Background

In August last year, Mattel Inc. (Mattel), the company that is responsible for creating Barbie, was awarded $100 million dollars (approximately £54.4 million) in a case for copyright infringement against MGA Entertainment Limited (MGA), manufacturer of the popular Bratz Dolls.

Mattel successfully argued that the original designs and prototypes for Bratz, which had been developed by one of Mattel's employees during his course of employment at the company, belonged to Mattel and by manufacturing and selling the Bratz dolls based on these designs, MGA had infringed their copyright. The award for damages was for the breach of the employee's employment contract as a result of Mattel's employee secretly selling his designs to MGA, as well as copyright infringement.

Despite the large award by the jury in the case in August 2008, the outcome was regarded as disappointing for Mattel, as the compensation awarded represented only 5 per cent of the $2 billion plus award sought.

Court Order

However, on 3 December 2008, a US District court judge imposed an injuction which will prevent MGA from producing, distributing and marketing the majority of the Bratz dolls, as well as any other products using the Bratz name. This ruling effectively means that Mattel has eliminated its main competitor from the market, as MGA will have to shut down its Bratz operation in order to comply with the injunction.

In a separate order, the judge ruled that Mattel will also be entitled to the benefit of most of the Bratz trademarks and domain names, which will be held in trust on behalf of the company.

A small concession for MGA is that the judge granted a 7 week period from the date of the ruling during which MGA may continue to sell existing Bratz goods before it is required to remove the dolls and other products from toy shop shelves.

The injunction is not due to come into full effect until after 11 February 2009 when the District Court judge rules on post-trial motions made by the parties. When the full injuction is implemented, MGA will only be entitled to continue to produce and sell a small number of dolls, and this is only allowed on the basis that the figures are packaged completely separately from the Bratz dolls which infringe Mattel's copyright.

Comment

Following the decision in August, there has been much debate as to whether only the 4 original dolls, or the original and all subsequent dolls (amounting to 40 dolls and hundreds of related products) infringe Mattel's copyright. The ruling on the injunction seems to be on the basis that the vast majority of the Bratz brand products are infringing.

Mattel's spokesperson stated, "Today's ruling underscores what Mattel has said all along – that MGA should not be allow to profit from its wrongdoing," although MGA have stated that it plans on appealing the August decision, as well as the injunction.

Due to the huge legal costs incurred already, a settlement between MGA and Mattel could be the best way forward, for example by agreeing that MGA licence the copyright back from Mattel in order that it can continue to produce the dolls, albeit with a significant reduction in profits due to the requirement to pay a licence fee. Completely removing Bratz from the shelves, as well as decreasing consumer choice and disappointing a lot of 'tweenage' girls, could result in significant job losses at MGA, a family-owned company which currently employs 1,500 people.

However, the case serves as a warning to businesses to ensure that proper enquiries are made and advice obtained before marketing a product, particularly where there is a risk that any intellectual property in the product or its designs is owned by someone else.