Sometimes, uphill battles must be fought because there really isn’t a viable second option; the stakes are too high, and allowing the status quo to remain undisturbed without a fight can mean forfeiting your business. And that’s precisely what MGA Entertainment did in its prolonged fight over the proprietary intellectual property rights to the Bratz dolls. (It also appears that a central element to the case was a claim that a former Mattel employee who left to work for MGA Entertainment had breached his fiduciary duty to Mattel in bringing the Bratz concept to MGA).

As I noted nearly two years ago in  “Infingers Beware: Court Upholds $100 Million Verdict in Bratz Dolls Case,” appellate courts tend to give great deference to jury verdicts, and therefore, the likelihood of an appeals court throwing out a jury’s verdict was unlikely. But MGA really had no choice. Allowing this verdict to stand may have meant the ruination of their business.

So they fought. And, according to a news report from earlier today, not only did they get that jury’s verdict thrown out, but a second jury found in their favor, awarding MGA Entertainment $88.5 million in damages due to Mattel’s wrongful actions.

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I was recently contacted by a small business owner who was looking to protect her company’s intellectual property. The problem is, she was contacting me to try and protect only after she was having a problem with one of her co-workers. She didn’t know that in order to properly protect the creative work that was generated for her company, she needed to have a written agreement that delineated everyone’s responsibilities, and most importantly, who would own the creative work product.

And therein lies the danger: the Copyright Act tends to favor (in terms of ownership) the one who actually created the work rather than the one who may have commissioned the work.

An article published in today’s New York Times, which notes the legal difficulties faced by Disney in its intended acquisition of Marvel Superheroes highlights these problems. In that case, Marvel’s ownership of the intellectual property rights to some of their superheroes has been challenged by the creators’ heirs, who claim that they are entitled to at least partial rights to selected characters. On the other hand, Sony apparently has undisputed movie rights to X-Men – forever.

Here’s the bottom line: if the creative business is worth anything significant (and if it isn’t, you’d better find one that is worth something),  it should be worth the modest investment necessary to prepare a written agreement that protects it.

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