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Thursday, Sep 21, 2023

Valley Toy Firm in War With Mattel

North Hills-based MGA Entertainment might manufacture the Bratz dolls and their arch-competitor Mattel might produce the Barbie line, but from the way the two companies are waging corporate war you’d think that they both sold only GI Joes. For the second time this year, El Segundo-based Mattel has sued a former employee who left the company to join MGA. The latest lawsuit, filed on Oct. 21, alleges that Ronald Brawer, previously Mattel’s senior vice president of customer marketing, was secretly making plans to join MGA while simultaneously maximizing his exposure to Mattel’s confidential information. MGA Chief Executive Isaac Larian was quick to note that the lawsuit occurred the same week that Mattel posted a disappointing 5.2 percent decline in profit during the third quarter. “Mattel, as the recent quarterly results show, unable to innovate and compete with MGA fairly, has decided to resort to frivolous law suits in order to distract MGA and slow the train,” Larian said. “We have a great legal team in place who will focus and handle the legal matters and our creative team will focus on innovation.” Yet Mattel dismisses such charges of frivolity, maintaining that Brawer, MGA’s current executive vice president of sales and marketing, had actively sought to compile as many company secrets as possible before jumping ship to MGA. “This really has to do with a former high level employee of Mattel’s team who routinely participated in confidential meetings and requested materials and was making plans to join as competitor,” Mattel corporate spokesperson Lisa Marie Bongiovanni said. “While he was doing this he was taking steps to maximize his exposure to Mattel’s confidential material. At Mattel we take great steps to protect our intellectual property.” Indeed, the lawsuit alleges that in the months leading up to his departure, Brawer began attending meetings that he hadn’t been to in months. Mattel claims phone records prove that for months prior to joining MGA, Brawer had often been in close contact with their competitor, often dialing MGA before and directly after confidential meetings. Difficult to prove But the case against Brawer will likely be difficult to prove, according to intellectual property attorney Kent Goss. Goss, a partner in Los Angeles- based Pillsbury & Winthrop, maintains that in intellectual property cases similar to the one in question, it is often hard to prove that the former employee is liable. “This is a problem that pops up quite frequently when a high ranking employee goes to another company, particularly a competitor. These cases can be difficult to prove,” Goss said. Basically, Goss said that Mattel would need to prove that Brawer was in possession of confidential information that he learned about from Mattel, as opposed to having some prior knowledge before Mattel, Goss said. “Then you’d have to prove that these secrets are unknown outside of Mattel and that Mattel had taken steps to protect it,” he said. “You’d also need to prove that they were damaged by it. Any time one of your former executives goes to another company and hurts you in the marketplace there is an incentive to take action.” With or without Brawer, it is certain that MGA is at least partially responsible for the erosion of Mattel’s once dominant market share. “MGA has done a better job of grasping pop culture trends and translating them into play patterns for girls than Mattel has,” John Taylor, a toy industry analyst for Portland-based Arcadia Investment Goup said. “MGA has more of an edge and closer ties to pop music and MTV with the Bratz line than Barbie has had for a long time. Barbie has been on a negative trend line for the last couple of years and a large part of that is that MGA has been able to innovate and be successful.” Larian expects unfettered growth to continue despite the litigious attacks. “The vision for the company is to be the biggest, best, and most innovative consumer entertainment product company in the next three to five years,” Larian said.

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