A federal judge ended a temporary receivership of MGA Entertainment Inc in a copyright infringement lawsuit over its Bratz doll business but broadened the list of products and know-how MGA must turn over to Mattel Inc
U.S. District Judge Stephen Larson also turned down MGA's request for a stay of the order pending an appeal to the Ninth U.S. Circuit Court of Appeal planned for next week. In the same order, filed late on Thursday, Larson allowed Mattel to amend a second lawsuit against MGA set for a 2010 trial.
The Riverside, California, judge appointed Patrick Fraioli, who served as temporary receiver for MGA, to monitor the transfer of Bratz to Mattel, and restored control of the rest of the family-owned toy company to founder and chief executive Isaac Larian.
A jury last year found that Barbie designer Carter Bryant came up with the Bratz concept while working at Mattel and secretly sold the designs to MGA. The jury gave Mattel dozens of drawings and models and up to $100 million in damages.
Larson said MGA and other distributors may sell all 2009 and older Bratz products through January 21, 2010, unless Fraioli decides the sales would devalue the brand, the order said.
In a statement, Mattel said it was gratified that Larson ordered a prompt transition of the doll line. Sales of the multiethnic Bratz have topped $3 billion since its 2001 launch and have cut deeply into sales of Mattel's aging Barbie doll.
MGA said it plans to file an emergency motion with the Ninth Circuit next week to bar Larson's order from taking effect.
While Larson's December 3 injunction barred MGA from selling the core female fashion dolls based on the drawings awarded to Mattel, the new order requires MGA to turn over net profits each month from sales of any product carrying the Bratz brand, including Bratz Kidz, Baby Bratz and Lil' Bratz.
MGA is to turn over profits from the jury's July 17, 2008, verdict through May 31, 2009, on June 22.
MGA also was ordered to turn over information about its fall 2009 Bratz line to help Mattel launch its own Bratz products for spring 2010, and to transfer to Mattel whatever materials or expertise its rival needs to prepare that line.
Larson also ordered the CEOs, chief financial officers and in-house counsels of MGA, Mattel and MGA creditor Omni 808 to a mandatory settlement conference on June 1.
The case is Carter Bryant v. Mattel Inc 04-9049 in the Central District of California, Riverside.
(Reporting by Gina Keating; Editing by Gary Hill)