IP/Internet/New Media Blog

By Galen Gentry

On July 22nd the Ninth Circuit Court of Appeals overturned almost all of a Riverside federal court judge’s rulings and jury’s findings in the $100 million Bratz v. Barbie case. Judge Stephen Larson presided over the trial which ultimately found that Mattel Inc. had the rights to the Bratz dolls produced by rival MGA Entertainment Inc.

The appeals court ruled that most of the jury instructions and conclusions reached during the 2008 trial between Mattel and MGA were incorrect. “Because several of the errors we have identified appeared in the jury instructions, it’s likely that a significant portion – -if not all — of the jury verdict and damage award should be vacated, and the entire case will probably need to be retried,” said the appellate panel in an opinion written by Chief Judge Alex Kozinski. See our orgininal blog post on this topic here. 

The panel stated in the opinion“Even assuming that MGA took some ideas wrongfully, it added tremendous value by turning the ideas into products and, eventually, a popular and highly profitable brand.”   And went on to say “It is not equitable to transfer this billion-dollar brand, the value of which is overwhelmingly the result of MGA’s legitimate efforts, because it may have started with two misappropriated names.”

Wow. Talk about a difference of opinion. The trial judge and the appeals court saw this one very differently.

By Galen Gentry

Last Monday, the NFL registered a trademark for use of the phrase “Who Dat?” on apparel with the Florida Department of State.  The NFL began sending cease and desist letters to vendors in New Orleans who sell clothing and hats that have “Who Dat? on them.  According to the Wall Street Journal’s story published Friday the NFL claims that it has been using the phrase and enforcing its rights for twenty years.  The citizens of New Orleans have been vocal in their displeasure with the NFL’s position.  Louisiana politicians have also weighed in.  Congressman Charlie Melancon and Senator David Vitter have contacted the NFL urging them to drop its claim. To date the NFL remains unmoved. According to the NFL vendors selling shirts adorned with the phrase Who Dat and the name of the team are infringing.  And, the commonly seen shirts that simply say “Who Dat?” in black and gold without the word Saints won’t pass muster with the NFL because “Who Dat?” refers to the team.  Today, Louisiana Gov. Bobby Jindal  has asked the state attorney general to look into a possible lawsuit over the ownership rights to the popular phrase.

Ninth Circuit Throws Curve Ball in Bratz Dolls Trademark Suit and Stops Mattel From Taking Bratz Line

By Galen Gentry

Mattel scored a sweeping victory in its trademark infringement trial against MGA concerning the Bratz Dolls. MGA, the Bratz Dolls’ maker, was ordered to pay $100 Million in damages, turn over the dolls, and cease making them. But the 9th Circuit Court of Appeal issued a stay, and allowed Bratz to keep making the dolls. The Appeals court then took the extraordinary step of ordering the parties to mediate their dispute. The suit is a cautionary tale for small businesses. Mattel and other giant companies vigorously litigate their trademark rights. Had MGA been smaller and less well capitalized it would almost certainly have been destroyed by Mattel.

One of the most important trademark infringement trials of the year concerned Mattel Inc.’s complaint against MGA Entertainment over the Bratz dolls. At the trial level Bratz lost on all fronts. In 2008 the jury ruled after a trial in federal court in Riverside that Bratz was created by a toy designer while the designer was still working for Mattel. As a result control of the Bratz line was awarded to Mattel and MGA was ordered to pay $100,000,000.00 in damages.

MGA appealed and argued that several rulings made by the judge, Stephen Larson, should be overturned including the assignment of the Bratz ownership to Mattel, an injunction preventing MGA from making any more Bratz dolls, and an order instructing MGA to remove all Bratz products from store shelves by January 21, 2010. One of the grounds upon which MGA appealed was that Mattel employment contract with the doll designer, Carter Bryant, was invalid. The 9th Circuit issued an interim order on December 9th. The order allowed both retailers to continue selling MGA’s Bratz dolls through next year. The Court will issue a more detailed order later in 2010.

After the jury trial MGA was ordered to transfer ownership of the Bratz trademark and copyright to Mattel. The trial judge in the matter ruled that MGA had developed the doll from intellectual property that rightly belonged to Mattel and he ordered that Mattel take over the manufacturer and sale of the doll after the 2009-2010 Christmas season. But the Court of Appeals relieved MGA of its obligation to buy back and destroy all the remaining Bratz dolls on store shelves and said MGA can continue to sell the Bratz dolls that are currently in stores until a final court decision in the case is made.

The ruling is a huge victory for MGA. Reading between the lines of the appellate court ruling the court seems to be saying it is not pleased with the original decision at the trial level. The Ninth Circuit questioned why Mattel wasn’t simply given a royalty or an ownership stake in MGA Bratz toys. The appellate judges evinced concern regarding the employment agreement between Carter Bryant and Mattel. The appellate court’s decision to modify the injunction which would have wiped out MGA and its order that MGA and Mattel attempt to mediate their dispute may indicate that the panel believes that both Mattel and MGA have some merit to their claims.

Mediation is unlikely to work. Mattel has historically guarded its trademarks vigorously. Mattel obtained a total victory at the trial level and is unlikely to give that up. The big losers are toy retailers who will have to gamble on which manufacturer will have the right to sell hugely popular Bratz dolls next season.

Both MGA and Mattel are preparing new doll lines. MGA has Moxie Girlz and Best Friends Club. Mattel has Fashionista Barbies which it delivered to retailers this past October. However the Bratz dispute ends, the popularity of the dolls has slipped from its 2005 peak when they generated more than $1 Billion in sales.