Mattel alleges MGA stole Bratz design

Mattel Inc. escalated the legal wrangling over Bratz dolls Monday, accusing MGA Entertainment Inc. of stealing plans for the doll line, the chief competitor to Mattel’s Barbie.

Saying it had uncovered new evidence, Mattel amended a lawsuit to include its rival as a defendant. The revised suit alleges that MGA stole company secrets, hired away Mattel personnel and illegally reaped millions of dollars in profit that the suit says Mattel should have gotten.

MGA Chief Executive Isaac Larian called Mattel’s allegations baseless and improper.

“This lawsuit just proves that Mattel is desperate,” he said. “They wished that they owned Bratz, but they don’t and they know it,”

The newest claims are part of a dispute between the cross-town rivals that dates back to 2004. It centers on the role of Carter Bryant, a doll designer for Mattel who was hired as a consultant by MGA.

“He concealed his Bratz work from Mattel and wrongfully sold Bratz to MGA while he was a Mattel employee,” the court filing said of Bryant.

Van Nuys-based MGA created a sensation when it introduced Yasmin, Sasha, Cloe and Jade in 2001. The line of exotically named doe-eyed dolls, which sport racy clothing and coquettish expressions, have been the most serious threat to Barbie in her 40-plus years.

Monday’s court filing amended Mattel’s lawsuit against Bryant, filed in U.S. District Court in Riverside. Mattel declined to elaborate.

The filing calls the added allegations a result of information gleaned during the lawsuit’s discovery process. It does not specify a dollar amount that Mattel is seeking in damages.

The expansion of the suit by El Segundo-based Mattel raises the stakes in the fight over the Bratz line, which has taken market share from the Barbie line.

Monday’s filing by Mattel alleges that MGA enticed a series of Mattel employees to breach their contracts with Mattel. The company also argued that MGA “repeated -- and even expanded -- its pattern of theft on numerous occasions.”

That alleged theft, Mattel’s filing says, included hiring Mattel employees based in Mexico and Canada and using stolen Mattel plans and information to expand throughout North America.

MGA’s rapid growth came as a result of its theft of Bratz, and MGA stole Mattel’s proprietary information to manage that growth, the complaint says.

“This not only allowed MGA to avoid expending time, money and effort necessary to build a legitimate business, but also allowed MGA to unfairly compete against Mattel by taking Mattel’s playbook,” the complaint says.

After filing the suit against Bryant in 2004, Mattel sued another former employee who went to work for MGA, but subsequently withdrew that complaint. MGA, meanwhile, joined the Bryant case, saying the outcome would be material to its business.

Bryant countersued Mattel, contending that his employment agreements with Mattel were invalid. MGA later sued Mattel, claiming its My Scene Barbie toy line was unfairly similar to Bratz.

“This is a classic trade secret case related to employee movement,” said Jennifer Urban, the director of USC Law School’s intellectual property clinic, who said she was not familiar with details of the suit.

“The original employer often will look to see if they can file a claim against the new employer,” Urban said, “if for no other reason than that the new employer has both control of the information and also money for damages.”

Larian said this year that he had been in talks with investment banks about an initial stock offering -- a goal that could be hampered by the litigation with Mattel.

Although MGA has expanded its product offering, creating electronic toys such as this year’s hand-held game, Miuchiz, and acquiring outdoor-toy maker Little Tikes Co., Bratz is the company’s overwhelming sales and profit leader, analysts said.

Since they were introduced, retail sales of Bratz dolls have grown to about $2 billion a year, said Sean McGowan, a toy industry analyst with Wedbush Morgan in New York. Privately held MGA does not release sales figures.

Barbie has managed to remain the best-selling fashion doll, but its market share has fallen dramatically since Bratz dolls elbowed their way onto toy store shelves.

Mattel does not release divisional sales, but McGowan estimated that sales of Barbie products, including Mattel’s toys and third-party licensed goods, are roughly $3.1 billion annually.

Although the numbers have begun to creep up, Barbie’s sales have fallen in 17 of the last 21 quarters -- often by double-digit percentages. In one of the remaining three quarters, sales were flat.

Shares of Mattel fell 34 cents Monday to $23.32.

abigail.goldman@latimes.com