A federal judge has ordered toy giant Mattel Inc. to pay MGA Entertainment Inc. more than $309 million. This marks another tumultuous chapter in the years-long legal fight between the two companies over ownership of the lucrative Bratz fashion doll line. MGA has been involved in a legal battle with Mattel since 2004 over which company owns the Bratz doll. As most parents of girls will know, the dolls with pouty lips, hip hop-style clothing and oversized feet were aimed at “tweens” (girls ages nine to 11). The sales were tremendous when these dolls made their debut in 2001.
In the case, U.S. District Court Judge David O. Carter reduced a previous jury award from more than $88 million to $85 million, but then awarded Los Angeles-based MGA an additional $85 million in punitive damages for trade secrets misappropriation. He also awarded MGA, the company’s Hong Kong affiliate and its Chief Executive Officer Isaac Larian $137 million in legal fees related to copyright and trade secrets issues. The total, which also included more than $2 million in legal fees on trade secrets claims, was more than $309.8 million.
Mattel first filed a lawsuit in 2004 alleging that Bratz designer Carter Bryant was employed at Mattel when he created the Bratz dolls. In 2008, a federal jury in Riverside sided with Mattel and awarded it $100 million — but the verdict was overturned on appeal and the case was sent back for retrial. After a second trial, in April, a jury rejected Mattel’s claims and instead awarded MGA damages in a counter-claim. The smaller toymaker alleged that Mattel used hired gumshoes to spy on its toy designs and marketing plans at trade shows and stole its trade secrets.
Mattel filed motions asking for a new trial and challenging whether the 26 trade secrets MGA alleged it stole actually qualified as trade secrets under the law. The judge, however, denied the motion for a new trial and rejected Mattel’s arguments on the trade secrets. The judge wrote in his order:
Mattel’s Chief Executive Officer, general counsel, two in-house counsel, three former high-ranking executives and a current employee all admitted under oath that employees misrepresented themselves to access competitors’ private showrooms and gather information about unreleased products. Every one of these individuals acknowledge that the conduct was sanctioned by senior members of Mattel’s corporate hierarchy and that it was improper.
Judge Carter lowered the original $88.5 million in damages to $85 million after finding the jury made a mathematical error and awarded damages on one claim twice. But the judge then awarded an additional $85 million in punitive damages. During the trial, MGA attorneys accused Mattel of trying to crush Bratz because of the competition the upstart company was providing. Mattel accused MGA of stealing its idea for Bratz and then working to cover up any hint the concept wasn’t theirs. Jurors ultimately rejected Mattel’s claims of copyright infringement and instead found that Mattel stole 26 of the 114 trade secrets MGA listed, resulting in the more than $88 million in damages awarded to MGA.
Source: USA Today
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