<p>SANTA ANA, Calif. – A federal court jury on Thursday rejected Mattel Inc.’s claims that it owns the copyright to the blockbuster, billion-dollar Bratz dolls and instead awarded upstart rival MGA Entertainment Inc. more than $88 million in damages for misappropriation of trade secrets.</p> <p>The verdict came as a staggering blow to the toy giant, which has long claimed the smaller company stole the idea for the provocative, pouty-lipped toys.</p> <p>The jury, which deliberated for nearly two weeks after a three-month trial, also found that Mattel acted wilfully and maliciously in misappropriating MGA’s trade secrets. MGA lawyers said that raised the possibility the judge could increase the damages by up to three times the jury’s award.</p> <p>The verdict will allow MGA to regain control of its flagship fashion doll that debuted in 2001 and to once again try to compete with Mattel’s iconic Barbie doll to dominate the market.</p> <p>”If Mattel had won this lawsuit, MGA would have been wiped out, and that’s what Mattel wanted to do,” MGA attorney Jennifer Keller said.</p> <p>Mattel’s Chief Executive Officer Bob Eckert, who was present for the verdict, said in a statement the company was disappointed.</p> <p>”But we remain committed to protecting the intellectual property that is at the heart of business success,” the statement said. “Mattel’s first priority is, and always has been, to make and sell the best toys in the world.”</p> <p>Mattel first sued MGA more than six years ago, claiming Bratz designer Carter Bryant was working for Mattel when he designed the urban-inspired dolls.</p> <p>Hundreds of millions of dollars in potential damages and the rights to a blockbuster toy were at stake in the case that cost each side millions in legal fees as it dragged on.</p> <p>MGA Chief Executive Officer Isaac Larian openly cried while listening to the verdicts. Despite the verdict, he questioned whether Bratz dolls would be able to make a comeback in the aftermath of the suit.</p> <p>”Mattel killed the Bratz brand. It is never going to be the same level as it was before,” he said.</p> <p>Still, he hoped the verdict would send a message to Mattel that it’s not alright to bully small-time entrepreneurs trying to break into the industry.</p> <p>”I think justice prevailed in the end,” Larian said. “Hopefully this will be a major lesson for Mattel.”</p> <p>MGA has always denied Mattel’s copyright claims and countersued the larger company for misappropriation of trade secrets and unfair business practices for engaging in corporate espionage at toy fairs and conspiring to keep Bratz products off retail shelves.</p> <p>Mattel won a minor point in the case when the jury found MGA and Larian interfered with Mattel’s contractual relations with doll designer Bryant and assigned $10,000 in damages, divided between the company and the CEO. But the damages will likely be nullified because the jury also found that Mattel should have discovered the interference and lost a window to make the claim.</p> <p>The interference involved a two-week period when Bryant had given notice about leaving Mattel but was still working there while helping MGA create the doll. MGA has maintained it did not know Bryant was still working at Mattel.</p> <p>In its case, El Segundo-based Mattel alleged that Bryant developed the dolls while working for Mattel in 1999 and secretly took the idea to MGA, which developed the first-generation fashion dolls while obscuring Bryant’s involvement.</p> <p>A jury awarded Mattel $100 million in 2008 and found that Bryant had developed the Bratz concept while with Mattel. A trust was issued for Bratz trademarks and an injunction was issued prohibiting MGA from producing or marketing almost every Bratz fashion doll and future dolls that were substantially similar.</p> <p>The verdict was overturned last year. In the appellate ruling, the court said some of the trial judge’s decisions didn’t take into account MGA’s sweat equity in developing and expanding the Bratz line from Bryant’s original ideas.</p> <p>Analysts said the verdict would make retailers more willing to display Bratz dolls, which have been in limbo since the 2008 ruling.</p> <p>Bratz are now a shadow of the former brand, said BMO Capital Markets analyst Gerrick Johnson, who estimated that wholesale sales are now under $50 million, down from $800 million at their peak five years ago.</p> <p>”Retailers are probably going to be more willing to bring the doll in, and MGA is definitely going to be more willing to put resources behind it,” Johnson said.</p> <p>_____</p> <p>Associated Press writers Amy Taxin in Santa Ana and Mae Anderson in New York contributed to this report.</p>
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