Barbie beats Bratz

Bratz dolls are facing removal from all shops after a US federal court banned parent company MGA Entertainment from making the Barbie rival. The court issued the order after Barbie-maker Mattel won a landmark copyright-infringement case against MGA in August. Bratz designer Carter Bryant has been found guilty of developing the Bratz brand while still working for Mattel. MGA has challenged the ruling, which severely undermines its business model. A federal judge in California banned MGA from selling and making all 40 multi-ethnic dolls in the Bratz line. But it allowed the company to wait until after Christmas to begin removing dolls from the shelves.

Mattel, the world's biggest toymaker, won the case after claiming that Mr Bryant had designed the Bratz dolls while he was still in the employment of Mattel. The toymaker claimed that under the terms of his contract it had ownership of his designs. Mr Bryant worked for Mattel between 1995 and April 1998 and then again from January 1999 to September 2000, and MGA argued that it was between these time frames that Mr Bryant had come up with the designs.

Once the most famous doll, Barbie has ceded ever more popularity to her rival upstarts. Bratz tapped into the lucrative "tween" market - not quite little girl, not yet teen. The dolls' looks were crucial, often coming with lots of makeover accessories. Barbie's worldwide gross sales fell 6% between April and June 2008 as the company's net profit fell 48% to $11.8m. Barbie sales in the US were down 21%.

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.