Mattel, Inc. V. MGA Entertainment, Inc.

• In 2004, MGA Entertainment’s Bratz range of dolls emerged on the market, they presented severe competition to Mattel’s Barbie doll line

• In 2005, Mattel alleged that Bratz designer, Carter Bryant was still an employee at Mattel when he consulted MGA on the Bratz designs

• Mattel sought $1 billion in copyright damages from MGA Entertainment

Case Overview

Mattel’s Arguments:• Bryant violated his

employment agreement by going to MGA with his Bratz idea

• Mattel is the rightful owner of Bryant’s preliminary sketches & sculpt which MGA’s subsequent Bratz products infringed

• MGA wrongfully acquired the name “Bratz” so the trademark should be transferred to Mattel

MGA’s Arguments:• Bryant did not violate his

employment contract with Mattel when he consulted with MGA over potential doll designs as the employment contract does not cover ideas.

• Therefore, MGA has not infringed on any copyrights or trademark protections

The Arguments

Central Dispute

• The central issue in this case is whether or not Carter Bryant’s 1999 employment agreement with Mattel could be interpreted to cover ideas

• An excerpt of the agreement reads “I hereby assign to the Company…all my right, title, and interest in such inventions…the contract specifies that the term ‘inventions’ includes, but is not limited to, all discoveries, improvements, processes, developments, designs, know-how”

• Final court ruling stated that ideas are markedly different from these examples since they are not concrete but exist only in the mind.

Constructive Trust

• “An equitable remedy that compels the transfer of wrongfully held property to its rightful owner” – US Court of Appeals Case No. 09-55673

• The appeals court in this case had to decide if whether a constructive trust was appropriate for this case. “A constructive trust would be appropriate only if Bryant assigned his ideas for ‘Bratz’ and ‘Jade’ to Mattel in the first place”

• Bryant’s 1999 employment contract had to be analyzed to determine whether the constructive trust is appropriate. The appeals court ruled that the text did not compel that ideas were covered, thus the constructive trust was not appropriate.

Court Decision

• 2008 District Court Decision: awarded Mattel $10 million (around 1% of the amount Mattel sought) as a small portion of the Bratz dolls infringed Mattel’s copyrighted work and imposed a constructive trust over all trademarks (which essentially transferred the trademark portfolio to Mattel).

• 2010 Court of Appeals Decision: No constructive trust should be imposed on MGA and declared that MGA is the rightful owner to the Bratz franchise

• 2011 Final Court Decision: federal retrial jury rejected Mattel’s copyright infringement claims and finds that Mattel owes MGA $88.5 million for stealing trade secrets

The appeals court proceedings can be found here: http://www.ca9.uscourts.gov/datastore/opinions/2010/07/22/09-55673.pdf

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