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MGA Entertainment Gets Bratty With Mattel Again

Rich Duprey
January 16, 2014

Geez, is this still going on? I thought the long-running dispute between Mattel (NASDAQ: MAT) and MGA Entertainment was settled last year with the toy industry giant having to pay a reduced settlement in the Bratz vs. Barbie imbroglio. Now it appears they'll be heading back to court as the pouty-lipped Bratz doll maker is suing the House of Barbie for $1 billion, alleging trade secrets were stolen.

Barbie is already suffering from an identity crisis. Shipments of the iconic doll slipped 1% in the U.S. in the third quarter, though that's a somewhat better position than earlier in the year and up 3% on a worldwide basis, with international markets representing two-thirds of Barbie's total revenues. As more than 50% of the point-of-sale in the toy business occurs in the fourth quarter, Mattel was looking to the Christmas season for a friendly boost, though the lackluster environment most of retail experienced might not bode well for the dramatic recovery it needs.

Part of its problem has been the cannibalism its other doll introductions have caused. Monster High, a collection of dolls based on the offspring of classic monsters such as Dracula, Frankenstein's monster, and the Mummy, and Disney-licensed products including the Princess line featuring female leads from various movies including Little Mermaid, Belle, and Sleeping Beauty, have had a strong response from consumers, which naturally siphons sales away from Barbie.

But Bratz isn't doing any better, and in fact, is doing a whole heckuva lot worse these days, which might be what's driving MGA to continue tilting at this particular windmill. Forbes estimates sales of the sassy dolls are no more than $50 million, a dramatic decline from their heyday, when they pulled in hundreds of millions of dollars for the toy maker.

MGA Entertainment asserts in a complaint filed in a California superior court that Mattel engaged in a bit of corporate espionage by sending undercover representatives to toy fairs for more than a decade to steal competitive secrets such as price lists and u