BRATZ/BARBIE: Judge to opt for royalty payment?

A decision on the future revenue from MGA?s Bratz dolls in the ongoing copyright case is expected this week.
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Experts are predicting that, in a case complicated by determining the measurable value of Bratz as a brand and a product, the judge may opt for an ongoing royalty payment to Mattel rather than a single damages settlement.

The federal judge who will make the decision, Stephen Larson, has indicated that his decision may, ultimately, satisfy neither party.

"This is the struggle I have with this case fundamentally: the measurable value of Bratz, the brand Bratz, the doll Bratz, and everything that comes with it, is so much a function of what Isaac Larian and his team put into it," Larson said.

After settlement talks between the two CEOs proved fruitless, Mattel filed two motions to prevent MGA from producing or selling the dolls, or using the Bratz name and trademark.

Last summer, a jury awarded Mattel up to $100 million in damages in a copyright infringement trial, but it was unclear about which company would make the dolls going forward and whether MGA would owe Mattel a royalty on future Bratz profits.

"I don't think there's ever been a case quite like this, because usually in infringement cases, the culprit is caught much earlier," said Stephen Smith, an entertainment and intellectual property lawyer with Greenberg Glusker.

Larson "most likely" will come up with a compromise that speaks to both companies' positions, experts said.

"There is a distinct possibility that he will split the baby, assigning a perpetual royalty that MGA must pay to Mattel - a certain percentage of all proceeds from the sale of the dolls," Smith said.

The amount "may be high enough to hurt MGA for its copyright infringement, but not be severe enough to preclude them from benefiting from the brand they built," Smith said.

As the copyright owner, Mattel has the right to restrict the reproduction, public display and creation of derivative works based on the protectable elements in the drawings for 95 years after creation, according to an expert.

"It is up to the judge to determine how much of the Bratz line is related to those drawings and what injunctive relief is appropriate, because the jury did not clearly mention what their intention was," said Jack Lerner, a copyright expert at the University of Southern California's Gould School of Law.

(Reuters)

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