Verdict’s in but Bratz future still in legal limbo

The federal jury award in the legal battle between Mattel Inc. and MGA Entertainment Inc. left a key issue unresolved: Can MGA continue to market the popular Bratz doll line?

Mattel attorneys said they intended to file an injunction to stop MGA from making more Bratz dolls in the wake of Tuesday’s verdict, which held MGA, Chief Executive Isaac Larian and subsidiary MGA Hong Kong liable for copyright infringement and awarded $10 million in damages.

The panel also awarded Mattel about $90 million for three causes of action related to breach of contract. That brings the total to about $100 million by Mattel’s arithmetic, well short of the $1.8 billion Mattel had sought. MGA contends the tab is about $40 million because some awards were duplicative.

U.S. District Judge Stephen Larson will have to decide whether MGA may continue to sell the dolls and, if it can, if it must pay Mattel royalties.

“The jury found that at some point the dolls infringed, but the question is, was it the earlier dolls or the later dolls or all of them?” said Oren Warshavsky, an intellectual property attorney who has followed the case closely.

At the heart of the issue are sketches done by designer Carter Bryant while conceiving the Bratz line. Earlier in the trial the same jury found that Bryant worked at Mattel under an exclusivity deal when the drawings were made and that all but four belonged to Mattel.

Larian, however, said the jury’s relatively small award for copyright infringement showed the panel felt only the earliest dolls were based on Bryant’s initial sketches and that later dolls belonged to MGA.

“The main Bratz brand will always remain with MGA, and we are going full blast forward,” Larian said.

Mattel attorney Michael Zeller said the toy giant would ask the judge to consider an injunction. The jury did not pinpoint which dolls were in violation of Mattel’s copyright, so the judge will have the latitude to make that decision, he said.

If the judge finds for a blanket ban of Bratz dolls, that ruling could devastate MGA, said Jack Lerner, an intellectual property professor at USC.

“The stakes still remain very, very high for MGA,” he said.

Mattel shares Wednesday fell 59 cents, or 2.9%, to $19.65.