Mattel loses Bratz appeal

The El Segundo-based toy company was wrongly given ownership of the popular dolls, says the 9th U.S. Circuit Court of Appeals. The ruling reverses a decision by federal judge Stephen Larson that would have given Mattel the Bratz portfolio, In case you lost track on this thing, a federal jury in Riverside had ordered Van Nuys-based MGA to pay Mattel $100 million in damages, concluding that a Barbie designer was under contract with Mattel when he sold MGA the Bratz designs. Larson subsequently ordered MGA to transfer the Bratz doll franchise to Mattel. From Reuters:

Writing for a unanimous three-judge panel, Chief Judge Alex Kozinski also threw out Larson's injunction prohibiting MGA from selling the pouty-lipped, multi-ethnic Bratz dolls, or dolls substantially similar to Mattel's own copyrighted works. Bratz dolls were introduced in 2001. "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," Kozinski wrote.

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Kozinski said "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" because the jury instructions contained several of the errors that the appeals court identified. "The district court didn't properly analyze whether Mattel owns Bryant's ideas under his contract," Kozinski wrote in a footnote, "so it's premature to try to determine whether MGA's acquisition of them was wrongful."

Mattel had already started manufacturing its own line of Bratz dolls, though the appellate case put those plans on hold. Shares of Mattel are actually up at the closing bell.