Mattel prevails in Bratz copyright trial

By Gina Keating

RIVERSIDE, California (Reuters) - Mattel Inc won a nearly complete victory on Thursday in its federal copyright infringement case against rival MGA Entertainment Inc over which toymaker owns the original drawings for the $1 billion-plus Bratz fashion doll franchise.

The decision by a California jury could have far-reaching implications for both companies as well as the toy industry if Mattel wins the large damages award it is seeking as well as an injunction to stop MGA from selling Bratz, the main rival to its Barbie dolls.

The federal jury found that the creator of the multi-ethnic, big-headed dolls, Carter Bryant, created their characters and the name while he was under contract as a Barbie designer at Mattel.

Mattel shares gained 4.4 percent in after-hours trade following the verdict.

Mattel Chairman and Chief Executive Bob Eckert, who testified at the trial, said it had pursued the case "as a matter of principle" and that the verdict was "a victory not only for Mattel but for all those who believe in fair play."

"While the case has been very complicated, the underlying principle has been a simple one: you shouldn't take what isn't yours," Eckert said in a statement.

The decision put Mattel in commanding position going into the damages phase of the trial, in which the jury will determine if the Bratz doll infringes on the drawings Mattel now owns and whether MGA owes Mattel damages as a result. That phase begins July 23.

Other than four drawings that Bryant testified he made in a notebook while on an eight-month hiatus from Mattel in 1998, privately held MGA lost the rights to all drawings and "sculpts" of the Bratz.

"DISAPPOINTED"

While the verdict is a blow for MGA, it can claim in the damages phase that Mattel has no rights to the dolls themselves because they are different from the drawings and were made by MGA designers.

"The real issues will be fleshed out in (the damages phase)," MGA attorney Thomas Nolan said outside the courtroom. "We have always taken the strong position that Bratz dolls do not infringe on Carter Bryant's drawings ... that substantial changes were made to the dolls to make them marketable."

MGA later said in a statement that Mattel was only suing MGA over the "first generation" of Bratz dolls issued in 2001.

"Under no circumstance will Mattel be able to assert ownership of the Bratz franchise - which will always belong to MGA," MGA Chief Executive Isaac Larian said in the statement.

The jury also found that Larian had interfered with Mattel's contractual relationship with Bryant and that both he and his company were liable for "conversion," the term used for industrial theft.

Larian, who attended court every day of the seven-week trial, said outside court he was confident his company "will prevail in the end," and that he was considering appealing the jury's verdict.