<b><i>BREAKING NEWS:</i></b> Jury Awards MGA $88.5 Million in Bratz Doll Retrial

A federal jury has rejected Mattel Inc.'s claims that MGA Entertainment Inc. stole the idea for the wildly profitable Bratz dolls, and instead awarded $88.5 million to MGA for trade secrets theft by Mattel.

In a verdict announced on April 21, the jury in Santa Ana, CA, rejected Mattel's claims of copyright infringement by MGA, finding that Mattel did not own the rights to the first four models of the dolls plus two newer versions. Mattel had claimed that one of its former designers took the idea with him when he joined MGA, which manufactures the Bratz dolls. The jurors found that MGA had not stolen Mattel's trade secrets.

The verdict was not a complete loss for Mattel — the jury awarded the company $10,000 in damages, finding that MGA and its chief executive, Isaac Larian, intentionally interfered with the contract between Mattel and its former designer, Carter Bryant.

Behind MGA's victory was Jennifer Keller, a criminal defense attorney at Keller Rackauckas in Irvine, CA, who was brought in at the last minute after Mattel convinced U.S. District Judge David Carter in December to disqualify MGA's original counsel, Patricia Glaser, a partner at Glaser, Weil, Fink, Jacobs, Howard & Shapiro. Mattel had moved to disqualify Glaser after discovering that a former associate at Quinn, Emanuel, Urquhart & Sullivan, which represents Mattel, had become a partner at Glaser Weil.

MGA, whose team also included Thomas McConville, a partner at Orrick, Herrington & Sutcliffe, asked the Ninth Circuit to reinstate Glaser or give its new lawyers more time to prepare for the trial, which ended up lasting for three months. The Ninth Circuit denied that petition.

Neither Keller nor an MGA spokeswoman, Susan Hale, responded to requests for comment.

Larian said in an e-mail message: “This is for all the entrepreneurs with an American dream. Don't ever give up when you know you are right.”

The verdict was a blow for Mattel lawyers John Quinn and William Price, both partners at Los Angeles-based Quinn Emanuel. In 2008, the firm obtained a $100 million verdict for Mattel during the first trial between the toy companies, which took place in Riverside, CA.

Last year, the U.S. Court of Appeals for the Ninth Circuit overturned that verdict, ruling that the judge had abused his discretion in giving Mattel the rights to the dolls. At that time, MGA's trial counsel was Thomas Nolan, a partner in the Los Angeles office of Skadden, Arps, Slate, Meagher & Flom. See, “Ninth Circuit Holds That Even Brats Deserve Equitable Treatment,” in the March 2011 issue of our sibling newsletter The Corporate Counselor.

Quinn did not return a call for comment.

Mattel Chief Executive Officer Robert Eckert issued a formal statement: “We are disappointed by the verdict, but we remain committed to protecting the intellectual property that is at the heart of business success. Mattel's first priority is, and always has been, to make and sell the best toys in the world.”

The case originated in 2004, when Mattel sued Bryant. MGA later joined the case. Bryant settled with Mattel for $2 million.

Unlike the first trial, which involved copyright infringement and breach of contract claims, the second case addressed additional claims brought by the competitors against one another for stealing trade secrets. MGA, which has made $3.3 billion on sales of the Bratz dolls, had accused Mattel of having its employees spy on its products during industry trade shows. Mattel argued that MGA and its employees had stolen confidential trade secrets.

A federal jury has rejected Mattel Inc.'s claims that MGA Entertainment Inc. stole the idea for the wildly profitable Bratz dolls, and instead awarded $88.5 million to MGA for trade secrets theft by Mattel.

In a verdict announced on April 21, the jury in Santa Ana, CA, rejected Mattel's claims of copyright infringement by MGA, finding that Mattel did not own the rights to the first four models of the dolls plus two newer versions. Mattel had claimed that one of its former designers took the idea with him when he joined MGA, which manufactures the Bratz dolls. The jurors found that MGA had not stolen Mattel's trade secrets.

The verdict was not a complete loss for Mattel — the jury awarded the company $10,000 in damages, finding that MGA and its chief executive, Isaac Larian, intentionally interfered with the contract between Mattel and its former designer, Carter Bryant.

Behind MGA's victory was Jennifer Keller, a criminal defense attorney at Keller Rackauckas in Irvine, CA, who was brought in at the last minute after Mattel convinced U.S. District Judge David Carter in December to disqualify MGA's original counsel, Patricia Glaser, a partner at Glaser, Weil, Fink, Jacobs, Howard & Shapiro. Mattel had moved to disqualify Glaser after discovering that a former associate at Quinn, Emanuel, Urquhart & Sullivan, which represents Mattel, had become a partner at Glaser Weil.

MGA, whose team also included Thomas McConville, a partner at Orrick, Herrington & Sutcliffe, asked the Ninth Circuit to reinstate Glaser or give its new lawyers more time to prepare for the trial, which ended up lasting for three months. The Ninth Circuit denied that petition.

Neither Keller nor an MGA spokeswoman, Susan Hale, responded to requests for comment.

Larian said in an e-mail message: “This is for all the entrepreneurs with an American dream. Don't ever give up when you know you are right.”

The verdict was a blow for Mattel lawyers John Quinn and William Price, both partners at Los Angeles-based Quinn Emanuel. In 2008, the firm obtained a $100 million verdict for Mattel during the first trial between the toy companies, which took place in Riverside, CA.

Last year, the U.S. Court of Appeals for the Ninth Circuit overturned that verdict, ruling that the judge had abused his discretion in giving Mattel the rights to the dolls. At that time, MGA's trial counsel was Thomas Nolan, a partner in the Los Angeles office of Skadden, Arps, Slate, Meagher & Flom. See, “Ninth Circuit Holds That Even Brats Deserve Equitable Treatment,” in the March 2011 issue of our sibling newsletter The Corporate Counselor.

Quinn did not return a call for comment.

Mattel Chief Executive Officer Robert Eckert issued a formal statement: “We are disappointed by the verdict, but we remain committed to protecting the intellectual property that is at the heart of business success. Mattel's first priority is, and always has been, to make and sell the best toys in the world.”

The case originated in 2004, when Mattel sued Bryant. MGA later joined the case. Bryant settled with Mattel for $2 million.

Unlike the first trial, which involved copyright infringement and breach of contract claims, the second case addressed additional claims brought by the competitors against one another for stealing trade secrets. MGA, which has made $3.3 billion on sales of the Bratz dolls, had accused Mattel of having its employees spy on its products during industry trade shows. Mattel argued that MGA and its employees had stolen confidential trade secrets.