barbie revised slideshow 1224786411762326 8

8/8/2019 Barbie Revised Slideshow 1224786411762326 8

1/17

BARBIE V. BRATZ

(MATTEL INC. V. MGA ENTERTAINMENT

INC.)

Prepared for Innovators Network by:

Nikolai & Mersereau, P.A.

900 Second Avenue South, Suite 820

Minneapolis, MN 55402(612) 339-7461

www.nm-iplaw.com

Nikolai & Mersereau, P.A. 2008


2/17

ABOUT THE PRESENTERSNikolai & Mersereau, P.A. is a full service IP firm located inMinneapolis, Minnesota. The firm represents individuals andbusinesses of all sizes in divergent technical areas.

Jim Nikolai has practiced intellectual property law since 1982focusing on IP litigation, licensing, product and trademark

clearance, and helping clients develop and implementcomprehensive IP strategies. Jims leadership and experience inthe area of patent litigation was recognized by the judges of theU.S. District Court for the District of Minnesota when theyappointed him to serve on the Courts Patent AdvisoryCommittee which recommended new procedural rules used bythe Court in patent cases.

Phone: (612)392-7302 Email:[email protected]

After serving in the U.S. Navy aboard two fast attack nuclearsubmarines, Jim Paige earned an electrical engineering degree

from Iowa State University and his law degree from DrakeUniversity, graduating with honors from both institutions.Since 2001, Jim has worked extensively on the protection ofmedical device, signal processing, communication and digitalmicroelectronic technologies. Jim was recognized as a RisingStar in the field of IP law by Minnesota Law & Politicsmagazine in 2005.

Phone: (612)392-7310 Email: [email protected]


3/17

UNDISPUTED FACTS

Ruth Handler created Barbie in 1959 andco-founded Mattel, Inc.

Thanks to Barbie, Mattel is now the

largest toy company in the worldCarter Bryant worked for Mattel

Bryant left Mattels employment

Bryant joined MGA Entertainment

Bryant developed the Bratz concept

MGA introduced the Bratz line in 2001


4/17

WHY THE FIGHT?

Mattel had $5.9 billion in sales last year--Mattel, Inc. 10K Report

Barbie comprises 21% of Mattels sales--

Bloomberg.com, May 13, 2008Barbie sales are dropping--Los Angeles

Times, May 27, 2008

Bratz is the most serious competitivethreat that Barbie has faced in its almost

50-year life--Sean McGowanBryant paid $30 million in royalties--Minneapolis Star Tribune, June 6, 2008


5/17

LEGAL CONTENTIONS

Mattel v. Bryant

y Bryant assisted MGA in violation of his contractual

and other duties to Mattel

Bryant v. Mattely Mattels Confidential and Proprietary Inventions

Agreements are invalid

y Bryants conveyance of the rights in Bratz to MGA

was proper and did not misappropriate Mattels

rights


6/17

LEGAL CONTENTIONS

(CONTINUED)

Mattel v. MGA

y Copyright infringement

y RICO violations

y Trade secret misappropriation

y Intentional interference with a contract

y Aiding and abetting breach of fiduciary duties

breach of duty of loyalty

y Unfair competition


7/17

LEGAL CONTENTIONS

(CONTINUED)

MGA v. Mattel

y Trade dress infringement

y Trade dress dilution

y

False designation of originy Unfair competition

y Unjust enrichment


8/17

WHAT INTELLECTUALPROPERTY LEGAL

CONTENTIONSHAVE NOT

BEEN MADE?

Patent infringement


9/17

MATTEL

When relying on employee ideas to further

business

y Implement idea or invention disclosure notebooks

Require the notebooks be secured or turned in regularly

Require all ideas to be within the notebook

Require the notebook to be turned in upon termination of

employee (perhaps confiscate before termination)

y Implement an employee agreement

Agreement clearly lays out all IP developed during

employment related to employment is Mattels property

Further, all IP related to employment after the employee

leaves could also potentially be Mattels


10/17

MATTEL Prevent idea theft by competitors

y Develop a non-compete agreement for all employees Make sure agreement is reasonable in time (less than 3 years),

scope (employees job at Mattel), and geography (local v. nationalcompany)

y Develop a non-disclosure agreement for all employees

y Develop trade secret protection protocol Limit employees who have access to trade secrets

Ensure trade secrets are kept in a protected place

Protect copyrightsy Mark materials with copyright notice

y Insist on work for hire agreements with consultants

y

Implement and enforce registration guidelines Protect trademarks, trade names, trade dress and service

marksy Clearances for proposed marks

y Applications for registration


11/17

MATTEL

Patentingy Develop an internal patenting process

Reward system for employees obtaining patents for thecompany

Managerial review of patent submissions to weed out

patent submissions of no value to company Develop patent board to determine what patents get filed

Create Standards (e.g.)

y 75% of high value submissions get filed

y 50% of medium value submissions get filed

y 25% of low value submissions get filed (this helps prevent thewild card idea from getting away)

Consider types of patents available (apparatus, method,process, design, plant, etc.)

Match foreign filing strategy to important markets orpotentially important future markets


12/17

BRYANT & MGAWhen hiring a competitors employee

y Check non-compete agreementsy Check non-disclosure obligations

Statutory Contractual

y Check employees invention assignment obligationsy Check prior employers rights to employees work

producty Check to make sure the employee has left all documents

of the prior employer behindy Restrict the employee to duties negating inevitable

disclosure of prior employers trade secretsy

Document ground rules for employee to follow: No recruiting No use of prior employers IP Keep clear and thorough documentation of work to show

where and how it was performed


13/17

BRYANT & MGA

When introducing a product

y Is there interfering IP

Patents

CopyrightsTrademarks

y How can IP of others be avoided

y Licenses

Is there IP that needs to be licensedFrom whom

y Is IP protection strategy in place


14/17

BRYANT & MGA

IP protection strategy

y What IP is potentially available Patent

Trademark/service mark/trade dress

Copyright Trade secrets

y Where should protection be sought

y What are the deadlines

y Who will manage the effort


15/17

REMEDIES

Patenty Injunction

y Lost profits/reasonableroyalty

y Triple damages

y Costs and attorney fees Copyright

y Injunction

y Owners damages andprofits of the infringer

y Statutory damages

y

Costs and attorney feesy Criminal sanctions

imprisonment and fines

Trademarky Injunction

y Owners damages andprofits of the infringer

y Triple damages

y Costs and attorney fees Trade secret

y Injunction

y Damages/unjustenrichment/reasonableroyalty

y Double damages

y Costs and attorney fees

y Criminal sanctions10years in prison, $5 millionin fines


16/17

INTELLECTUAL

PROPERTY

It is all about risk and return

y Reducing risk that others will be able to keep youfrom not receiving full return on investment

y Increasing risk to others who might try to reap profitsfrom your development efforts

Mattel and MGA each have tied their future totheir intellectual property rights


17/17

WHOWON?

Liability Verdict (July 17, 2008)

y MGA found liable on 15 of 15 counts

Damages Verdict (August 26, 2008)

MGAMGA LarianLarian MGA HongMGA Hong

KongKongIntentional Interference with ContractualIntentional Interference with ContractualRelationsRelations

$ 20,000,000$ 20,000,000 $ 10,000,000$ 10,000,000

Aiding and Abetting Breach of FiduciaryAiding and Abetting Breach of FiduciaryDutyDuty

$ 20,000,000$ 20,000,000 $ 10,000,000$ 10,000,000

Aiding and Abetting Breach of Duty ofAiding and Abetting Breach of Duty of

LoyaltyLoyalty

$ 20,000,000$ 20,000,000 $ 10,000,000$ 10,000,000

ConversionConversion $ 31,500$ 31,500

CopyrightInfringementCopyrightInfringement $ 6,000,000$ 6,000,000 $ 3,000,000$ 3,000,000 $ 1,000,000$ 1,000,000

TOTALTOTAL $ 66,031,500$ 66,031,500 $ 33,000,000$ 33,000,000 $ 1,000,000$ 1,000,000

barbie revised slideshow 1224786411762326 8

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