The Bratz doll is back in business, thanks to the 9th U.S. Circuit Court of Appeals.
A three-judge panel on Thursday vacated Mattel Inc.'s hard-won injunction on behalf of its Barbie doll, finding the remedy way too broad. The litigation arose because Bratz's creator, Carter Bryant, worked for Mattel before decamping for the competition.
In his opinion, Chief Judge Alex Kozinski held that the district court erred when it found Mattel's employment agreement covered the idea for Bratz.
"Designs, processes, computer programs and formulae are concrete, unlike ideas, which are ephemeral and often reflect bursts of inspiration that exist only in the mind," Kozinski wrote.
That was one of several errors Kozinski found with U.S. District Judge Stephen Larson's management of the case.
"It is not equitable to transfer this billion dollar brand -- the value of which is overwhelmingly the result of MGA's legitimate efforts -- because it may have started with two misappropriated names," Kozinski wrote. "The district court's imposition of a constructive trust forcing MGA to hand over its sweat equity was an abuse of discretion and must be vacated."
The decision is a huge boon to Thomas Nolan of Skadden, Arps, Slate, Meagher & Flom who handled the trial on behalf of MGA. Orrick, Herrington & Sutcliffe partner E. Joshua Rosenkranz argued the case in front of the 9th Circuit.
Mattel was represented at trial by John Quinn of Quinn Emanuel Urquhart & Sullivan. Munger Tolles & Olson partner Daniel Collins argued the appeal.
"Bryant's employment agreement may not have assigned his ideas for the names 'Bratz' and 'Jade' to Mattel at all, and the district court erred by holding that it did so unambiguously," Kozinski wrote. "Even if Bryant did assign his ideas, the district court abused its discretion in transferring the entire Bratz trademark portfolio to Mattel."
The case now goes back to Larson.
"Nothing we say here precludes the entry of equitable relief based on appropriate findings," Kozinski wrote. "Because several of the errors we have identified appeared in the jury instructions, it's likely that a significant portion -- if not all -- of the jury verdict and damage award should be vacated, and the entire case will probably need to be retried."
Senior Judge Stephen Trott and Judge Kim McLane Wardlaw joined Kozinski, who concluded: "America thrives on competition; Barbie, the all-American girl, will too."
