BARBIE HOPES TO GUT BRATZ

(Updated: See end of article.)

Bratz

I'm sitting in on closing arguments in the penalty phase of Mattel's

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[MAT  Loading...      ()   ] case against privately held MGA Entertainment. The CEOs of both companies are in the Riverside, Calif. courtroom 70 miles from their offices. It's standing room only.

The jury already ruled last month that the idea for MGA's Bratz Dolls was conceived by former Mattel employee Carter Bryant while he was under contract at Mattel. Now the remaining nine jurors must unanimously decide how much money -- if any -- Mattel is due.

Mattel wants well over $1 billion from the company and MGA CEO Isaac Larian. But to get compensatory damages, the jury has to decide there are "substantial similarities" between the original designs and the final products (MGA says they are very different). And to award punitive damages, jurors have to be convinced the company and/or its CEO acted with malice, oppression or fraud.

Mattel is going first in closing arguments. Attorney John Quinn opened by telling jurors, "There's a right way to compete and a wrong way to compete. If you compete in a right way, you get to keep your profits."

But, he argues, both MGA and its CEO committed "theft," which made Isaac Larian a billionaire.

What does Mattel want? All net profits related to Bratz. Quinn calculates Mr. Larian alone has profited nearly $700 million just from Bratz, and MGA Entertainment netted $778 million. Mattel is also seeking interest on both amounts going back five years, at 7 percent, worth another $320 million, for total of approximately $1.8 billion.

Mattel wants another $340 million if jurors determine MGA's alleged copyright infringement was "willful." And we're not even halfway through Quinn's argument.

Quinn wants jurors to "return MGA to the position they were in without the theft." Which could be nowhere.

"Crime doesn't pay," he told the jury.

More to come -- when MGA gets its shot...

Update: Mattel's John Quinn ended his closing argument by suggesting jurors also award punitive damages to send a message to MGA Entertainment. Those damages cannot be beyond a defendant's ability to pay. And how much can MGA and Larian pay? Quinn says Larian's net worth before the trial was $1.9 billion but has fallen to $723 million, and MGA's worth was $2 billion pre-trial but is now $541 million.

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