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Friday, August 31, 2012

Mattel Inc. VS MGA Entertainment Inc.


The Mattel Inc VS MGA Entertainment Inc. patent suit emerged after a former employee of Mattel, Carter Bryant, pitched the Bratz doll line idea to MGA Entertainment while he was still employed with Mattel. Although Bryant had managed to keep the secret from Mattel for close to a year, the company eventually found out of his underhanded assignment. As a result of this discovery, Mattel filed a series of lawsuits against MGA Entertainment. 

patent suit In July 2008, the court ruled in favor of Mattel’s claim for exclusive rights over the Bratz doll line. Mattel claimed that Carter Bryant had violated his exclusivity contract while working at their company. During that time he created dolls under MGA Entertainment. Since he was still working at Mattel, the company claimed that the Bratz doll line was indeed their creation. As a result of those claims, Mattel was awarded $100 million US in damages. By December 2008, MGA was banned from manufacturing and selling Bratz dolls. The ban went into effect in January 2009. 

Furthermore, the judge stated that MGA Entertainment Bratz doll line manufactured during the period of 2001 to 2008 had infringed on Mattel’s intellectual property. Only the Kidz and Lil Angelz lines were excluded from this infringement.
Therefore, the judge granted MGA Entertainment permission to persist with the sale and manufacture of these lines as long as they were promoted under a brand other than Bratz. MGA Entertainment were also required to remove all Bratz products from retailers’ shelves and reimburse the retailers for the merchandise removed. Furthermore, the judge ordered that MGA Entertainment hand over all recalled merchandise to Mattel so it could be disposed accordingly. Moreover, all molds, marketing materials, and other merchandise associated with the Bratz line had to be destroyed. As a result of this ruling, MGA Entertainment filed for a permanent stay of the injunction which was granted in February 2009. The stay remained effective until December 2009. However, the court granted MGA an immediate stay of the injunction. This lifted the recall on the Bratz product line which would have taken effect in January 2010. The reason for the ban lift was due in part to the draconian ruling that the judge had previously issued which required MGA Entertainment to hand over the Bratz product line to Mattel. 

MGA Entertainment was awarded $310 million in punitive damages, attorney fees and other related costs. The winnings included $85 million for punitive damages, $3.4 million in fees and costs for each trade secret theft claim. Furthermore, MGA Entertainment received $137 million in fees and costs on account of having to stand defense against Mattel’s claim of copyright infringement. Moreover, MGA Entertainment was awarded $3.4 million for each instance where Mattel misappropriated its trade secrets. In total, MGA walked away with $88.4 million for misappropriated trade secrets. 

The Mattel Inc VS MGA Entertainment case upgraded the copyright law. The law now incorporated free expression based on basic principles that did not protect ideas. Mattel’s claim for $1 billion dollars in damages and exclusive ownership of all Bratz dolls not only hindered free expression, but also competition. 

The court found that Mattel’s claim for exclusive ownership of all female fashion dolls with a certain type of look, its claim for $1 billion in damage and for injunctive relief against the sale of all Bratz dolls “was stunning in scope and unreasonable in the relief it requested. The claim imperiled free expression, competition, and the only serious competitor Mattel had faced in the fashion doll market in nearly 50 years. MGA's successful defense ensured that well-resourced plaintiffs cannot bend the law to suit their pecuniary interests.” MGA’s failure to vigorously defend against Mattel’s claims in a case of such magnitude and notoriety “could have ushered in a new era of copyright litigation aimed not at promoting expression but at stifling the ‘competition’ upon which America thrives.” The court also found that a fee award would ameliorate the lawsuit's detrimental impact on MGA's sales, as well as compensate for the economic benefit Mattel may have obtained by distracting its primary competitor with litigation.

Section 505 of the Copyright Act allows for the award of full costs and reasonable attorney’s fees to the prevailing party. Noting that the prevailing party is not always entitled to recover its costs, the court reasoned that that the exercise of its discretion in this case is guided by a single equitable inquiry: did the successful prosecution or defense further the purposes of the Copyright Act?


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