May 27, 2009 10:47 PM

MGA Moves to Stop Transfer of Bratz to Mattel

Posted by Drew Combs

MGA Entertainment, Inc., maker of the Bratz doll line, filed an emergency motion Tuesday with the U.S. Ninth Circuit Court of Appeals seeking to stop the transfer of the doll line to rival toy maker Mattel, Inc.

The motion was filed on MGA Entertainment’s behalf by Mark Haddad, cochair of Sidley Austin’s appellate practice group. Skadden, Arps, Slate, Meagher & Flom, which represented the toy company during a three-month trial last year that resulted in the loss of Bratz to Mattel, remains involved in the case.

At that trial, a jury concluded toy designer Carter Bryant was under contract with Mattel when he first envisioned the doll line and therefore Mattel as the rightful owner. MGA Entertainment was also hit with a $100 million damages ruling for copyright infringement and breach of contract.

MGA Entertainment is appealing that decision, but U.S. District Court Judge Stephen Larson is proceeding with orders transferring Bratz intellectual property to Mattel and barring MGA Entertainment from selling Bratz items. Last month, the judge gave a receiver oversight of all of MGA Entertainment’s operations, but after a recent hearing the receiver, also referred to as a monitor in some court documents, was given the specific task of overseeing the transfer of Bratz intellectual property to Mattel.

In its most recent filing, MGA Entertainment argues against transferring the Bratz line to Mattel as well as related injunctions on a variety of grounds. "The district court's disproportionate orders rest on multiple start errors of law, any one of which would require reversal." The motion attacks the judge’s decision pertaining to equitable relief, infringement standards, duties in employment contracts, and trademark.

But according to the motion, MGA's likelihood of success in an appeal becomes moot as a result of the extensive damage that will be done to MGA by allowing the orders to take effect. "In the absence of a stay, a successful appeal will be of little value to MGA, for Injunctive orders will have destroyed the Bratz brand and irreparably harmed MGA," the motion declares.

The move comes amidst suggestions that the two sides are inching towards a possible settlement. During a hearing earlier this month, the court-appointed mediator said the two parties were closer to settling than they have been at any point in the past. In a follow-up email to The Am Law Daily, the mediator, Pierre-Richard Prosper, wrote that the two sides still are far apart.

Sidley Austin’s Mark Haddad did not return calls seeking comment. Mattel’s counsel, Quinn Emanuel Urquhart Oliver & Hedges, was unavailable for comment by the time of this post.

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