Mattel Says ‘Bratz’ Violator Moved Assets

     LOS ANGELES (CN) – Litigation continues in a billion-dollar case in which Mattel claims that MGA Entertainment swiped its popular Bratz doll “and then continued stealing Mattel’s confidential and proprietary information.” Now Mattel claims that MGA and its CEO Isaac Larian “have fraudulently transferred and encumbered MGA’s assets to ensure that no matter the outcome of the underlying lawsuit, Mattel will never be able to recover for its losses”.

     Mattel claims Larian and his family and their trusts took $430 million “while the underlying litigation was ongoing.”
     “Between 2001 and 2008, Bratz products generated revenues for MGA in excess of $3 billion,” Mattel says in its new complaint in Superior Court. “Knowing that these were the products of wrongful conduct, and fearing that Mattel would discover this wrongdoing and assets its rights, MGA and Larian commenced to distribute at least $489 million of these proceeds to Larian, his family members, and their associated trusts … MGA and Larian distributed at least $430 million between 2004 and 2008 while the underlying litigation was ongoing.
     “These distributions had the actual and intended effect of draining MGA of assets, including assets that rightfully belonged to Mattel, and placing them into the possession and/or control of Larian and his co-conspirators, thereby hindering, delaying and/or defrauding Mattel’s rights as a creditor of MGA or placing those assets out of reach from Mattel. … (T)hese distributions also had the effect of rendering MGA insolvent and some or all were made at times when MGA was insolvent. These distributions were made at times when MGA was on full notice of the nature and extent of Mattel’s claims against it. “
     Referring to the underlying, federal case, Mattel claims that “MGA and Larian have continued to engage in wrongful acts directed toward Mattel and the courts during the course of this lawsuit, including by obstructing justice.”
     Mattel says it raised claims in the underlying case under the California Uniform Fraudulent Transfer Act, but the Federal Court declined to exercise supplemental jurisdiction and dismissed those claims on Aug. 2. “Accordingly, Mattel brings this action to challenge MGA’s fraudulent transfers, encumbrances, and transfers of security interests or rights of priority so as to ensure that its ongoing efforts in the underlying lawsuit will not be for naught.”
     Mattel is represented by John Quinn with Quinn Emanuel Urquhart & Sullivan.
     The underlying complaint, about what Mattel calls its “fashion doll,” has spun off other lawsuits.
     In a class action June this year, the Singing Machine Co. claimed MGA charged it and others “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.” That class action was filed in Los Angeles Federal Court.
     Here is an Oct. 22, 2009 Courthouse News story about another spinoff from the underlying case.
     New Challenge to Billion-Dollar Bratz Dolls
     Karina Brown
     (CN) – The man who designed Bratz dolls admitted he copied the design from a shoe advertisement, the artist who drew the Steve Madden shoe ads claims in Manhattan Federal Court. Bernard Belair claims he designed the dolls with “disproportionally large head, small torso, long legs and very large feet” that Mattel and MGA Entertainment parlayed into a billion-dollar success.
     In May 2008, Mattel sued Bratz owner MGA Entertainment for copyright infringement, claiming doll designer Carter Bryant had come up with the Bratz characters when he was working for Mattel as a Barbie designer, then took the designs to competitor MGA.
     Mattel won $100 million, an order directing MGA to transfer all Bratz-related assets to Mattel by February 2010 and a permanent injunction stopping MGA from selling the dolls.
     Belair claims that while testifying in that litigation in Los Angeles Federal Court, Bryant testified that he came up with the idea that became the Bratz dolls after seeing Steve Madden shoe ads in Seventeen Magazine.
     Now Belair has sued MGA and Mattel in Federal Court, claiming he drew those Steve Madden ads, featuring dolls with the same “disproportionally large head, small torso, long legs and very large feet” that Bratz dolls have.
     Belair says his dolls also share “character, fashion styling and posture” with Bratz dolls.
     Belair says neither MGA nor Mattel asked his permission to use his doll design.
     He seeks MGA’s and Mattel’s profits from the Bratz line.
     He is represented by Gerard Haddad and Jennifer BianRosa with Dickstein Shapiro.

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