Can Mattel and MGM play nice if ordered to by the court?

The carousel of verdicts that is the “Barbie vs. Bratz” case has gone around one more time. Now, MGM appears to have the upper hand, at least for now. The jury’s 2011 verdict for MGM has been slashed in half by the Ninth Circuit, and MGM’s trade secret claim has been thrown out, albeit without prejudice. Specifically, on January 25, 2013, Chief Judge Alex Kozinski issued a terse, two-page order overturning half of the approximately $175 million jury award. 2013 DJDAR 1040 (January 25, 2013).

To put this seemingly innocuous ruling in perspective, let’s recap a bit:

The case dates back to its original filing in 2004 in Los Angeles’ federal court. See http://articles.latimes.com/2011/apr/22/business/la-fi-bratz-verdict-20110422

In 2008, during the first trial, a jury awarded Mattel $100 million in damages for copyright violations it alleged and trade secret theft by one of its employees who left Mattel to create the Bratz dolls at MGM.

In 2010, the Ninth Circuit reversed the jury verdict (see Mattel, Inc. v. MGA Entm’t, Inc., 616 F.3d 904, 918. MGA went on the offensive, filing a claim against Mattel for trade secret misappropriation.

Then in April of 2011, during the retrial, the new jury went completely the opposite way, ruling that Mattel was entitled to $10,000, but that MGM was entitled to approximately $80 million for trade secret theft and a staggering $137 million in attorneys’ fees for having to endure the legal battle with Mattel (who was now on the losing side). (see http://articles.latimes.com/2011/apr/22/business/la-fi-bratz-verdict-20110422 accessed on 2/5/2013). What firm was able to bill $137 million in seven years? None other than Skadden, Arps, Slate, Meagher & Flom.

So back to the latest ruling in which Chief Judge Alex Kozinski has issued another succinct yet weighty proclaimation. First, Judge Kozinski zigged for Mattel, as the $80 million awarded by the jury to the Bratz owners for trade secret theft was tossed alongside with Mattel’s trade secret theft claims. MGM’s claims for trade secret theft should “not have reached this jury” according to the Chief Judge.

But just as one hand giveth, the other taketh away: Next, Kozinski approved the stunning $137 million award to MGM in the cost of its attorney’s fees. In five brusque paragraphs, with very little discussion, the opinion is a stinging rebuke of one of the countries’ leading law firms, Quinn Emmanuel Urquhart & Sullivan. One of the most telling quotes was an affirmation that Mattel’s scorched earth strategy was simply “stunning in scope and unreasonable in the relief it requested.'”

Finally, Judge Kozinski, who always enjoys the last word, ended the opinion by writing “While this may not be the last word on the subject, perhaps Mattel and MGA can take a lesson from their target demographic: Play nice.” We’ll wait for the last word on that one, but we won’t be holding our breath.

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