees and
costs tied to the copyright claim.
Mattel took a charge of $137.8 million to cover those costs in
the fourth quarter of 2012.
MGA Chief Executive Isaac Larian has alleged litigation with
Mattel had "destroyed" Bratz, a brand he claims was valued at over
$2 billion in 2006 but now isn't being sold by MGA. In an interview
with The Wall Street Journal, he also alleged legal matters
derailed talks of a potential initial public offering.
Mattel and MGA are fierce competitors in the fashion doll
category, a pocket of the toy market that has continues to notch
higher sales even among choppy demand for the overall category.
Mattel's Barbie and Monster High and MGA's Lalaloopsy are among the
top sellers in the domestic market, according to research firm NPD
Group.
Write to John Kell at john.kell@wsj.com
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