Barbie Plays Dirty, Bratz's Dirty Tricks Suit Claims

Jan. 16, 2014— -- Dolls have been known to cry, wet and do other bad behavior, but a lawsuit claims that Barbie has spied on Bratz dolls and carried out dirty tricks for 18 years.

In the latest round of what has been an epic legal battle, a new lawsuit by MGA Entertainment, the company that makes Bratz dolls, accuses Mattel and Barbie of carrying out a campaign of corporate espionage in what it calls "one of the most heavily contested trade secret cases in American history."

In the lawsuit filed this week in Los Angeles Superior Court, MGA, based in San Fernando Valley, Calif., detailed how Mattel has allegedly been spying on Bratz dolls "since 1992 through at least 2009."

Jennifer Keller, an attorney for MGA, said the company "has been seeking justice for the wrongs done to it by Mattel for many years."

"This is just the latest chapter in a long saga. We are confident it will be the last chapter and we will prevail. If an American jury gets a hold of this case, the jury will understand that MGA is right," she said.

The two companies have been fighting legally for years. Mattel initially sued MGA in 2008, accusing the creator of Bratz, a former Mattel employee, of stealing trade secrets. A jury rejected that claim, which Mattel did not appeal. MGA, which then sued Mattel for allegedly stealing its intellectual property, was awarded $85 million in compensatory damages and $85 million in punitive damages, plus attorney's fees. But in January 2013, the Ninth Circuit threw out the $170 million judgment.

MGA says in its new lawsuit that the award was tossed because of a procedural issue and had "nothing to do with the merits of the claims against Mattel."

Alan Hilowitz, a spokesman for Mattel, based in El Segundo, Calif., provided a statement to ABCNews.com:

"In January 2013, the United States Court of Appeals agreed with Mattel that the verdict and damages on MGA's toy fair claims must be vacated and ordered the dismissal of the claims. We are confident that the same stale claims brought in MGA's lawsuit today are barred by the statute of limitations, and we look forward to the speedy and final resolution of this dispute. Mattel will continue to focus its efforts on successfully competing in the marketplace."

Here are some of the allegations against Mattel in the new lawsuit:

1. Mattel's "Market Intelligence Department"

MGA alleges Mattel's Market Intelligence Department "willfully and deliberately misrepresented themselves to gain entry into the private showrooms of Mattel's competitors," including MGA, at numerous trade shows. The showrooms are off-limits to competitors, the suit states. MGA alleges Mattel's supervisors and senior executives provided training and financial support for this spying.

2. Fake business cards from Kinko's

In its lawsuit, MGA accuses Mattel employees of going to Kinkos and printing fake business cards, "and had Mattel accounting create mocked-up invoices, so they could flash 'evidence' of their fictional business cards and lie their way into the private showrooms of competitors."

3. Illegal video tapes

Mattel is accused of buying small video recorders, "paid for by Mattel," and bringing these cameras to photograph and videotape what they saw in those private showrooms, the lawsuit states.

4. Rewarding employees for stealing secrets

MGA alleges Mattel employees stole "confidential competitive information - including price lists, advertising plans, and unreleased product attributes," according to the lawsuit. It also claims the company rewarded the employees who swiped the information.

5. "How to steal" manual

MGA alleges that Mattel provides "express instructions" in an 11-page "how to steal" manual created by Mattel executives. It states that the manual taught "Mattel's corporate spies on the most effective means to steal their competitors' trade secrets."

The court filing states that federal litigation between the two companies has spanned nine years, "racked up" more than 10,000 separate docket entries, involved two multi-month jury trials and 11.5 million pages and 400 depositions taken during discovery.