Bratz dolls face an uncertain future

Mattel (NYSE: MAT) and Bratz maker MGA Entertainment have been locked in bizarre litigation involving Bratz dolls -- those scantily-clad coked up Barbie wannabes that have been marketed aggressively to pre-teen girls. MGA lost an intellectual property lawsuit and is to give up control of the brand to Mattel sometime early this year. Mattel had sued, claiming that the creator of the dolls was working for Mattel when he designed the Bratz line.

But The Wall Street Journal reports (subscription required) that there is still considerable legal wrangling before the two parties as they work out a time line for the change of control. MGA Chief Executive Isaac Larian is hoping that his company will be allowed to continue manufacturing and shipping the dolls through 2009 so he can avoid laying off half of his company's employees. The matter is currently on appeal.

Financially, this doll fiasco could solve itself: The Bratz fad appears to be on its last legs. In September, I wrote that Target (NYSE: TGT) had slashed its Bratz shelf-space by 50% as sales of the dolls were expected to fall by 25% year over year.

Parents who don't want their kids to grow up to be like Paris and Lindsay should be pleased.