Barbie-Bratz Toy War

Mattel Inc., the world's biggest toymaker, may add as much as $500 million a year to its revenue by winning a copyright suit against MGA Entertainment Inc. over the Barbie doll's hip urban rival, Bratz.

The maker of Matchbox cars, T.M.X. Elmo
and Barbie is arguing before a California court this month that the
pouty- lipped Bratz doll was conceived while designer Carter Bryant
was a Mattel employee. If the jury agrees, the toy company will
potentially pocket damages estimated at $360 million and, based on
Mattel calculations, as much as $500 million in annual direct MGA
sales and licensing fees.

Barbie, originally all-blonde and
all-suburban, has had a place on toy shop shelves since 1959. Since
the advent of Bratz in 2001, sales have slipped. Mattel reported
April 21 that U.S. Barbie sales fell in the first quarter by 12
percent.

By contrast, the Bratz doll, with big
eyes, prominent lips, hip-hop clothing and “a passion for fashion,''
has grown in seven years into a $2 billion franchise, MGA has made
about $360 million in after-tax profit since the beginning and
probably earns licensing fees “in the vicinity of 15 percent'' on
non-MGA sales of Bratz products.

The trial in a Riverside, California,
court starts May 27. In the first phase, a jury will decide if MGA
infringed Mattel's copyright. The litigation originally involved
three consolidated cases. Bryant, the designer, filed against Mattel,
asking the court for a declaration that he hadn't acted improperly
over Bratz. The third suit was filed by MGA, claiming Mattel copied
the Bratz's lips and almond-shaped eyes for its “My Scene'' dolls.
MGA will seek $1 billion in damages.