A U.S. jury found Mattel Inc misappropriated trade secrets from MGA Entertainment relating to the Bratz doll line and awarded MGA $88.5 million in damages in what appears to be a stunning reversal of legal fortunes.
The battle over who owns the pouty-lipped Bratz dolls has been raging since 2004. A federal jury in 2008 ordered MGA and its Chief Executive Officer Isaac Larian to pay Mattel $100 million, but a federal appeals court threw out that ruling last year.
The verdict in the retrial was read in a packed federal courtroom on Thursday morning in Santa Ana, California. The jury also decided that Mattel had not proven ownership of Bratz drawings and sculpts.
The court took a brief break, and is expected to reconvene shortly to hear the remainder of the verdict on additional claims Mattel brought against MGA.
BMO Capital Markets analyst Gerrick Johnson said the failure to settle will go down as a tremendously bad decision by Mattel management.
It means they wasted $400 million or so of shareholder money to get zero return, Johnson said.
A Mattel representative did not immediately comment.
MGA's Larian said the verdict demonstrates that the legal process works. Members of the Larian family were seated with their arms around each other before the verdict was read.
It very well shows that in America, even huge corporations are not above the law, Larian told Reuters.
In taking MGA's trade secrets, the jury found that Mattel had acted willfully. After the trade secrets damages amount was announced, U.S. District Judge David Carter said the verdict amount could be lowered to $88.4 million due to a calculation mistake by the jury.
Mattel's shares fell as much as 2.8 percent to a low of $26.17 after the verdict was announced, before bouncing back slightly to stand 1.6 percent lower at $26.49. The stock had been roughly flat throughout the morning session.
The case in U.S. District Court, Central District of California is Mattel Inc. v. MGA Entertainment Inc., 04-9049.
(Reporting by Nichola Groom; Writing by Dan Levine and Dhanya Skariachan; Editing by Maureen Bavdek and Gerald E. McCormick)