Bratz-Barbie Doll Copyright and Trademark Dispute Continues: Ninth Circuit Denies Mattel's Petition For Rehearing

The Bratz – Barbie doll battle continues in a dispute between their respective owners, MGA Entertainment, Inc. and Mattel, Inc. On October 21, 2010, the U.S. Court of Appeals for the Ninth Circuit denied Mattel's petition for rehearing of its decision of last Summer.

The effect is that the Ninth Circuit's earlier ruling in favor of MGA will essentially remain intact and Mattel will have to prove its case at trial rather. (The ruling denied Mattel's petition to have the case reheard by the Ninth Circuit's three judge panel that heard the case originally or by a larger panel of the Court.)

The case involves copyright and trademark issues arising out of the design of the Bratz doll for MGA by Carter Bryant, a one-time Mattel employee who designed fashions and hair styles for its Barbie doll. In 2000, while still at Mattel, Bryant pitched his idea for the Bratz line of dolls to two MGA employees. The pitch was successful and on October 4, 2000, Bryant gave Mattel two-week notice and signed a consulting agreement with MGA. Bryant contended that he worked on the idea on nights, weekends and when he was otherwise off-the-clock. The Bratz line proved very successful for MGA.

Multiple lawsuits ensued, which were consolidated and divided into two phases. Phase 1 involved claims related to Bratz' ownership, including copyright and trademark claims. This case concerned an interlocutory appeal of the equitable orders entered at the conclusion of that phase. (Phase 2 remains pending.)

In Phase I, Mattel prevailed in the trial court on virtually every point. The jury had found that Bryant thought of the “Bratz” and “Jade” names and that he had created the preliminary sketches and sculpt while he was still employed by Mattel. It also found that MGA committed three violations of state-law relating to his involvement with Bratz. It issued a general verdict that found MGA liable for infringing Mattel’s copyrights in Bryant’s preliminary Bratz works.

Although Mattel sought more than $1 billion in copyright damages, the jury awarded it only about 1% of that amount ($10 million), perhaps because it found only a small portion of the Bratz dolls were infringing. The district court then entered equitable relief based on the jury’s findings. In July 2010, the Ninth Circuit reversed and ruled in MGA's favor.

With respect to the trademark claims, the trial court had imposed a constructive trust over all trademarks, and essentially transferred MGA's entire Bratz trademark portfolio to Mattel. As for the copyright claims, the court issued an injunction prohibiting MGA from producing or marketing virtually every Bratz female fashion doll.

Some issues concerned an employment agreement Bryant had signed with Mattel, which assigned inventions created during his employment with the company to Mattel. However, Bryant's job did not include creating new doll lines. The Ninth Circuit reversed the trial court and found that the contract was ambiguous as to whether it resulted in an assignment of everything Bryant invented during his working hours, or everything he invented during the entire calendar period of his employment with Mattel - even if what he invented was outside the scope of his employment. Thus, the trial court should have submitted to the jury the issue of whether or not his work on nights and weekends on the Bratz line fell within the scope of the contract.

The Ninth Circuit also vacated the trial court's copyright injunction. It addressed the copyright analysis and explained the parameters the trial court should have considered in evaluating the protectable and unprotectable elements of the designs, and the differences between the copyrightable expression of ideas and the noncopyrightable ideas themselves.

The Ninth Circuit also reversed the trial court's trademark rulings. The issue of whether Bryant's employment agreement with Mattel covered Bryant's ideas for the "Bratz" and "Jade" names, which were part of the trademark portfolio, the Ninth Circuit found it was error to hold that Bryant's employment agreement "unambiguously" covered those ideas and that it necessarily assigned them to Mattel. The trial court further abused its discretion in transferring the entire Bratz trademark portfolio to Mattel the Ninth Circuit found these issues should have been decided by a jury at trial. Thus, the Ninth Circuit also vacated the constructive trust and other equitable relief concerning Mattel's rights to the Bratz trademarks.

The court warned that a narrower constructive trust could only be imposed if there was a proper determination that Mattel owned Bryant's ideas; and that it could only issue a copyright injunction if the Bratz "sculpts," which were used in manufacturing the Bratz dolls, were "virtually identical" to a preliminary sculpt that Bryant created before he left Mattel. The court also suggested that most, if not all, of the case that was tried to a jury might need to be retried in light of its opinion.

As a result of the Ninth Circuit's ruling last week, its July 2010 ruling stands (other than a few changes in which the court amended four lines of the prior 25 page opinion). The case will be returned to the trial court for a jury trial.

The Ninth Circuit's opinion in MGA Entertainment, Inc. v. Mattel, Inc., 9th Cir. Case. No. 09-55673 (Oct. 21, 2010) is available here.