Barbie Beats Bratz Dolls In Legal Battle

The rowdy Bratz dolls have been evicted. Barbie has regained control of the dollhouse, and shares of toy giant Mattel shot up Thursday.

After a four-year legal dispute with MGA Entertainment Inc., Mattel Inc. touted its win in the case Wednesday after a federal judge banned MGA from making and selling its pouty-lipped and hugely popular Bratz dolls.

"It's a pretty sweeping victory," Mattel attorney Michael Zeller said. "They have no right to use Bratz for any goods or services at all."

Shares of Mattel rose 60 cents or more than 4 percent to $13.80 in early trading Thursday. MGA is privately owned.

U.S. District Judge Stephen Larson rocked the toy industry with his order that MGA must immediately stop manufacturing Bratz. He allowed MGA to wait until the holiday season ends to remove the toys from store shelves.

The decision was a stunning defeat for MGA, which exploded onto the tween scene in 2001 with the edgy dolls and made hundreds of millions in profits, giving Mattel's more classic doll-diva Barbie a run for her money.

MGA planned to immediately appeal the judge's injunction, Chief Executive Isaac Larian said in a written statement late Wednesday.

Larian said the company also intended to ask that the order be stayed until the appeals process is over, so that "we can maintain the over 1,500 people that MGA employs, and continue to give our consumers a product they desire."

The ruling, issued in federal court in Riverside, followed a jury's finding that Bratz designer Carter Bryant developed the concept for the dolls while working for Mattel.

The same jury later awarded Mattel $10 million for copyright infringement and $90 million for breach of contract after a lengthy trial stemming from Mattel's 2004 lawsuit ended in August.

Mattel has fought to neutralize the Bratz line for years. The dolls - with their huge lips, pug noses, almond-shaped eyes and coquettish figures - were an instant hit with young girls. MGA had taken Bryant's original four dolls and spun out a line of more than 40 characters, complete with accessories and related toys such as Bratz Boyz, Bratz Petz and Baby Bratz.

El Segundo-based Mattel has seen sales of Barbie - once a rite of passage for American girls - slide since the doe-eyed Bratz dolls first came on the scene. Domestic sales of Barbie were down 15 percent in 2007.

Both sides had a lot riding on the judge's decision and had worried about the impact of any ruling during the holiday shopping season.

The judge's injunction named all 40 dolls in the Bratz line, including the four originals - Yasmine, Chloe, Sasha and Jade. Larson also ordered MGA to reimburse its vendors and distributors for the cost of the dolls and all shipping charges for sending them back.

During trial, Mattel attorneys said MGA made nearly $778 million on the Bratz line since it was introduced seven years ago, and company Chief Executive Isaac Larian made $696 million through June - but MGA insisted the profits were much less.

The post-trial dispute that prompted Wednesday's ruling centered on whether the jury found that only the first generation of four Bratz dolls infringed on Mattel's copyright or whether all the dolls in the line are in violation.

The jury verdict form only asked panelists to find whether there was infringement and assign a dollar reward, but did not ask them to specify which dolls among the dozens MGA made violated the law.

Los Angeles-based MGA, which no longer makes the first-generation dolls, argued that the later toys in the Bratz line don't violate the copyright and it could continue to sell them.

MGA attorney Raoul Kennedy argued that Larson had the discretion to determine which dolls violated Mattel's copyright. Mattel's attorneys disagreed, saying the court does not have the authority to interpret the jury's findings after the fact.