In the latest step of a seven-year legal battle, Mattel, Inc. fell on the wrong side of their court battle with MGA Entertainment, maker of the Bratz dolls.  A jury in a Santa Ana Federal Court decided that MGA is the rightful owner of the toy line.

The case started in 2004 after MGA’s dolls gained enough popularity to grow into a billion dollar company.  Mattell claimed MGA stole its designs by hiring one of their key employees.

Mattel’s lawyer, Susan Estrich, said an appeal will be filed soon.  “This is not the final word in this case.”

MGA Chief Executive, Isaac Larian, emigrated to the U.S. from Iran at the age of 17.  He runs MGA in Van Nuys, California, and says the legal battles have been hard on his family.  Two of the Bratz dolls are named after his own children.

“It very well shows that in America, even huge corporations are not above the law,” Larian told Reuters following the verdict.

Larian scored a major victory last year as well; a federal appeals court threw out a 2008 federal jury award of $100 million.

MGA countered, claiming that Mattel gained entry to toy fairs by using false credentials, thereby stealing trade secrets.

The jury agreed with MGA, finding that Mattel acted willfully in misappropriating trade secrets.  MGA will seek to triple the $88.5 million in damages (this amount was reduced by U.S. District Judge David Carter to $88.4 million due to a calculation error).

Mattel CEO Robert Eckert looked un-phased when the verdict was read, later admitting he was disappointed.  He released an e-mail, stating “we remain committed to protecting the intellectual property that is at the heart of business success.”

There was one positive result for Mattel on the day.  The jury agreed with Eckert, and ruled that by hiring designer Carter Bryant, MGA interfered in Mattel’s employment contract.  The jury awarded Mattel $10,000 in damages.

The two sides will be back in court on May 24.