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Ninth Circuit Reduces Bratz Award, Tells Toymakers to 'Play Nice'

By Robyn Hagan Cain | Last updated on

Bratz and Barbies may be friends in the toy box, but they're bitter enemies in the courtroom.

This week, the Bratz were back in the Ninth Circuit Court of Appeals again, in an appeal challenging the damages from the retrial of the last round of litigation over the dolls. Got that?

If not, we'll recap the pertinent details.

In 2008, Mattel won a copyright infringement and breach of contract lawsuit against MGA Entertainment. Mattel claimed that MGA had infringed its copyright and breached a contract because Carter Bryant, the designer who created the Bratz dolls, was still under contract to Mattel when he developed the Bratz concept for MGA, The Wall Street Journal reports. In 2009, a federal judge upheld that verdict, essentially giving Mattel ownership of the billion-dollar-Bratz brand.

In 2010, the Ninth Circuit reversed that order, finding "It is not equitable to transfer this billion-dollar brand, the value of which is overwhelmingly the result of MGA's legitimate efforts, because it may have started with two misappropriated names."

And so MGA and Mattel went back to court.

In Round 2, MGA filed a new claim against Mattel for misappropriating its trade secrets. Mattel moved to dismiss MGA's claim, arguing that the statute of limitations had run. The district court denied Mattel's motion, concluding that "Mattel's trade secret misappropriation counterclaim and MGA's trade secret misappropriation counterclaim-in-reply are logically related," therefore MGA's counterclaim-in-reply was compulsory and permissible.

Evidence in the second trial included an amazing Mattel memo that predicted a 'rival-led Barbie genocide,' and warned "This is war and sides must be taken: Barbie stands for good. All others stand for evil," The New Yorker reports. This time, MGA emerged victorious, and Mattel was ordered to pay MGA a total of $309 million in damages and fees.

Thursday, a Ninth Circuit panel ruled that MGA's counterclaim-in-reply was not compulsory and was not properly permitted because it did not rest on the same aggregate core of facts as Mattel's trade secret misappropriation counterclaim.

But it wasn't a total loss for MGA. Ninth Circuit Chief Judge Alex Kozinski, writing for the panel, said that MGA could some goodies, namely $137 million in legal costs, The Associated Press reports.

Judge Kozinski suggested in the opinion, "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."

That seems unlikely. MGA has already announced plans to pursue its trade-theft claims by filing a new lawsuit, according to the AP. Mattel, meanwhile, announced in a press release that it is "confident that such a lawsuit will be barred by the statute of limitations."

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