The $310 million judgment against Mattel Inc. in its long-running dispute against Bratz doll maker MGA Entertainment Inc. should be reversed because it was based on inaccurate damages calculations and erroneous billing invoices from 11 law firms, Mattel argued in its latest appellate filing.
“Rather than engage these deficiencies in the record, MGA rehashes its rhetorical attack on Mattel for supposedly suppressing competition in the market for dolls,” wrote Mattel attorney Kathleen Sullivan, a New York partner at Los Angeles-based Quinn, Emanuel, Urquhart & Sullivan.
Mattel’s reply, filed with the U.S. Court of Appeals for the Ninth Circuit on May 29, sets the stage for oral arguments on whether the $310 million judgment, issued on Aug. 4 by U.S. District Judge David Carter in Santa Ana, Calif., should be reversed or remanded for a new trial.
The judgment includes an $85 million verdict, $85 million in exemplary damages and nearly $140 million in attorney fees and costs, all but $2.5 million of which were related to MGA’s defense against claims that it infringed on Mattel’s copyright by hiring away the Bratz doll’s designer. The jury verdict, however, was based on claims that Mattel stole trade secrets from MGA by planting spies at toy fairs.
Mattel, in appealing the judgment, called it “the largest copyright fee award in history.”
Mattel is not challenging the jury’s separate finding that MGA did not infringe Mattel’s copyright.
MGA, in opposing Mattel’s brief, said the award was justified against “one of the largest and most aggressively litigated cases ever tried in this Circuit.”
“Mattel launched litigation warfare to obliterate upstart MGA and seize MGA’s competing Bratz brand,” wrote MGA attorney Clifford Sloan, a partner in the Washington office of Skadden, Arps, Slate, Meagher & Flom.
Sloan argued that the attorney fees and costs paled in comparison to more than $400 million that Mattel reportedly spent on the litigation, which began in 2004.
In its reply, Mattel challenged the verdict, arguing that MGA’s trade secrets claims, which were added later in the case, were untimely because the toy fairs at issue occurred more than three years before those allegations were added. Moreover, Mattel added, the damages of $85 million were based on MGA’s expert testimony, which failed to calculate the values associated with 26 specific products whose trade secrets the jury concluded had been stolen.
Mattel also challenged the fees, even after Carter subtracted $24 million from a total of $129 million that MGA purportedly spent on defending Mattel’s copyright claims.
“The district court’s mistaken assumption that MGA spent all $129 million on defensive fees infects it entire award,” Sullivan wrote.
She cited tens of millions of dollars in duplicative billings, discounts and work contracted out to other firms. “Mattel has been ordered to bear these fees, even though MGA will never pay them,” she wrote.
At a minimum, the fee award should be remanded for recalculation, with Mattel given a chance to review invoices that so far have been redacted, Sullivan wrote.
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