In a previous post (Live by the Sword), I noted this story: Man files antitrust lawsuit over printer ink, and the irony of companies who “actively pursue, support, and employ government monopolies (patents) and use them to squelch competition” getting hammered by anti-trust law. ((See also my previous post Live by the centralism, die by the centralism.))
Now comes this report: Toy giant Mattel weighing options after $309 million judgment(h/t Michael Barnett). Turns out Mattel “sued MGA Entertainment Inc. over ownership of the hugely popular Bratz fashion doll line.” In this 2004 lawsuit, Mattel alleged “that Bratz designer Carter Bryant was employed at Mattel when he created the Bratz dolls.” Initially Mattel won a $100M verdict. However, it was overturned on appeal and the case was retried. In the retrial, MGA counterclaimed for trade secrets misappropriation. In the end, “The turbulent legal chapter has now ended with a federal judge ordering Mattel to pay its rival more than $309 million.”
Of course, Mattel is spitting mad that their attempt to wrangle $100M out of MGA ended up with them losing to the tune of $309M–on top of their $400M in legal fees: “‘We are disappointed with the recent rulings on the post-trial motions. Mattel strongly believes that the outcome at the trial level is not supported by the evidence or the law,’ Mattel said in a statement.” Oh well. At least the $309M won by MGA will make up for the $170M they spent on attorneys defending themselves.
Mattel also amusingly said: “we remain committed to finding a reasonable resolution to the litigation, and are focused on our primary goal — to make and sell great toys.” Well if you want to find a reasonable resolution to litigation, don’t institute it. And if your mission is to make and sell great toys, do it, and stop trying to use state monopoly privileges to stop your competitors. Beat your competitors fairly, with better products, rather than using state law to squelch them.
Good for MGA. As for Mattel: live by the IP sword, die by the IP sword.
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Guess we won’t see a lawyer Barbie or Ken for a long time.
$400 million in legal fees! Outstanding. I hope some senior partner was able to retire to a beautiful villa in the earthly paradise of his choice after all this. Litigation: turning dreams into reality.
Re: HL,
Makes one think that IP is kept only as a means to keep lawyers [very well] fed and [very well] clothed.
Wow. Do the shareholders get to direct the company in matters like this, or are these decisions made on a managerial level? If I was a shareholder, on the hook for $700 million, I would be pissed. I would rather Mattel management had spent *my* $700 million developing the next Bratz, Tickle Me Elmo, Silly Putty, Hula Hoop, or whatever the “next big thing” is. Instead they are transferring funds to their competitor and their lawyers. Hopefully they have learned a lesson?
For something like this the BOD will be aware, somewhat involved, and providing a modicum of oversight. They will normally support IP litigation.
The vast majority of shareholders, and institutional investors, are more focused on EPS — whether that comes from lawyers duking it out, or whether it comes from sales of “Rock’em Sock’em Robots” is irrelevant.
Even if Mattel won in the end, the project would have still been a $300 million loss. At no point did this suit ever enjoy positive cash flows, so it was foolish to engage in it in the first place.
Mattel is not worried about this case alone. There might be future implications, from their perspective, that will reduce their competitive situation. No doubt they should have cut their losses, but they did not embark on this because Legal counsel and outsourced lawyers saw justification of their positions and $500 per hour billable rates. There is an extensive vetting process. The CEO and BOD chose poorly.
Nevertheless, the question from Evan pertained to shareholders and their reactions. They will be “pissed” because Mattel made a poor decision, not because IP litigation is a bad thing. They will support or deride IP litigation depending upon the stock’s value and the annual report. Politically, within the corporate environment, consensus believes that IP is worth protecting, and this loss will change few minds.
$400M and $170M in legal fees. This is why IP exists, nothing more.
Any why it is so.vigorously defended.
The author forgot to mention that in a world without IP, Mattel simply would have copied, manufactured, and sold Bratz dolls themselves, using their much larger network and supply chain to drive MGA Entertainment out of business before it even got off the ground. Of course, in a world without IP, Carter Bryant would have realized that leaving Mattel to start his own company would have exactly this outcome.
And then they would be stigmatized as copiers, not creators. We all know kids like to have copies, rather than the “real thing”.
So what?
Re: Tim,
You certainly have not collected Star Wars action figures.
Would customer be worse off if more efficient company wins? May be, but most likely not. Besides, it is not at all obvious that in the no-ip world there even be a ‘large network and supply chain’ company. Larger companies, you know, are much harder to manage than smaller companies (if it were easier, communism would’ve won). On a constantly changing market ruled by erratic winds fashion manageability can be a life and death question. I think.
Antitrust law has nothing to do with IP you muppet
IP and anti-trust laws are inherently contradictory. One grants monopolies and the other imagines them before tearing them apart.
Let’s not forget who the real enemy is here. Refusing to use the sword yourself won’t protect you from others wielding it.
I don’t know anything about these action figures, but this reminds me of an anecdote from a biography of George Lucas written in the 1980s. After the Star Wars craze of 1977, another company quickly came out with the “Battlestar Galactica” TV show which was obviously an attempt to cash in on the space-wars toy craze and had nothing to do with the art of motion-picture making. The spaceship toys were thinly-disguised copies of the Star Wars X-fighter. Lucas sued them and lost. Then (Lucas claimed) a young child died while playing with a Battlestar Galactica toy, and a headline read: “Child chokes to death on Star Wars toy”. This is how he justified going after IP infringers, because it helped enforce safety standards and prevented the reputation of his product line. But of course the argument is nonsense, because if Star Wars produced the most dangerous toys on earth (Darth Vader Tie Fighter Lawn Darts, LOL) then Lucasfilm would probably still sue everything that looked, sounded or even smelled like their creations. And in any case the fault belonged to the newspaper who wrote the (arguably) libelous headline, not the Battlestar Galactica people who never claimed to be selling “Star Wars” toys.
Hah!
> The spaceship toys were thinly-disguised copies of the Star Wars X-fighter
Not really. Both are “planes in space” and Vipers look more like planes than anything else. Which of course is silly.
But here goes. Jimmy Wales’ BIG BAG OF TRIVIA to the rescue:
http://en.wikipedia.org/wiki/X-wing
http://en.wikipedia.org/wiki/Colonial_Viper
Heh!
http://www.theregister.co.uk/2011/08/08/apple_sued_over_mac_x_fast_boot/
A lawsuit has accused Apple of violating a patent describing a means of “quickly booting a computer system”.
Late last week, an outfit calling itself Operating Systems Solutions filed suit in the Middle District of Florida, claiming that Apple infringes its patent with Mac OS X. As pointed out by Patently Apple, the patent in question – RE840,092 – was originally granted to LG Electronics.
The patent describes a method for quickly booting a personal computer system using information that was previously saved to hard disk. This information includes data from memory and the status of devices attached to the system, and it hinges on a POST routine.
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