Mattel Asks Appeals Court to Toss $310 Million MGA Loss

Mattel Inc. asked a federal appeals court to reverse the $310 million in damages and fees that toymaker MGA Entertainment Inc. won last year in a trial over ownership of the rights to MGA’s Bratz dolls.

Mattel said in a brief filed Feb. 27 with the U.S. Court of Appeals in San Francisco that “after two trials and eight years of litigation,” it isn’t contesting the jury’s finding that MGA didn’t infringe Mattel’s copyright when it developed the dolls from an idea and drawings by a former Mattel designer.

The El Segundo, California-based maker of the Barbie doll said it wants the appeals court to throw out the $172.5 million MGA won on its counterclaims that Mattel stole its trade secrets. Those claims were time-barred and shouldn’t have been brought to trial, Mattel said. Nor was there evidence that the alleged trade secrets were actually secrets, it said.

“MGA failed to prove on a trade-secret-by-trade-secret basis that the 26 products on which the jury found liability and damages were trade secrets, adducing at best only vague and general proof that MGA protected the secrecy of some of the products it displayed at toy fairs for publicity purposes,” Mattel said.

The company asked the court to reverse what it called the unprecedented $105.6 million in attorneys’ fees and $31.6 million in costs U.S. District Judge David O. Carter in Santa Ana, California, awarded to MGA for having to defend against Mattel’s copyright-infringement suit.

Victory in 2008

Its victory at the first trial, in 2008, proves the claims were reasonable, the toymaker said.

Carter called Mattel’s claim “stunning in scope and unreasonable in relief it requested.”

“I’m pleased that Mattel and its board of directors, after wasting $400 million of shareholders’ money in a lawsuit they should have never brought, have now abandoned that and the ownership of the Bratz brand belongs to MGA,” Isaac Larian, chief executive officer and founder of Van Nuys, California-based MGA, said in an e-mailed statement.

“As for the damages for their crimes against MGA, as well as 40 other toy companies, and the legal fees, I am confident we will prevail on appeal,” Larian said.

The jury in April agreed with closely held MGA that Mattel stole its trade secrets when company employees got into MGA’s showrooms at toy fairs using phony business cards.

The jury rejected a claim that MGA stole Mattel’s trade secrets in 2000 when it made an agreement with Carter Bryant, a toy designer, who Mattel said was one of its employees when he came up with the idea for the Bratz dolls and made the first sketches.

The jury also rejected claims that the pouty multiethnic dolls, which MGA started selling in 2001, violated Mattel’s copyright.

The case is Mattel v. MGA, 11-56357, U.S. Appeals Court for the Ninth Circuit (San Francisco.)