Top Appellate Reversals: Mattel Inc. v. MGA Entertainment Inc.

Stylish fashion doll rivals Barbie and Bratz were locked in an epic legal battle. It looked like bedtime for Barbie when Bratz won an $85 million Central District jury verdict, doubled to $172 million by the trial judge who also added legal fees, over trade secrets theft claims.

But that changed in January 2013 when the 9th U.S Circuit Court of Appeals issued a short six-page opinion reversing the outcome.

Lawyers at Quinn Emanuel Urquhart & Sullivan LLP, representing Barbie's maker Mattel Inc., argued that Bratz's MGA Entertainment Inc. should not have been allowed to take its counterclaims to the jury.

"The brevity of the opinion should not obscure the magnitude of the win," said Quinn Emanuel partner Kathleen M. Sullivan, who argued the case before the circuit panel. "We had multiple grounds, but we saw that one key early on to reversing the entire judgment was that MGA brought its toy fair claims too late.

"Our terrific appellate team boiled a tremendous amount of record down to make our argument. Often in an appeal you look for Occam's razor - the simplest solution is the best." Mattel Inc. v. MGA Entertainment Inc., 705 F.3rd 1108 (9th Circuit, Jan. 24, 2013).

The argument turned on the legal question of whether MGA's counterclaims about Mattel's alleged toyland skullduggery involving spies at trade fairs purloining Bratz secrets was logically related to Mattel's original trade secret theft complaints. Those were based on former Mattel workers allegedly having taken doll designs to MGA.

A logical relationship was absent, so the MGA counterclaims were time-barred, and the circuit panel found that was exactly what U.S. District Judge David O. Carter of Santa Ana should have ruled. Because Carter got it wrong, the big jury award had to be reversed, the panel held.

The panel did leave in place Carter's grant to MGA of $137 million in attorney fees on separate Copyright Act claims.

No one thought the decision would necessarily end the conflict, despite Chief Judge Alex Kozinski's closing words in the January 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."

Sure enough, MGA refiled its claims in state court last month. Though experts said it may hit statute of limitations barriers, MGA contends that Mattel concealed trade secret theft - an argument that could beat the limitations problem and let the dolls continue to duke it out.

- JOHN ROEMER

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