Bratz ban could be end of MGA

New York —- Pouty-lipped Bratz will stay on store shelves until after the holidays, but their fate after that —- and that of their parent, MGA Entertainment Inc. —- was uncertain Thursday after a federal court ruling banning MGA from making the saucy Barbie alternative.

MGA is appealing the ruling that —- if upheld —- is a severe blow for the company and an equal boon for Barbie maker Mattel Inc., which has been duking it out with MGA over Bratz for four years.

“In the most dire scenario, MGA can’t sell Bratz at all and a humongous chunk of their business disappears,” said Needham & Co. analyst Sean McGowan. “But it’s likely they will work out a way for MGA to stay in business but Mattel to profit.”

Late Wednesday, a federal judged banned MGA from making and selling all 40 dolls in the Bratz line, which it began selling in 2001, including the four originals —- Yasmine, Chloe, Sasha and Jade. U.S. District Judge Stephen Larson also ordered MGA to reimburse its vendors and distributors for the cost of the dolls and all shipping charges for sending them back.

The ruling, issued in a California federal court, followed a jury’s finding that Bratz designer Carter Bryant developed the concept for the dolls while working for Mattel. The same jury later awarded Mattel $10 million for copyright infringement and up to $90 million for breach of contract after a lengthy trial stemming from Mattel’s 2004 lawsuit ended in August.

The post-trial dispute that prompted Wednesday’s ruling centered on whether the jury found that only the first generation of Bratz dolls infringed on Mattel’s copyright or whether all the dolls in the line were in violation.

The jury verdict form asked panelists only to find whether there was infringement and assign a dollar reward.

It did not ask them to specify which dolls violated the law.

Larson allowed MGA to wait until after the holidays to begin removing dolls from the shelves, and the company has asked for that stay to be extended until after the appeal is resolved. Post-trial motions are scheduled for Feb. 11.

Mattel said in a statement it is pleased with the ruling, but did not immediately return a request for comment about the appeal.

The ruling “underscores what Mattel has said all along —- that MGA should not be allowed to profit from its wrongdoing,” Mattel said in a statement.

MGA did not immediately respond to a request for an interview.