A 10-person federal jury in California came to a unanimous decision that the majority of the Bratz design drawings, prototypes and sculpts were created by doll designer Carter Bryant while he was employed by Mattel.
MGA had argued that Bryant conceived the Bratz doll in 1998 while he was on an eight-month break from Mattel.
The jury also found that Issac Larian, MGA's chief executive, had interfered with the contractual duties owed by Bryant to Mattel.
In the next phase of the trial, due to begin on July 23, the same jury will determine if Bratz dolls or related products, manufactured by MGA, infringe on the Bratz drawings and sculpts now owned by Mattel.
If the jury finds that the drawings do infringe, it will be asked to determine the amount of damages to be awarded to Mattel.
Mattel is also seeking an injunction to stop MGA selling Bratz dolls, the main rival to its Barbie franchise.
The big-headed Bratz dolls have proved a big hit since they launched seven years ago, while sales of Mattel's Barbie dolls have fallen.
MGA can claim in the damages phase that Mattel has no rights to the dolls themselves because they are different from the drawings and were made by MGA designers.
Mattel's attorney John Quinn said that the damages for copyright infringement would be based on MGA's profits from Bratz and related products, which some estimates put at $500m a year.
Robert Eckert, chairman and chief executive of Mattel, said: "We want to ensure that Mattel's Design Centre is a place where concepts that are built upon and enhanced by the entire team -- not stolen for personal gain and to assist a competitor."
Larian said that he was confident his company would "prevail in the end" and that Mattel's lawyers did everything they could to confuse the jury.