Special Fee Shifting Statute/Substantiation of Fees/Trade Secrets: Ninth Circuit Decision Is In — Mattel v. MGA Entertainment Appeal

 

Trade Secrets Damages/Fees/Costs Go POOF!, But Copyright Defense Fee/Costs Recovery to MGA Sustained On Appeal.

     In a remarkably short decision penned by Chief Justice Kozinski on behalf of a 3-0 panel, the Ninth Circuit has taken some things away and let other things stay in the oft-posted-upon Mattel, Inc. v. MGA Entertainment, Inc., Case No. 11-56357 (9th Cir. Jan. 24, 2013) (published) litigation/appeal saga over Bratz and Barbie dolls.

     What happened on appeal is that the Ninth Circuit found that MGA’s trade secret claim was not compulsory, a requirement for counterclaims-in-reply. It ordered the district court to dismiss the claim without prejudice, which meant a compensatory award of $88.5 million, punitive damages award of $85 million, and fee/costs award of $2.5 million went POOF! for now.

     However, a different result altogether on MGA’s recovery of fees and costs of $137.4 million for defensing Mattel’s copyright claims. 17 U.S.C. section 505 allows the district court discretion to award fees, something furthered when a copyright defendant advances meritorious defenses as it did here. Also, MGA did not have to show Mattel’s claims were frivolous or in bad faith in order to garner a fee recovery. Mattel also challenged the fact MGA supported its request through redacted fee substantiation, but the federal appeals court found that the existence of attorney work product entries upheld reliance on redacted billings even though there was no harm because the district court reviewed unredacted billings in camera anyway.

     No costs were awarded on appeal.

     And here is Justice Kozinski’s ending reminder to the parties: “While this may not be the last word on the subject, perhaps Mattel and MGA can take a lesson from their targeted demographics: Play nice.”

Children playing in sandbox. Tulare migrant camp. Visalia, California

 

Children playing in sandbox. Tulare migrant camp. Visalia, California.  Arthur Rothstein, photographer.  March 1940.  Library of Congress.

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