Orly Lobel

Behind every great fortune is a great crime, the saying goes; Lobel illuminates those behind the success of Bratz dolls as well as Barbie dolls. Mattel began as a pirate, copying a German doll and then denying the copying, but turned into a vigorous enforcer, almost wresting control of the competing Bratz dolls created by a former employee. Mattel was enraged because the Bratz beat Barbie out for top-selling doll for the first time since her introduction. Lobel tells the story of the legal battle, interspersed with digressions into Barbie’s history and Mattel’s other battles against unauthorized users of Barbie. I wished she hadn’t seemed to conflate other countries’ less speech-protective laws with US law when she discussed a short film, Barbie Gets Sad Too, which was enjoined by a Mexican court “because the sexual content would threaten Barbie’s image”—a lay reader might not understand that this wouldn’t have worked in the US. Lobel does make clear how much the jury’s feelings about the parties as people matters, though; in the first trial, there might well have been some bias against MGA’s Iranian-Jewish immigrant founder, while at the second trial a new lawyer brilliantly portrayed MGA as the inventive, caring victim of Mattel’s malice and creative stagnation.

Side note: Mattel portrayed another employee, Lily Martinez, as the true creator of Bratz; they featured her prominently, (apparently) dressing her to emphasize her physical resemblance to the Bratz and presenting her as if she were a significant designer, when in fact she hadn’t ever made a toy line that Mattel actually produced. (Martinez declined to be interviewed for the book.) At the second trial, she was torn apart on the stand, and subsequently left the toy industry after seventeen years. Given the current discussion around how discrimination and harassment have destroyed so many women’s careers, I wonder whether this is just a very unusual version of the same old story.

Lobel uses the story to decry restraints on competition such as restrictive employment contracts; the writing is punchy if at times a bit cute. The case is indeed part of a bigger story: the attempts by big market players to use the law to prevent successful competition. Mattel spent $400 million on this litigation, while MGA (maker of Bratz) spent $200 million—and was lucky to be able to do so (also, it’s not entirely clear they ever fully paid any of their lawyers). MGA ultimately won, but only after two trials and a trip to the court of appeals. Lobel argues that Mattel’s litigiousness was both personal—the men in charge felt that Barbie was like a real person, being “genocid[ally]” attacked—and professional, in that Mattel’s own lines were stagnating and they stifled internal attempts to add new life into their product lines. Lobel connects this to the classic problem of currently successful businesses—they often reject innovation because of the threat of cannibalization of their core product line.

The personal story here is also tragic—Carter, the original designer of Bratz, who conceived of them while on a break from working for Mattel, was first written out of the Bratz origin story and then had his life basically destroyed by the litigation. When he mentioned seeing a Steve Madden ad with oversized heads and feet and small torsos as part of his inspiration, he was quickly sued by the photographer who took that photo—even though ideas aren’t protectable. The designer engaged in some shady behavior before finally leaving Mattel—he took money from MGA without quitting Mattel for a few months, and engaged fellow Mattel workers to help with the doll after hours (the Mexican-American seamstresses who did the sewing got fired after this came out, even though they’d worked for Mattel for decades). And Lobel suggests that MGA’s erasure of the designer was only in part to buttress the myth of the entrepreneur-creator, Larian, who claimed to have been inspired by his daughter—contemporaneous emails made clear that MGA was also worried about getting caught by Mattel. But Mattel definitely comes off worse, especially once it develops that Mattel had a massive scheme in place to steal competitors’ secrets by sending people who pretended to be independent toy store operators to get intel. Ultimately this led to a $309 million verdict against Mattel, reduced on appeal to $139 million. But the real problem, Lobel concludes, is the increasing willingness of corporations to claim ownership over everything their employees do, hampering their ability to move their skills and dampending their motivations even when they stay.… (mais)

The theory and empirical evidence indicating that restrictions on labor mobility in the form of noncompete agreements, expansive trade secret law, antipoaching rules, and trailing invention agreements (in which a company owns everything an employee invents even after she leaves) are all overall harmful to innovation and growth, and even affect the grasping company negatively as well. Essentially, people learn more and create more when they move around in their careers, and they bring knowledge and connections with them that benefit both the destination firm and, often enough, the source firm. Higher producers will move, if they can, to states that allow more labor mobility—also known as adverse selection. So states would be better off to have legal regimes more like California, which only allows very limited noncompetes and has historically restricted the definition of trade secrets.… (mais)