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Commentary by Carl Kanowsky, Esq.
| Friday, Sep 27, 2013
Carl Kanowsky, Esq.

Carl Kanowsky, Esq.

You might recall my column last week about how Barbie got spanked by the 9th Circuit Court of Appeals in its litigation against Bratz. In 2010, the 9th Circuit reversed a $100 million verdict in favor of Mattel against MGA, the owner of the Bratz line of dolls.

As a result, everything went back to the trial court in a case that was already seven years old.

The second time around, things came out a little differently. Yes, Mattel did win again. The jury found that MGA had interfered with Mattel’s relationship with Mattel employee Carter Bryant, who went on to create the original designs of the Bratz dolls.

The problem: Mattel was awarded only $10,000 instead of the $100 million it had gotten before. Talk about a court ruining your day.

Adding insult to injury, the federal jury said Mattel had stolen from MGA. The jurors apparently believed MGA’s saga about how Mattel used super-secret spy methods to learn MGA’s trade secrets. Well, I guess not so super-secret, since apparently the whole world saw through Ken and Barbie’s disguises. Anyway, MGA got $88.5 million in damages because of Mattel’s supposed wrongdoing.

So instead of getting either a) the $300 million to $500 million in lost profits or b) the $100 million originally awarded to it or c) the injunction Mattel wanted to prevent MGA from selling Bratz dolls, Mattel now has to pay MGA more than $88 million. (I assume Mattel can deduct the $10,000 from what it owes MGA.)

What’s worse, according to an L.A. Times report, Mattel has spent $400 million in this litigation. (You know, I could have achieved the same result and done it for only $100 million, saving Mattel $300 million.)

So what happens now? You can almost bet Mattel will appeal the jury’s decision. But before you even get to the appeal, there’s a whole slew of motions filed by both sides that need to be considered.

Mattel has asked the judge to throw out the verdict, while MGA is saying it’s entitled to punitive damages (another potentially scary day for Mattel). So I wouldn’t be surprised if that $400 million already spent on the case increased by another $100 million.

Time magazine suggests this is really a major battle over a swiftly dwindling market. Back in 2005, when the naughty Bratz girls were doing their best, sales were estimated at about $1 billion, and MGA had 40 percent of the fashion-doll market.

Previously, Barbie had dominated the market like nobody’s business. Now, the Bratz dolls have taken a severe tumble.

Again, according to Time, annual MGA sales are only about $30 million to $40 million. (These figures are all estimates, since MGA is a privately held company.) So, at the end of the day, was it worth it for either MGA or Mattel?

The moral of the story for my business readers: This is another fine example of that old adage, “When it comes to lawsuits, the only party sure to win is the attorneys.”

So try to work out your issues without resorting to litigation. It almost invariably lasts longer, costs more money and gives you less than you anticipated.

But if you want to spend $400 million to win an order to pay the other guy $88 million, please keep me in mind.

 

Carl Kanowsky of Kanowsky & Associates is an attorney in the Santa Clarita Valley. He may be reached by email at cjk@kanowskylaw.com. Nothing contained herein shall be or is intended to be construed as providing legal advice.

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