Barbie vs. Bratz Dolls…

Michael D. Moberly      April 2, 2009

 Why is it important for companies to (proactively) unravel and monitor the origins, ownership, stability, defensibility and audit-ability of intangible assets and intellectual property?, well…

In Federal court in Riverside (CA) on Tuesday (June 2, 2008) toymaker Mattel, owner of the Barbie empire, alleged that MGA Entertainment engaged in copyright infringement when they commercialized Bratz dolls.

This case represents one more costly (in your face) example why the practice of ‘that’s the way we’ve always done it’  is no longer adequate when valuable IP and intangible assets are in play – at stake!  For companies with intensive – valuable intangible assets and IP portfolios, continuing to do things the way they’ve always been done no longer serves the owner-holder of those assets particularly well, especially in light of the economic fact – business reality that 65+% of most companies’ value, sources of revenue and future wealth creation lie in are directly linked to intangible assets and IP.

Setting aside for a moment, (a.) the charges that have been filed in this case, (b.) the dissing which both sides have engaged, and (c.) how legal counsel have tried to characterize the circumstances in their clients’ favor, the case essentially boils down to a single procedural – due diligence question; did either side effectively unravel and consistently monitor the origins and development of the idea (concept) and associated drawings that gave rise to the Bratz dolls?  Clearly this is a ‘contestable’ point!  However, my position is quite straight forward, had this been done, it surely would have lessened, if not prevented, this case rising to the level it did.

When hundreds of millions of dollars are at stake, as they are in this case, c-suite decisions are correctly guided by profits and hopefully experienced guesstimates about the probability of who will ultimately prevail in court.  It seems equally rational however, especially in aggressive, winner-take-all global business environments like this, when not only a company’s reputation and image are at stake, but potentially millions, if not billions of dollars of revenue, and when challenges and disputes (over IP and intangibles) are becoming the norm, proactive unraveling and monitoring of the origins and development of ideas and innovation must go well beyond patent applications and the wishful thinking assumptions embedded in NDA’s, confidentiality agreements, and non-competes to bring:

1.  Clarity and transparency to idea – innovation development processes reflective of the six requisites to trade secrecy…

2. Respectful bridges between innovators, collaborators, IP counsel, business unit managers, and decision makers to produce efficiencies and improved oversight, stewardship, and management of the relevant IP and intangibles…

3. Comprehensive picture of (a.) what know how – intellectual capital warrants protection, (b.) when proprietary status (safeguards) should attach, and (c.) how to tailor risk mitigation measures commensurate with the assets’ (projected) life and value cycle and company culture, and…

4. Rationale to facilitate broad buy in to strenghten compliance aligned with best practices necessary to protect – preserve (sustain) control, use, ownership, value, and brand integrity of those assets!

That’s why it is important today to proactively unravel and monitor the origins and development of ideas and innovation!


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