Legal Battle Over Bratz and Barbie IP Rights Persists After Ninth Circuit Reversal

Since 1959, Barbie has dominated the fashion-doll market, becoming an iconic brand with a vast following. However, the entry of Bratz dolls in 2001, marketed as "The Girls with a Passion for Fashion!", introduced a formidable competitor. Within five years, Bratz captured approximately 40 percent of the market, challenging Mattel’s long-standing supremacy.

The dispute between Mattel and MGA Entertainment, the creator of Bratz, originated from an ambiguous employment agreement involving Carter Bryant, a Mattel designer. In 2000, while employed in Mattel’s “Barbie Collectibles” department, Bryant pitched the Bratz doll concept to MGA, providing preliminary sketches and a prototype. Upon signing a consulting agreement with MGA, Bryant resigned from Mattel, giving two weeks’ notice before immediately developing a prototype for MGA. The initial Bratz dolls—Cloe, Yasmin, Sasha, and Jade—were based on Bryant’s early drawings.

Mattel initiated litigation in 2004 after uncovering Bryant’s involvement with Bratz, alleging breach of his employment contract. The ensuing legal battle involved multiple claims and counterclaims, consolidated in the United States Federal District Court for the Central District of California.

Bryant settled with Mattel prior to trial, but the companies’ dispute continued. In July 2008, a jury ruled in Mattel’s favor, finding that Bryant’s ideas for the names “Bratz” and “Jade,” along with the preliminary sketches and prototype, were created within the scope of his employment agreement with Mattel. Consequently, Mattel was deemed the rightful owner of the Bratz concept. The jury issued a general verdict that MGA had wrongfully acquired these ideas and infringed Mattel’s copyright, awarding Mattel $100 million in damages.

Due to the general nature of the verdict, the District Court judge independently determined that most Bratz dolls infringed Mattel’s rights. The court imposed a constructive trust over all Bratz trademarks, effectively transferring ownership of the entire Bratz business to Mattel. Additionally, an injunction barred MGA from producing or marketing all Bratz dolls, not just the original four.

MGA appealed to the United States Court of Appeals for the Ninth Circuit, which on July 22, 2010, reversed the District Court’s decision. The appellate court vacated both the constructive trust and the injunction, highlighting key issues regarding the interpretation of Bryant’s employment agreement and the scope of intellectual property rights assigned.

Central to the Ninth Circuit’s analysis was whether Bryant’s contract assigned his ideas for “Bratz” and “Jade” to Mattel. The agreement required Bryant to communicate and assign to Mattel all inventions conceived during his employment, defining “inventions” broadly to include discoveries, designs, and know-how, whether patentable or not. While industry practice suggested “inventions” encompassed ideas, Bryant’s contract lacked explicit language assigning ideas, unlike other Mattel employee agreements. This ambiguity led the Ninth Circuit to conclude the District Court erred in definitively ruling that Bryant’s ideas belonged to Mattel.

The appellate court also considered whether the constructive trust was an equitable remedy given MGA’s substantial creative contributions to the Bratz brand after Bryant’s initial involvement. Chief Judge Alex Kozinski noted that the billion-dollar value of the Bratz line largely resulted from MGA’s legitimate efforts, making it inequitable to transfer the entire brand to Mattel based solely on potentially misappropriated names.

Further, the Ninth Circuit examined whether Bryant’s employment agreement assigned the copyright in the Bratz drawings and prototype. The contract covered works created “at any time during [Bryant’s] employment,” but the court found ambiguity regarding whether this included work done outside regular hours. Testimony at trial reflected differing understandings among employees about ownership of work created on personal time. The Ninth Circuit held that this factual dispute should have been resolved by a jury, not the judge, necessitating vacating the copyright injunction.

The ongoing litigation underscores the complexities of intellectual property ownership when employment agreements lack clear language on assignment of ideas and works created outside formal working hours. The case also illustrates the challenges courts face in balancing contractual rights with equitable considerations when substantial value is added post-initial creation.

As of the Ninth Circuit’s 2010 ruling, the legal battle between Mattel and MGA over the Bratz brand remains unresolved, with significant implications for IP rights in creative industries and employment law.