Vincent Doré is a JD/MBA Candidate at Osgoode Hall Law School and Schulich School of Business.

Any billion-dollar lawsuit is bound to be a highly-charged event, especially when one of the parties makes an American icon, the Barbie doll. But Barbie is not the protagonist here. Instead, we turn our focus to the fashion doll industry’s latest darling, MGA Entertainment’s “Bratz” dolls (Mattel, Inc. v. MGA Entertainment, Inc.). MGA appealed to the Ninth Circuit Court of Appeals following a decision by the District Court of Central California to impose an injunction on MGA. The injunction would prevent any further use of the “Bratz” trademark by MGA--which the Court found belonged to Mattel since the idea arose in the mind of a Mattel designer while he was still under contract there. On appeal, the language of the designer’s contract of employment was found to preclude such a District Court finding without the question first being put to a jury.

Bratz’s success over the last decade has led MGA to create an extensive line of dolls and doll accessories, video games, and even a Bratz movie. Mattel brought an action against MGA claiming that they in fact own the “Bratz” doll concept, commensurate financial compensation, and the name itself, because they were developed by a Carter Bryant, during his tenure with the company. Although Bryant created the initial Bratz sketch and sculpture at home outside of business hours, and his role at Mattel was limited to the design of hair and fashion styles for high-end Barbie dolls, Mattel believed his employment contract covered such personal moments of inspiration.

The District Court of Central California agreed, and the full scope of the Bratz trademark was thus transferred to Mattel under an imposed constructive trust. However, the jury awarded Mattel only $10 million, less than 1% of the copyright damages it sought, because much of the value in the intellectual property resulted from MGA’s own marketing and production efforts. More crippling to MGA was the District Court’s broad injunction “prohibiting MGA from producing or marketing virtually every Bratz female fashion doll, as well as any future dolls substantially similar to Mattel’s copyrighted Bratz works.”

MGA appealed to the Ninth Circuit Court of Appeals, where Chief Judge Alex Kozinski delivered the opinion. In a recent entry, I commented on another case decided by the Chief Judge (see here), and in Mattel v. MGA, he proffers another well-articulated decision, eloquently dissembling the District Court’s reasoning. It vacates the constructive trust which it deems imposed under the premise that Bryant’s employment contract covered all ideas developed during his employment. According to Chief Judge Kozinski, because of the ambiguous language in the contract, the District Court Judge should have put it to the jury to decide the issue. The constructive trust's imposition is castigated as an “abuse of discretion.”

The uncertainty surrounding the language of the contract was also sufficient to preclude the District Court’s imposition of its copyright injunction, according to the Chief Judge. He goes on to apply the copyright infringement test nonetheless (the “extrinsic/intrinsic” test), faulting the lower court’s reasoning, and concluding that even with a finding of Mattel copyright ownership, a finding of infringement under the “extrinsic/intrinsic” test remains unlikely. Specifically, because there is such a narrow scope of possible expressions of the idea of “fashion dolls with attitude” (remember: copyright law does not protect ideas, only their tangible expression), the tangible expression itself must be “nearly identical” to a copyrighted work to warrant infringement. Mattel would have a difficult enough time proving that they own the sculpture  and drawings, let alone prove that MGA’s dolls are “nearly identical” to them. Discussions of the “idea vs. expression” dichotomy in the context of the case are available here and here.

The Ninth Circuit District Court turned the tables on Mattel. It has been noted that vacating the constructive trust and injunction, as Chief Judge Kozinski did, effectively eliminates Mattel’s potential remedies should they succeed on retrial. Regardless, the case will likely go on as legal fees mount. Is this “The American Way?” Exasperated, the Chief Judge winds up, “the entire case will probably need to be retried…America thrives on competition; Barbie, the all-American girl, will too.”