Posted on 05 Aug 2011
A federal judge ordered toy giant Mattel Inc. to pay bitter rival MGA Entertainment Inc. more than $309 million in damages, fees and other costs in the long-running dispute over the billion-dollar Bratz doll line and rejected Mattel's bid for a new trial.
Isaac Larian, the outspoken chief executive of Van Nuys-based MGA, said he was thrilled by the decision by U.S. District Judge David O. Carter, which he called a "step in the right direction."
"I feel vindicated and I'm very excited," he said in an interview. "I'm happy for MGA, MGA employees and all the people who believed in us and did not abandon us for all these years."
El Segundo-based Mattel said it was disappointed and was evaluating its next steps. "Mattel strongly believes that the outcome at the trial level is not supported by the evidence or the law," the company said in a statement. "We remain committed to finding a reasonable resolution to the litigation."
The explosive case pitted two Southland toy companies against each other: Mattel, the world's No. 1 toy maker and owner of the Barbie empire, and MGA, a little-known player before it introduced Bratz in 2001. The multiethnic dolls known for their big heads, pouty lips and sexy clothing went on to be runaway hits among older girls and deeply cut into sales of Barbie.
Mattel accused Bratz creator Carter Bryant, a former Barbie designer, of being in its employ when he came up with the idea for the dolls, and said he broke the terms of his "inventions agreement" by taking it to MGA. Larian, meanwhile, cast the struggle as a David-and-Goliath battle, with Mattel using its financial might to bring down the first real competitor Barbie ever faced.
The case captivated Southern Californians, nearly put MGA out of business and made toy analysts question Mattel's motives as the litigation dragged on.
In April, after nearly three months of testimony, a federal jury in Santa Ana sided with MGA — a remarkable turnabout from the first trial, when a jury in Riverside found in favor of Mattel in 2008 and awarded it $100 million in damages.
The jury in the retrial said Mattel had not proved its claims of copyright infringement and instead found that the company had stolen trade secrets from MGA and owed it $88.5 million. That was seen as a paltry amount for a case that analysts estimated had cost each side hundreds of millions of dollars in legal fees alone.
After the jury verdict in April, MGA's lawyers quickly said they would ask the judge for a significant amount of money to cover legal costs and punitive damages while Mattel's lawyers said they would request a new trial.
In his decision Thursday, Carter disagreed with Mattel's arguments that the jury's verdict was unfounded, and he rejected Mattel's contention that the jury's award lacked evidentiary support.
He awarded MGA $85 million in punitive damages and $2.5 million in attorneys' fees and costs for its trade-secret theft claims against Mattel. Separately, he awarded MGA and Larian $137.4 million in attorneys' fees and costs for having to defend against Mattel's claims of copyright infringement, intentional interference with contractual relations and other allegations.
However, Carter also reduced the $88.5-million award that the jury had decided on in April to $85 million because of a mathematical error and because the jury may have twice awarded MGA $3.4 million for the same product.
The total award amount: $309.9 million.
Mattel maintains that doll designer Bryant came up with the idea for Bratz in 1999 during his second stint with Mattel and violated the terms of his contract by taking the concept to MGA, which went on to produce and market the franchise.
Bryant testified that he conceived of Bratz in 1998 when he was on a break from Mattel and living in Missouri — an assertion Mattel's lawyers attacked in court, alleging that Bryant and Larian had engaged in a massive cover-up.
The 2008 jury decision was overturned last year by an appeals court, which ruled that MGA deserved "sweat equity" for manufacturing and marketing the dolls. The appeals court said Mattel couldn't claim a monopoly over dolls with a bratty attitude. The retrial was moved to the Orange County federal court.
Larian said Thursday that the legal wrangling with Mattel had damaged the Bratz brand by an estimated $1 billion, and that MGA intended to recoup those losses in a separate and pending antitrust lawsuit against Mattel.