(Adds MGA comment, analyst, share price, bylines)
By Gina Keating and Aarthi Sivaraman
LOS ANGELES/NEW YORK Dec 4 A California
federal judge ordered MGA Entertainment Inc to stop selling its
popular Bratz dolls and banned it from using the toy's name,
finding that hundreds of Bratz products infringe copyrights
owned by rival toymaker Mattel Inc MAT.N.
U.S. District Judge Stephen Larson also ordered MGA to
recall all Bratz dolls from retailers and to destroy
"specialized plates, molds and matrices" used to make the
dolls, under the terms of a permanent injunction issued late on
The ruling -- which was stayed until at least early next
year -- handed the biggest victory yet to Mattel in its more
than four-year legal fight over the Bratz dolls. Mattel shares
rose 6.7 percent.
"This is a large win for Mattel, if upheld, as it
effectively removes Bratz from the competitive landscape,"
Wachovia Capital Markets analyst Tim Conder wrote in a note.
"This is obviously much more important and critical than
any one-time monetary damages," he said.
The ruling appears to allow MGA and retailers to sell the
Bratz dolls through the holiday shopping season, when toy
sellers typically ring up a significant portion of annual
But Larson rejected the idea of allowing MGA to continue to
make the pouty-lipped, urban chic dolls that made its name and
fortunes while paying Mattel a royalty.
He set a Feb. 11 hearing on post-trial motions.
"Mattel has established its exclusive rights to the Bratz
drawings and the court has found that hundreds of the MGA
parties' products -- including all the currently available core
female fashion dolls Mattel was able to locate in the
marketplace -- infringe those rights," Larson wrote in the
MGA TO APPEAL
Mattel said in a statement that it was pleased with the
MGA intends to appeal the injunction immediately.
"We will seek to stay enforcement of this order until our
appeal is resolved so we can maintain the over 1,500 people
that MGA employs, and continue to give our consumers a product
they desire," MGA Chief Executive Isaac Larian said in a
The ruling, if upheld, would mean good news for Mattel's
iconic Barbie, which has lost market share to the Bratz dolls
since their launch in 2001.
At the same time, it could cripple MGA, which derives a
huge portion of its revenues from Bratz.
Mattel won the rights to the $1 billion-plus Bratz
franchise earlier this year in a lawsuit against MGA and former
Mattel Barbie designer Carter Bryant, who invented the Bratz
concept while under contract to Mattel.
A jury later ruled Bryant had secretly sold the concept to
Mattel was also awarded rights to all but four concept
drawings and models created by Bryant, but was granted only a
fraction of the $2 billion in damages it had sought at trial.
That left questions about the extent to which the dolls
infringed on those drawings.
In his ruling, Larson said his own side-by-side review of
the drawings and dolls left him with no doubts that MGA was
infringing on Mattel's copyrights.
Family-owned toy maker MGA has expanded the Bratz line
since its 2001 debut to include Baby Bratz, Bratz Kidz, and
Lil' Bratz, as well as films and TV shows based on the line.
It is not clear whether those products also were found to
infringe on Mattel's copyright for the female fashion dolls
that compete with its Barbie doll.
Mattel shares were up 80 cents to $14.00 on the New York
Stock Exchange in late morning trade.
(Editing by Kim Coghill and Gerald E. McCormick)