U.S. District Judge Stephen Larson "indicated he will be modifying his Dec. 3 stay ... to allow purchases and sales (of Bratz items)" beyond a previously set deadline of Feb. 11, MGA attorney Tom Nolan said. MGA had asked Larson to postpone his order barring the company from selling products that infringe on Mattel's (MAT.N) copyrights until MGA can appeal the ruling to the Ninth U.S. Circuit Court of Appeals. A Mattel representative had no immediate comment.

MGA told the court retailers were skittish about placing orders for spring and fall of 2009 because of uncertainty about whether the toys would be available, Nolan said. MGA has invested "tens of millions of dollars" developing spring and fall Bratz lines and is awaiting orders from retailers in January, Nolan said.

"Retailers wanted assurances that if they buy them they can sell them," he said. It was not immediately clear whether MGA would keep profits from those sales or if they would be placed in an escrow account until the appeals process is completed.

U.S. District Judge Stephen Larson in Riverside, California, yesterday granted Mattel's request to stop MGA from making most of its multiethnic fashion dolls that have contributed to a drop in Barbie sales since being first sold in 2001. A jury earlier found that a Mattel designer came up with the Bratz name and characters and secretly took the idea to MGA.

"Mattel has established its exclusive rights to the Bratz drawings, and the court has found that hundreds of the MGA parties' products, including all the currently available core female fashion dolls Mattel was able to locate in the marketplace, infringe those rights," Larson said in his ruling. The judge also granted Mattel's request to order MGA not to use the name "Bratz." El Segundo, California-based Mattel asked for an injunction against MGA after a two-phase trial.

Mattel rose 66 cents, or 5 percent, to $13.86 in New York Stock Exchange composite trading. Shares have fallen 30 percent in the past year. The jury found that ex-Barbie designer Carter Bryant came up with the Bratz idea and made most of the original sketches for it while he was still at Mattel. It awarded Mattel $100 million in damages, 5 percent of the $2 billion the toymaker sought.

1. Barbie
2. Disney Hannah Montana
3. Dolls (generic)
4. Bratz
5. Nintendo Wii
6. Video Games
7. Elmo
8. Disney High School Musical
9. Disney Princess
10. American Girl

1. Video Games
2. Nintendo Wii
3. LEGO
4. Cars (generic)
5. Transformers
6. Elmo
7. Star Wars
8. Hot Wheels
9. Remote Controlled Vehicles
10. Xbox 360

Certainly, Mattel has tried to keep its brands Internet-savvy for more than a decade. Mattel's Barbie.com and EverythingGirl.com have the highest concentration of girls age 2 to 11 on the Web, according to researcher Nielsen NetRatings, but their overall audience hasn't grown much over the years.

The company is also being pressured by toys like Webkinz and an avalanche of virtual worlds designed for kids. Bratz, for example, the racier fashion dolls that have eaten into Barbie sales in recent years, plans to launch a virtual world called Bratz World (Be-Bratz.com) and a Rescue Pets (my e-pets.com) this summer.

"Mattel is the 800-pound gorilla in the toy industry, and it's worked hard to continually reinvent itself," said Lisa Bradner, senior analyst at Forrester Research. "I think they'll continue to be a very strong player, but it's hard to innovate at the speed and agility that a company like Webkinz can." The overall audience for Barbie sites has declined slightly over the last year, and has failed to grow over the last three years. According to Nielsen NetRatings, the Barbie site attracted about 1.9 million unique visitors from home and work in April 2007, down from 2.1 million in April 2006. Those numbers are in line with about 2 million visitors in the same month in 2004.

In contrast, Webkinz--plush pets with corresponding virtual homes on the Web--have exploded in popularity over the last year. In April, Webkinz attracted 3.6 million unique visitors from home and work, up from just 285,000 a year before. Webkinz has even usurped the long-reigning virtual pets site of the Web--Neopets, which went from 2.6 million unique visitors in April 2006 to 3.2 million in 2007. Another major contender in the kids category, ages 2 to 11, is Club Penguin, a virtual community of penguin avatars for children. It drew more than 4 million unique visitors in April. And Disney.com, the generalist playground of Mickey Mouse and other characters, attracted more than 11 million visitors that month.