LOS ANGELES (CN) - The Barbie doll was so threatened by the success of the Bratz doll that Mattel launched an abusive campaign to "Kill Bratz," violating antitrust laws and suing MGA Entertainment "to death," MGA claims in Federal Court. So virulent was the attack, MGA claims, that Mattel used industrial spies with false IDs, intimidated and threatened Bratz vendors, and "spread press releases that Bratz sexualizes girls and that Bratz dolls say the 'F' word (which they do not)."
MGA claims that as its bigheaded, hipster Bratz dolls became popular, Mattel's Barbie lost market share "at a chilling rate," and Mattel, under CEO Robert Eckert, began a series of "attacks" on MGA to force it out of the market.
Barbie has dominated the fashion doll market since 1959, and "has been the main reason for Mattel's immense success and growth, accounting for nearly $2 billion in annual sales by the late 1990s, about one-third of Mattel's total sales and nearly 50% of Mattel's profit," MGA says in its complaint.
When Bratz arrived in 2001, it "became an overnight success," and Barbie began "losing market share 'at a chilling rate,'" according to the complaint.
"By the end of 2003 and early 2004, the reality of Mattel's inability to compete had set in," MGA claims. Mattel's execs "were in a full-blown panic," and decided to "'Kill Bratz' through a multi-front assault by whatever means necessary," MGA says.
It claims that Mattel conducted "attacks" on MGA "through the use of tactics which included the self-titled 'Operation Cast Doubt on Bratz,' 'Defcon 1 Alert,' and 'Litigate MGA to Death.'"
"This collective 'Kill Bratz' strategy, ordered and authorized by Mr. Eckert, consisted, in part, of anticompetitive practices such as: (a) infiltrating confidential competitor showrooms, accessing industry events with false identification and representing sham toy retailers made up by Mattel in order to get an illicit preview of new Bratz products before they hit the market so that Mattel could imitate of copy them; (b) rearranging Barbie/Bratz displays at key retailers such as Wal-Mart to disadvantage Bratz; (c) pricing products below cost to block Bratz's access to the market; (d) intimidating and threatening licensees, retailers and suppliers with loss of Mattel business if the dealt with MGA; and (e) paying retailers around the globe not to buy Bratz or MGA products."
MGA says that as part of "Operation Cast Doubt on Bratz," Mattel "intentionally and falsely spread or caused to spread press releases that Bratz sexualizes girls and that Bratz dolls say the 'F' word (which they do not) ..." (Parentheses in complaint.)
MGA claims Mattel spent more than $270 million in attorney's fees to "kill" the Bratz line.
"Mattel's litigation strategy involved launching thousands of discovery requests, taking needless depositions and filing hundreds of motions," the complaint states.
It continues: "Indeed by the time of trial in the Mattel litigation, the federal docket had over 3,800 docket entries, making it one of the largest (and certainly most expensive) cases ever litigated. The docket has now swollen to over 8,800 entries as Mattel continues to scorch the earth in this litigation."
Litigation between the doll giants has a long and bitter history.
MGA claims that Mattel habitually sues competitors in the fashion doll market.
It claims that "a California court found it to be 'substantially true' that 'Mattel aggressively defends against any entries in the fashion doll business and 'anyone who makes an 11½ inch fashion doll paints a target on their back.''"
Mattel claimed that MGA "swiped its popular Bratz doll 'and then continued stealing Mattel's confidential and proprietary information.'" Mattel sued MGA, claiming the company transferred assets to duck damage payments to Mattel, according to a September 2010 Courthouse News story.
MGA claims that Mattel persuaded a district court to grant a constructive trust "over virtually all of MGA's trademarks using the words 'Bratz' or 'Jade,'" transferring its $1 billion trademark portfolio to Mattel.
Though the 9th Circuit eventually vacated the constructive trust and order, MGA claims the constructive trust "itself was a death blow to Bratz and MGA."
"In short, the sole objective Mattel had in seeking this overreaching and erroneous remedy was not to ultimately prevail on the merits, because Mattel absolutely knew that such a ruling was not legally supportable and could not be sustained on appeal, but merely to get the ruling - indifferent to the ultimate outcome - because once granted, Mattel would have won the war," MGA claims.
MGA says that despite its "best efforts, its Bratz brand relaunch is essentially unsuccessful, resulting in a dismal portion of what it once was."
MGA also was sued in a class action by the Singing Machine Co. in June 2010. Singing Machine claimed it had been charged "'millions of dollars in fees and royalties' to use the Bratz concept and identity, wrongfully, 'as MGA pirated the 'Bratz' concept and identity from its competitor, Mattel.'"
In this round, MGA demands more than $1 billion in damages for violations of the Sherman Act and the California Business & Professions code, and abuse of process.
Its lead counsel is Maxwell Blecher with Blecher & Collins.
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