Has Mattel finally had enough? A press release issued after a withering ruling by U.S. District Court Judge David Carter suggests that the embattled toymaker may be prepared to finally throw in the towel in its epic battle with rival MGA. Yesterday, Judge Carter assessed an additional $85 million in punitive damages and $139.5 million in attorneys fees against Mattel. This will be added to the $88 million that a Southern California jury awarded to MGA last spring when it found Mattel had misappropriated MGA’s trade secrets.
The following lines from Judge Carter’s opinion have generated the most media attention: “Mattel asserted a copyright claim that was stunning in scope and unreasonable in relief it requested,” Judge Carter wrote. “The claim imperiled free expression, competition, and the only serious competitor Mattel had faced in the fashion doll market in nearly 50 years.” Ouch.
Some day, someone will write a very, very, very long book about this case, which is best described as the legal equivalent of an ultimate fighting cage match between the two very bitter rivals. Mattel won round one, persuading a jury to award $100 million against MGA in 2008 for the theft of trade secrets for the Bratz dolls line, arguing that the idea was conceived by former employee Carter Bryant while he was still employed by Mattel. However, after the Ninth Circuit reversed, MGA won round two earlier this year, securing an $88 million verdict against Mattel on evidence that Mattel employees slipped into MGA’s showrooms at toy fairs using phony business cards. The jurors awarded MGA $3.4 million for each of the 26 instances in which they found that Mattel had misappropriated a trade secret; in his post-trial rulings, Judge Carter reduced the overall award to $85 million. (As a matter of full disclosure, I litigated a commercial injunction case against Mattel several years ago).
Now to the “tell” in the Mattel press release: “Mattel strongly believes that the outcome at the trial level is not supported by the evidence or the law,” Mattel said in a statement. “We remain committed to finding a reasonable resolution to the litigation.” Roberto Duran could not have said it better.
The takeaway? Avoid blood feuds.