NEW YORK (Reuters) - Mattel Inc was accused by rival MGA Entertainment Inc of spying on rival toy companies for at least 15 years and defrauding it out of secret details on more than 50 products, in an escalation of the battle over the popular Bratz dolls.
In a filing in Los Angeles federal court late Monday, MGA said MATTEL (MAT.NQ)workers, with the approval of executives, infiltrated rivals' private showrooms to steal product ideas, price lists and advertising strategies.
MGA said the maker of Barbie and Ken dolls went so far as to print up fake business cards at Kinko's to help gain entry and obtain this "holy grail" of information about rivals.
Mattel allegedly gained access to the showrooms of other toy companies besides MGA, including Hasbro
Mattel did this "to maintain its unlawful competitive advantage in the toy industry, its vigorously promoted reputation as an ethical company, and most importantly of all from MGA's perspective, its ability to deceive a federal judge into believing that Mattel was good and MGA was evil," MGA said.
Mattel spokeswoman Lisa Marie Bongiovanni did not immediately respond to requests for comment. MGA Chief Executive Isaac Larian declined to comment.
MGA made the filing four weeks after the U.S. Ninth Circuit Court of Appeals in San Francisco said a lower court judge had wrongly granted Mattel ownership of the $1 billion Bratz franchise. This cleared the way for a possible January 11 trial over who can sell the pouty-lipped, multi-ethnic dolls.
In August 2008, a federal jury in Riverside, California, had ordered MGA and Larian to pay Mattel $100 million, concluding that Barbie designer Carter Bryant was under contract to Mattel when he sold MGA some drawings upon which Bratz was based. Trial judge Stephen Larson, who has since left the bench, then ordered MGA to transfer the Bratz portfolio to Mattel.
Writing on July 22 for the Ninth Circuit, Chief Judge Alex Kozinski said it was inequitable to transfer Bratz, whose value was "overwhelmingly" created by MGA, and that in any new trial the district court should address whether Mattel owned Bryant's ideas under his contract.
"America thrives on competition; Barbie, the all-American girl, will too," he wrote.
Mattel is based in El Segundo, California, while MGA has offices in Van Nuys, California.
Shares of Mattel were up 1.2 percent at $21.98 in morning Nasdaq trading.
The case is Bryant v. Mattel Inc, U.S. District Court, Central District of California, No. 04-09049.
(Reporting by Jonathan Stempel in New York; Additional reporting by Anurag Kotoky in Bangalore and Dhanya Skariachan in New York; Editing by Kavita Chandran and Lisa Von Ahn)
