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Toy Company MGA Seeks $177 Million for Punitive Damages from Mattel in Bratz Case

Source: AP

Posted on 26 May 2011

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Stating that  the litigation had done irreparable damage to the smaller company and its finances, toy company MGA Entertainment Inc. asked a judge Wednesday to follow up their win over arch-rival Mattel Inc. last month in a trial over who owns the rights to the popular Bratz doll line by awarding MGA more than $339 million in punitive damages, attorney fees and other costs.

Jurors who heard the case in U.S. District Court in Santa Ana awarded the Los Angeles-based MGA more than $88 million after finding Mattel liable for the misappropriation of trade secrets. The jury also rejected Mattel's claims that MGA stole the idea for Bratz, which the smaller company then developed into a blockbuster, billion-dollar fashion doll franchise.

Mattel first filed suit in 2004 alleging that Bratz designer Carter Bryant was employed at Mattel when he designed the urban, multi-ethnic and street-smart dolls.

MGA attorneys argued Wednesday that Mattel had pursued the copyright case to crush a rival as Barbie sales declined — a "war by litigation" that entitled MGA to double damages and reimbursement for all its attorney fees.

The company is seeking $177 million in punitive damages and $162 million in attorney fees and other legal costs.

"If the court awards every penny sought by MGA today in fees, restitution and double (punitive) damages, it will not have compensated MGA for the harm it has suffered at Mattel's hands," said Annette Hurst, an attorney representing MGA.

"Hundreds of people lost jobs, the company was nearly destroyed, the brand was nearly destroyed and the full amount sought by MGA at this hearing is just one step on the path to remedying that harm."

MGA is seeking reimbursement for all its legal fees — not just those spent on defending its Bratz copyright — but Mattel argued Wednesday that it could only recoup fees related to the copyright defense and not to other related claims or cases.

MGA, which has spent nearly $200 million on the litigation so far, filed a countersuit accusing Mattel of stealing trade secrets. Other players, including a Mattel employee who was hired away to by MGA in Mexico, were also sued.

"There's a long list of claims they lost, claims they abandoned," said Susan Estrich, an attorney representing Mattel. "All of these claims are not interrelated."

The judge also has before him a half-dozen other post-trial issues to consider in a hearing that could take several days. It wasn't immediately clear whether he would issue a tentative ruling on the damages and attorney fees at the end of the hearing or file a written order later.

The El Segundo-based Mattel first sued more than six years ago, claiming it owned the provocative Bratz dolls with large eyes, heads, lips and feet, and tiny noses. The doll, introduced in 2001, was a blockbuster hit with "tweens," as Barbie sales declined.

MGA countersued and accused Mattel of stealing its trade secrets by sending spies to toy fairs and engaging in unfair business practices to keep Bratz dolls off toy shelves.

Jurors rejected the copyright claims and instead found that Mattel stole 26 of the 114 trade secrets MGA listed, resulting in the $88.4 million in damages awarded to MGA.

Mattel won a minor point in the case when the jury found MGA and Larian interfered with Mattel's contractual relations with doll designer Bryant and assigned $10,000 in damages, divided between the company and the CEO.