The makers of the popular toy franchise are under fire from Mattel for allegedly smuggling trade secrets. But the lessons here carry beyond the rival dollhouses
In toy stores, she's a dancing princess, a mermaid, or a hip teenager. But behind the scenes, Barbie is kicking down doors and taking names. In a 58-page complaint filed Nov. 20 in federal court in Riverside, Calif., Mattel (MAT), Barbie's parent, accuses nemesis Isaac Larian, father of the phenomenally successful Bratz dolls, and a number of former Mattel employees of breach of contract, theft of trade secrets, copyright infringement, and racketeering. In making its case, Mattel had federales raid the Mexican offices of Larian's company, MGA Entertainment, and applied forensic computer techniques to what they found.
Mattel claims that since the Bratz were launched in 2001, Larian has hired away at least 25 of its employees. Mattel first sued doll designer Carter Bryant in 2004, claiming he created the Bratz while working for them. Larian countersued, alleging that the world's largest toymaker copied the Bratz look when it subsequently overhauled Barbie. No trial date has been set and legal experts say predicting a winner is all but impossible.
Larian, a 52-year-old Iranian immigrant who never minces words, calls the latest filing "fabricated lies," and says "there are no secrets that Mattel had that we want." No matter how it ends, legal and corporate security experts say the complaint provides a host of lessons for employees thinking of jumping to a competitor:
There is no such thing as personal e-mail. By now, it's well known that anything said in a company e-mail can one day pop up in court, but what about personal e-mail accessed through a company computer? Mattel claims that in 2004, three of its employees in Mexico created a private e-mail account—not-so-creatively dubbed email@example.com—that they used to correspond with Larian's company. The complaint alleges that one of the employees tried to destroy his computer's hard drive and use a software program to erase evidence that he had been copying proprietary information. All of that is easy to track in company computers.
Everything you do electronically is traceable. The complaint alleges that four days before she resigned and on the same day she was scheduled to speak to Larian by phone (the call date was in an electronic calendar she left behind), a Mattel employee in Canada copied 45 sensitive company documents onto a portable storage device, popularly known as a thumb drive. She labeled the file "backpack" and carried it out of Mattel's offices in a knapsack.
Mattel claims she later gained access to that information after she started working for MGA, based on a recovery of the storage device by Canadian authorities. "Leave your thumb drive behind," cautions Jennifer Urban, head of the intellectual property law clinic at the University of Southern California.
Don't involve others (unless you plan on taking them with you). Mattel claims one of its senior marketing executives left for the Rosh Hashanah holiday in 2004 with a large cardboard box full of documents. Later that day, he asked his administrative assistant to provide him with a sales plan for one of Mattel's most significant customers. He resigned after returning to the office two days later.
Scott Cooper, a forensic computer expert who has worked with Mattel, although not on this case, says job-hoppers are often so anxious to please their new employers that they want to take something with them. Larian says he has this advice for new hires: "Do not bring anything with you except what's in your brain." Now, he may have to prove in court that he and his team followed that advice.