Page last updated at 17:35 GMT, Friday, 5 December 2008

A costly storm in a toy box

A range of Bratz dolls

Dave Croston
Patent Attorney, Withers & Rogers

Mattel might be celebrating its legal victory in removing one of Barbie's main rivals from the shop shelves, but the company could have avoided a court room drama with closer management of its intellectual property?

After a four-year legal battle, a US court has decided that MGA Entertainment must withdraw the Bratz range of dolls from sale in the new year.

Mattel's case rested on the fact that one of its former employees designed the Bratz doll while they were still employed by the company.

Businesses know that employees hold valuable intellectual property, but identifying and managing such intangible assets may be more challenging and is often overlooked.

In Mattel's case, its failure to protect its knowledge at an early stage has resulted in costly court proceedings and a significant loss of market share for Barbie.

Mattel's omission allowed the Bratz brand to thrive under the ownership of MGA Entertainment, generating strong sales and a young market following.

Since the launch of Bratz in 2001, sales of Barbie have declined sharply - they fell by 15% in 2007.

Stand-offs on the rise

The jury awarded Mattel damages of $10 million (6.8m) for copyright infringement and $90 million for breach of contract, which is some recompense at least, although the damage caused to the Barbie brand could persist in the longer term.

The Barbie / Bratz showdown isn't just a battle of the dolls - it should act as a strong warning to businesses to develop better systems to manage intellectual property

As the economic downturn takes hold, the incidence of intellecutal property-related stand-offs is increasing as major brands become more vigilant about protecting their ideas in a bid to ring-fence market share.

But rather than waiting for potential infringements to arise, companies should take steps to protect their knowledge and their brand at an early stage.

Businesses need to develop an innovation culture that is designed to encourage employees to share ideas so that they can be harnessed and protected.

It is also important that this knowledge is respected by everyone and treated appropriately either by codifying it in a document or by seeking trade mark, patent or design rights protection.

It is also important to carry out a regular audit to ensure that all new ideas are captured.

'Strong warning'

There are many ways that companies can protect their intellectual property.

Terms can be included in employment contracts and in some instances it may be necessary to introduce restrictions for site visitors.

For example, some companies ask employees and visitors with camera mobile phones to relinquish them on entry. This relatively simple measure can help to convey the importance the company places on its intellectual property.

The Barbie / Bratz showdown isn't just a battle of the dolls - it should act as a strong warning to businesses to develop better systems to manage intellectual property, particularly in the current economic downturn where we are seeing escalating job losses and redundancies.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.

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