A Los Angeles Superior Court judge on Thursday denied Mattel’s motion to dismiss MGA Entertainment’s $1 billion trade-secret lawsuit alleging the toy giant spied on its smaller rival at toy shows.
The legal scuffle stems from the Van Nuys-based MGA’s federal court struggle with Mattel over the ownership of the Bratz line of dolls.
“We are grateful for this correct decision,” said Isaac Larian, Chief Executive Officer of MGA Entertainment. “Large, publicly traded companies are not above the law. Mattel, for years, has blatantly stolen trade secrets from MGA Entertainment and other toy companies.
“MGAE looks forward to justice finally being served, and to having a second jury find against Mattel on these issues,” Larian said. “Today’s ruling is the first step in the courts sending a strong message to Mattel and other big companies that it is not OK to steal competitors’ IP and compete unfairly.”
Mattel did not immediately respond to a request for comment. But Mattel officials have earlier said they believed the lawsuit in state court was barred by the statute of limitations.
The Los Angeles Superior Court lawsuit was filed in January, nearly a month after U.S. District Judge David O. Carter rejected MGA’s request for a new trial on its trade-secrets dispute with the El Segundo-based toy titan.
Jurors in April 2011 handed down a verdict against Mattel based on evidence in the trial indicating Mattel engaged in corporate espionage. MGA’s attorneys also argued that Mattel bullied retailers into keeping Bratz dolls off their shelves.
The jury awarded MGA $85 million in compensatory damages, and Carter later ruled Mattel should pay another $85 in punitive damages.
The U.S. Ninth Circuit Court of Appeals overturned the jury’s verdict because Carter improperly ruled MGA’s counterclaim was “compulsory” to Mattel’s original complaint. In other words, the jury in 2011 should not have been considering the claims of both companies at the same time.
The appellate court upheld Carter’s order that Mattel pay MGA’s attorneys’ and related fees of $137.8 million.
MGA claims Mattel had an 11-page “how to steal” manual on the trade secrets of competitors.
The jury’s 2011 verdict reversed a 2008 verdict when a federal jury in Riverside sided with Mattel in its civil suit alleging MGA committed copyright infringement and conspired to breach the Mattel contract of Bratz creator, Carter Bryant.
The dispute stems from Bryant’s defection from Mattel to MGA. Bryant worked for MGA after giving Mattel two weeks notice of his intent to quit, triggering Mattel’s claims that MGA stole its trademark secrets.
— City News Service