Mattel Must Pay $137M for Foe's Legal Fees and Costs

, The National Law Journal

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MGA chief executive Isaac Larian

In the battle of the fashion dolls, Barbie manufacturer Mattel Inc. must pay $137 million in attorney fees and costs to MGA Entertainment Inc., maker of Bratz, under a federal judge's ruling.

Tuesday's order by U.S. District Judge David Carter, which also struck down MGA's request to pursue trial over trade-secret claims against Mattel, clears the way toward ending the federal case between the competitors.

In a written statement released on Wednesday, MGA chief executive officer Isaac Larian praised the ruling but indicated the battle wasn't quite over.

"We are pleased with the order," Larian said, "and gratified that Mattel is finally going to pay MGA for the enormous attorney's fees it imposed due to its failed attempts to seize ownership of the Bratz. We will pursue Mattel in state court for other wrongs they have done to MGA."

He did not elaborate, and Mattel's press office did not respond to a request for comment.

In 2011, a federal jury awarded MGA $88.5 million on claims that Mattel stole trade secrets by having employees show up at trade fairs. Carter later increased the award to $310 million, including a corrected verdict of $85 million plus an additional $85 million in exemplary damages and $140 million in attorney fees and costs. Most of the fees dealt with MGA's defense against Mattel's failed claims of copyright infringement — specifically, that MGA had hired away its designer to create Bratz.

Mattel posted a $315 million bond pending its appeal before the U.S. Court of Appeals for the Ninth Circuit.

On Jan. 24, the Ninth Circuit reversed the trade-secret portion of the judgment, concluding that Carter should not have allowed those claims into the copyright case automatically as "compulsory counterclaims."

But the appeals panel upheld the award of attorney fees and costs. Immediately, MGA, its insurers, and its former law firm, Orrick, Herrington & Sutcliffe, made claims against that award. On Feb. 13, Mattel, fearing it might end up paying more than $137 million, moved to enjoin enforcement of the judgment and prevent MGA or any third parties from collecting on its bond.

Meanwhile, MGA sought to revive its trade secrets claims. In his ruling, Carter agreed with Mattel that allowing MGA to amend its complaint would "completely abandon the one clear directive of the Ninth Circuit."

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