U.S. News

Court keeps spying claims against Mattel alive

SAN FRANCISCO (Reuters) - Mattel Inc will answer accusations it spied on rival toymakers by infiltrating their private showrooms around the globe, after a U.S. court denied its motion to dismiss claims filed by rival MGA.

In an escalation of a long-running battle over MGA’s popular “Bratz” dolls, MGA Entertainment Inc accused Mattel of gaining entry to toy fairs with false credentials to steal trade secrets. It says Mattel then concealed evidence about these activities, according to court filings.

MGA has accused Mattel employees of gaining access to private showrooms of toy makers -- including Hasbro Inc, Lego and Sony Corp -- armed with fake business cards and spy cameras, to steal price lists and other sensitive information.

It made the accusations in August, four weeks after the 9th Circuit U.S. Court of Appeals in San Francisco said a lower court judge had wrongly granted Mattel ownership of the $1 billion franchise of multi-ethnic, fashionable Bratz dolls.

Mattel sought to have MGA’s most recent trade secret allegations dismissed. But U.S. District Judge David Carter, based in Southern California, ruled the allegations can survive because Mattel has also accused MGA of destroying evidence.

The two sets of allegations “share a logical relationship,” Carter ruled.

However, he denied MGA’s attempt to recover damages resulting from court injunctions that had once been imposed on MGA, only to be overturned.

MGA Chief Executive Isaac Larian called Mattel’s conduct “shameful” on Wednesday. Representatives for Mattel were not immediately available for comment.

Trial is currently scheduled for January 11, though further pretrial motions will be decided before then.

The case in U.S. District Court, Central District of California is Bryant v. Mattel Inc, 04-9049.

Reporting by Dan Levine; Editing by Lisa Shumaker