Case: In 2004 Mattel Inc. (the plaintiff) decided to sue MGA Entertainment Inc.
ID: 374947 • Letter: C
Question
Case: In 2004 Mattel Inc. (the plaintiff) decided to sue MGA Entertainment Inc. and the Bratz designer, Carter Bryant (the defendants) for copyright infringement and theft of its trade secrets (CITE). Prior to the release of the Bratz dolls by MGA in 2001 Carter Bryant was a former employee of Mattel Inc. until October 19th 2000. The plaintiff claimed that Mr. Bryant had come up with the idea for the Bratz doll in 1999 while still employed with them which would have violated his nondisclosure inventions agreement (Mitchell).
To protect their company from the disclosure of any confidential or proprietary information Mattel had Mr. Bryant sign a nondisclosure inventions agreement on January 4, 1999 which specifically stated, “I agree to communicate to the Company as promptly and fully as practicable all inventions conceived or reduced to practice by me (alone or jointly by others) at any time during my employment by the Company. I hereby assign to the Company . . . all my right, title and interest in such inventions, and all my right, title and interest in any patents, copyrights, patent applications or copyright applications based thereon.” (WIPO). In this agreement it specified what the term ‘inventions’ included, this gave Mattel the “right, title and interest” to any inventions which included but did not limit all discoveries, improvements, processes, development, designs, know-how, data computer programs, and formulae whether patentable or unpatentable (Westlaw). When Mr. Bryant ended his employment with Mattel on October 19th, 2000 he was to sign a proprietary information checkout from Mattel that stated, “in his employment agreement he has agreed to transfer all inventions made or conceived during the period of his employment at Mattel” (Westlaw). After leaving Mattel Mr. Bryant then became employed with MGA Entertainment who then released the Bratz dolls the following year.
In 2008
the jury found that “Mr. Bryant’s ideas for the names “Bratz” and “Jade” as well as the preliminary sketches and prototype were all generated within the scope of his employment agreement with Mattel, making Mattel the rightful owner of the dolls” (WIPO[MP1] ). The verdict was that MGA wrongfully obtained the Bratz idea therefore MGA was to be held liable for infringing Mattel’s copyright and awarded Mattel $100 million (WIPO). The District Court then issued a constructive trust which gave Mattel all the rightful ownership to the Bratz trademark (WIPO). The court also issued an injunction that prohibited MGA from further marketing or producing of all Bratz dolls (WIPO).
However
A three-judge panel of the Ninth Circuit Court of Appeals overturned the 2008 decision stating that “MGA deserved “sweat equity for making and marketing the dolls” and that Mattel could not lawfully claim a monopoly over dolls” Judge David Carter allowed MGA to submit a counterclaim to the jury that accused Mattel of engaging in corporate espionage at toy fairs and conspiring to keep Bratz products off retail shelves (NY TIMES). Keeping in mind the previous facts and allegations from the first trial the retrial then took into consideration copyright claims and mutual allegations of stealing trade secrets (Mitchell).
In April of 2011 in the case of MGA Entertainment, Inc. v. Mattel Inc. the jury determined that the ideas, designs, and name of the doll collection were not a part of Mattel’s trade secrets therefore MGA did not misappropriate any of Mattel’s trade secrets (TSI). However, the jury did find that Mattel stole 26 of 114 trade secrets from MGA by sending spies to MGA’s toy fairs and trade shows (Mitchell).
Mattel also failed to prove its allegations of copyright infringement since they did not own a copyright in the creative designs behind the dolls (TSI). The final verdict in this case was that the plaintiff be awarded $3.4 million for each misappropriated trade secret for a total of $88.5 million (Mitchell). On August 4, 2011 the District court denied Mattel’s motions for JNOV and for a new trial since “the factual record supported the jury's conclusion that MGA used reasonable efforts to maintain its trade secrets, which Mattel had misappropriated by misrepresentation” (TSI). The District Court then settled that $85 million in damages was to be awarded to MGA as well as $139.9 million in attorney fees and costs, for a total payment of $310 million(TSI).
With regard to the Mattel v. Bratz dolls case how could have management/HR, from Mattel and MGA, prevented these issues from occurring? What mistakes were made by each of the parties along the way? What policies could have been put into place in order to stop this dispute from happening? How does knowing the laws not only protect the company, but the employees as well?
Explanation / Answer
The following ways HR at Mattel and MGA prevented these issues from occurring:
Mistakes made by Mattel:
Mistakes made by MGA:
Polices which could have stopped this:
Knowing the laws protects the company and the employees in the following ways: