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Bratz doll manufacturer MGA Entertainment Inc. is asking that Mattel Inc. post a $464.83 million bond while the Barbie manufacturer appeals a jury’s $88 million trade-secrets theft verdict against it. U.S. District Judge David Carter in Santa Ana, Calif., issued a final judgment in the case on Aug. 4, upholding the verdict and awarding MGA nearly $310 million in total damages, including exemplary damages, attorney fees and costs. The jury actually awarded $88.5 million, but Carter said the panel made a mathematical error. Mattel filed a notice of appeal on Aug. 11 with the U.S. Court of Appeals for the 9th Circuit. “Mattel has filed a notice of appeal which preserves our right to appeal all of the decisions of the Court and jury in this case,” Mattel said in a prepared statement issued by company spokeswoman Heather Wilson. “Mattel remains committed to finding a resolution that allows us to conclude this litigation on terms that are reasonable and fair to Mattel.” Mattel asked to extend an automatic stay of the judgment that expires on Aug. 18. In the alternative, Mattel offered to pay a $315 million bond to obtain a stay pending appeal — $5 million more than the judgment — to compensate for interest, attorney fees and costs that MGA is expected to incur during the two to five years it will take to resolve Mattel’s appeal. Mattel’s insurers would post the bond, according to documents filed by Mattel’s attorney, Michael Zeller, a partner at Quinn, Emanuel, Urquhart & Sullivan. MGA’s chief executive officer, Isaac Larian, issued a statement condemning Mattel’s move. “This appeal shows the magnitude and arrogance of Bob Eckert and Mattel’s board of directors and how out of touch they are with reality,” he said, referring to Mattel’s chief executive officer. “We will oppose Mattel’s appeal and are confident that we will prevail.” MGA, in court documents filed on Aug. 14, argued that Mattel should be required to post a higher bond — the $464.83 million figure. “In light of the uncertainties of the current environment, no one can forecast where Mattel Inc. will be in three years time, or whether it will be able to pay a judgment approaching one-third of a billion dollars,” wrote MGA’s attorney, Warrington Parker, of counsel at Orrick, Herrington & Sutcliffe. “After all, three years ago AIG and Lehman Brothers appeared to be strong companies.” MGA’s bond request amounts to 1.5 times the judgment. The federal jury on April 21 concluded that Mattel had stolen trade secrets from MGA by planting spies at industry trade shows. The jury rejected Mattel’s claim that MGA infringed on its copyright by hiring away a designer who took the Bratz doll concept with him, saying that Mattel did not own the rights to the first four models of the Bratz dolls or two newer versions. However, the jury gave Mattel $10,000, finding that MGA and Larian intentionally interfered with the contract between Mattel and the designer. Mattel argued various motions against the verdict, and Carter on Aug. 4, rejected most of them. They included a request for a new trial and an attack on Carter’s decision to let MGA introduce the trade-secrets theft complaint. “Far from lacking a legally sufficient evidentiary basis, MGA’s claim that Mattel misappropriated its information was practically uncontested at trial,” Carter wrote. Much of Mattel’s argument for a new trial focused on the expert testimony the jury relied upon in awarding damages of $3.4 million for each trade secret that it decided had been stolen. “That the jury calculated and awarded an average and uniform award for each act of misappropriation is not grounds for a new trial, especially since Mattel similarly failed to introduce specific evidence of harm for each of its claimed trade secrets,” Carter wrote. Carter granted MGA’s demand for exemplary damages, although he halved the requested award to $85 million, calling Mattel’s actions “silly, not evil.” MGA had demanded double the compensatory damages of $85 million. Carter awarded MGA $2.17 million in attorney fees and $350,000 in costs for litigating the trade secrets claims; and $105.69 million in attorney fees and $31.68 million in costs spent defending against Mattel’s copyright infringement claims. “Mattel’s claim posed a serious threat to the public’s access to free and competitive expression,” 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.” Carter rejected an equitable defense motion in which Mattel argued that MGA’s claims of trade-secrets misappropriation were barred due to its own “unclean hands” in having obtained confidential information about Mattel’s products. Not all the judge’s rulings were against Mattel. Besides reducing the compensatory damages, Carter rejected MGA’s unfair competition claim that Mattel and Kohl’s Corp. colluded to oust the Bratz doll manufacturer from the store’s shelves. Contact Amanda Bronstad at [email protected].

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