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Business Unplugged™
This blog features Carol Roth's tough love on business and entrepreneurship, as well as insights from Carol's community of contributors.

What Your Business Can Learn from the Barbie vs. Bratz Lawsuit

Written By: Carol Roth | Comments Off on What Your Business Can Learn from the Barbie vs. Bratz Lawsuit

Copyright infringement, corporate espionage and violations of employment contracts are not exactly what usually come to mind when you think about fashion dolls.  I have been following the case of Mattel (the marketer of the Barbie brand) and MGA Entertainment (the marketer of the Bratz fashion dolls) for quite some time now, even citing the case study in detail in The Entrepreneur Equation.

This case has had more twists and turns than a season of Desperate Housewives, but there are some incredibly valuable takeaways when it comes to small business.

It’s been a long and complicated road, but here are some highlights:

  • Carter Bryant, a fashion doll designer, came up with an idea for a line of hip dolls, that he created in what he described as his free time
  • He presented it to his then-employer, Mattel, who wasn’t interested in the line
  • He then approached toymaker MGA Entertainment to partner with him on the line.  Together they created the brand Bratz and marketed the line based on his concepts
  • Mattel sued, noting that since Bryant was employed by Mattel at the time the dolls were conceived in part, they owned the concept and therefore the Bratz brand
  • Mattel was awarded $100 million with potential damages up to $1 billion
  • MGA appealed, and according to the ABA Journal, not only was the verdict overturned, but now MGA was awarded $88.5 million in damages (with the judge able to triple that amount)
  • I have it on good authority that well over $100 million in legal fees have been spent on this lawsuit to date

So, besides the fact that dolls are probably a lot more interesting than you previously imagined, what can you learn from this situation?

Developing products when employed by another firm is tricky territory: If you are employed by a business and have an idea you may want to commercialize, get legal help to try to reach a deal before you go down the path.  And if you have employees, be very clear in your policies about your expectations of products or services developed while they are employed.

If you are successful, someone will want a piece of it: Mattel didn’t come after the Bratz until they were commercially successful (not to mention taking substantial market share from Mattel’s Barbie franchise). If you succeed, others will be watching and may try to grab a piece, whether through lawsuits, poaching clients, luring away star employees or knock-offing  your idea.  Be prepared for this!

Stay focused on what you do: Instead of focusing on their core brands, Mattel devoted significant resources to a line that they initially weren’t interested in.  I imagine they would have served themselves and their shareholders better to devote those resources towards their own brands and customers.

The value of compromise: The real winner at the end of the day here may be the lawyers, with the amount of money in legal fees that were spent.  Sometimes, the risk and reward of litigation doesn’t pay off.

I am sure we will hear more in the months to come on this situation, which is not yet over.  What additional takeaways did you learn thus far from this fashion doll battle royal?

Article written by
Carol Roth is a national media personality, ‘recovering’ investment banker, investor, speaker and author of the New York Times bestselling book, The Entrepreneur Equation. She is a judge on the Mark Burnett (Shark Tank, The Voice, Survivor, The Apprentice) produced technology competition series, America's Greatest Makers, airing on TBS and Host of Microsoft's Office Small Business Academy show. Previously, Carol was the host and co-producer of The Noon Show, a current events talk show on WGN Radio, one of the top stations in the country, and a contributor to CNBC, as well as a frequent guest on Fox News, CNN, Fox Business and other stations. Carol's multimedia commentary covers business and the economy, current events, politics and pop culture topics. Carol has helped her clients complete more than $2 billion in capital raising and M&A transactions. She is a Top 100 Small Business Influencer (2011-2015) and has her own action figure. Twitter: @CarolJSRoth