Close Menu

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
In an explosive counterclaim filed in federal district court late Monday night, MGA Entertainment Inc. fired off a new round in the Barbie v. Bratz doll war, accusing Mattel Inc. of carrying out an elaborate corporate espionage scheme in which Mattel employees lied about their identities in order to gain access to confidential information about MGA products and those of dozens of other toy industry rivals. MGA’s attorneys at Orrick, Herrington & Sutcliffe accuse top Mattel executives—including general counsel Robert Normile—and attorneys for Mattel from Quinn, Emanuel, Urquhart & Sullivan of engaging in a racketeering conspiracy and of stealing trade secrets. Mattel, the MGA filing claims, used “false pretenses” to gain access to private showrooms set up by its competitors at industry trade shows that Mattel employees were otherwise barred from entering. In filing the new counterclaim, MGA may be trying to capitalize on its recent victory at the U.S. Court of Appeals for the Ninth Circuit. A panel of judges from that court recently overturned an injunction that would have allowed Mattel to seize control of MGA’s Bratz doll line, which reportedly earned the company as much as $1 billion per year. Had the injunction been allowed to proceed, it would have been a punishment virtually without precedent in intellectual property law. The MGA counterclaim explains that in the toy industry, manufacturers often set up private showrooms where they show retailers their newest, hottest toys. Entry into those showrooms is regulated, and access is only granted to toy retailers and toy distributors. Mattel, the MGA brief notes, has limited access to its own toy showroom since at least 1998. MGA claims in its brief that employees assigned to Mattel’s “market intelligence” division would go to Kinko’s, and print up fake business cards, which they used to gain access to their competitors’ private showrooms and make recordings of what they saw with “spy cameras” purchased by Mattel. This happened, MGA claims, at toy fairs around the world, such as the annual New York Toy Fair, a major trade show staged in Manhattan every February. MGA’s lawyers allege that Mattel has been getting access to confidential information in this manner since at least 1992. By “lying and stealing every year,” Mattel was able to assemble an “unparalleled library” of its competitors’ plans and products, MGA claims. This library–housed on the ninth floor of Mattel headquarters in El Segundo, California–allegedly includes “information about products that have not yet seen the light of day and might well be considered by their originators for future seasons.” Access to the library was tightly controlled, and the brief specifically states that Mattel’s legal department made use of the library. The corporate espionage plan didn’t just involve low-level employees, either. The reports generated by the “market intelligence” group were seen by “Mattel executives all the way up to CEO Bob Eckert.” The MGA brief also states that Mattel in-house lawyers were deeply involved in the scheme to spy on competitors. For instance, MGA claims, Mattel hired Bain & Company, a strategic consulting firm, to help it put together a “complete and detailed profile of MGA,” including confidential information. A Mattel lawyer named Michael Moore worked together with Bain to edit the profile and “remove information deemed potentially harmful to Mattel’s position in this litigation,” MGA claims. The MGA brief also states that Mattel GC Normile was told about “the fraudulent practice of stealing information using false credentials by no later than the end of 2005, but the practice nonetheless continued.” In late 2005, MGA contends, Sal Villasenor, a Mattel employee at the center of the alleged spying operation, told Normile “that he could no longer lie and steal to get information—especially in light of MGA’s allegations” and that “he believed his conduct was unlawful and exposed him to potential criminal liability.” When Villasenor decided to leave the company in 2006, MGA claims, Mattel in-house lawyer Jill Thomas worked together with Quinn Emanuel lawyers and arranged to pay Villasenor “hush money in the form of a lucrative severance package.” The Quinn Emanuel lawyer, MGA says, “had full knowledge of the depth and breadth of Mattel’s spying on competitors,” according to MGA. MGA says it requested documents related to Mattel’s spying on competitors “no later than the end of 2006,” but the documents were not produced. Why is all this coming up now? MGA’s Orrick lawyers explain in the brief that much of the information was gleaned from a deposition taken from Villasenor on July 12. In an interview with sibling publication The Am Law Litigation Daily, Quinn Emanuel partner Michael Zeller described MGA’s most recent claims as “second-rate tactics by desperate lawyers” that “won’t survive the pleading stage.” “MGA engages in these public relations blitzes,” Zeller said. “It’s done to obscure the truth about [MGA's] own tactics.” A Mattel spokeswoman responded to the counterclaim with a statement released Tuesday. “These eleventh hour claims are without merit,” the company stated. “They are a cynical attempt to deflect attention from MGA’s own wrongdoing,” Annette Hurst, the Orrick partner who wrote the counterclaim brief for MGA Entertainment, declined to comment. Docments mentioned in this story:

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a story?

License our industry-leading legal content to extend your thought leadership and build your brand.

More From ALM

Premium Subscription

With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas.
View Now

Team Accounts

Our Team Account subscription service is for legal teams of four or more attorneys. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team.
View Now

Bundle Subscriptions

Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. Our second option allows you to build your bundle and strategically select the content that pertains to your needs. Both options are priced the same.
View Now

Legalweek(year) 2021

February 02, 2021 - July 14, 2021

Legalweek(year) will bring together thousands of legal professionals for a series of 5 innovative virtual legal events.


General Counsel Conference Midwest: SuperConference 2021

July 26, 2021 - July 27, 2021
Chicago, IL

GCC Midwest addresses today's legal issues facing companies by providing general counsel with insight and best practices.


General Counsel Summit (GCS) 2021

September 07, 2021 - September 08, 2021

General Counsel Summit is the premier event for in-house counsel, hosting esteemed legal minds from all sectors of the economy.


Attorney - Elder Law - Trusts And Estates

White Plains, New York, United States

Prominent, multidisciplined White Plains law firm seeks attorney with 4-plus year experience in Elder Law and Trusts and Estates. Position r...

Apply Now ›

Real Estate Attorney

Tampa, Florida, United States

A prestigious statewide business law firm is seeking a mid-level to senior commercial real estate associate for its Tampa office. The ideal ...

Apply Now ›

Chief Legal Officer

Tampa, Florida, United States

A rapidly growing multi-office personal injury law firm is seeking a Chief Legal Officer to help guide the firm's litigation team, find and ...

Apply Now ›


DR Web


View Announcement ›



IN MEMORIAM - The lawyers of Mintz & Gold LLP mourn the loss of our friend and partner Kevin W. Goering

View Announcement ›



Kolsby, Gordon, Robin & Shore, P.C. Announce with great sadness the loss of our beloved founding partner, a renowned trial lawyer, community leader and distinguished professor.

View Announcement ›

Subscribe to Corporate Counsel

Don't miss the crucial news and insights you need to make informed legal decisions. Join Corporate Counsel now!

Unlimited access to Corporate Counsel
Access to additional free ALM publications
1 free article* across the ALM subscription network every 30 days
Exclusive discounts on ALM events and publications
Join Corporate Counsel

Already have an account? Sign In