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Mattel: Little to Gain in Legal Battle

MGA Entertainment has accused its toymaker rival Mattel of spying on competitors and stealing trade secrets for at least 15 years, as their battle over the popular and lucrative Bratz dolls line continues to heat up.
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(Mattel, MGA story updated with share price change and commentary from litigation expert.)
NEW YORK (TheStreet) -- Last week, MGA Entertainment accused its toymaker rival Mattel (MAT) - Get Mattel Inc. Report of spying on competitors and stealing trade secrets for at least 15 years. It was the latest salvo in a prolonged legal battle between the two companies over the popular and lucrative Bratz dolls line.

Legal experts believe that regardless of the outcome, neither company stands to gain much from the fight.

MGA alleged in a federal court filing on Aug. 16 that Mattel, the maker of the Barbie doll, used fake name cards to sneak into private showrooms of rivals, including those of MGA and


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MGA added that Mattel surreptitiously took photos of rivals' new toy designs at trade shows around the world. Mattel has denied the accusations.

The court filing occurs as the companies' battle over ownership rights for the popular and multi-ethnic Bratz dolls continues to heat up and amid an impending retrial of the Bratz doll copyright infringement case that is slated for Jan. 11 in Santa Ana, Calif.

"I think these companies are on the path to mutual self destruction through litigation and that this has all the makings of an epic litigation battle that in the end may deplete and tarnish both companies and both brands," John Siegal, Baker Hostetler's New York litigation coordinator said.

"It's hard to see a litigation win here going forward that amounts to a business win."

Siegal said both sides have the resources to stick with the battle and that it could drag on for years.

Previously, Mattel alleged that its trade secrets were being stolen from MGA through the latter's hiring of former Mattel employees who divulged confidential Mattel information to their new employer.

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In July, the U.S. Ninth District Court of Appeals overturned a December 2008 order that said Mattel should have most of the rights to MGA's Bratz dolls products --forcing Mattel to retry its claims to the property.

Shares of Mattel stock have fallen 0.7% to $21.41 in pre-market trading.

-- Reported by Andrea Tse in New York.

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