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Mattel V MGA Entertainment Emergency Motion For Stay Pending Appeal
Mattel V MGA Entertainment Emergency Motion For Stay Pending Appeal
CA No. 09-55673
DC No. 04-cv-9049 SGL (RNBx)
IN THE
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
____________
MGA ENTERTAINMENT, INC., MGA ENTERTAINMENT HK LTD., and ISAAC LARIAN,
Appellants,
vs.
MATTEL, INC., a Delaware Corporation,
Appellee.
____________
On Appeal from the United States District Court
for the Central District of California
(Hon. Stephen G. Larson, Presiding)
____________
Jon D. Corey
joncorey@quinnemanuel.com
Brett Dylan Proctor
dylanproctor@quinnemanuel.com
QUINN EMANUEL URQUHART OLIVER
& HEDGES LLP
865 S. Figueroa Street, 10th
Los Angeles, CA 90017-2543
Tel: (213) 443-3000
Fax: (213) 443-3100
Sanford I. Weisburst Counsel for Appellee Mattel, Inc.
sandyweisburst@quinnemanuel.com
QUINN EMANUEL URQUHART OLIVER
& HEDGES LLP
51 Madison Avenue, 22nd Floor
New York, NY 10010
Tel: (212) 849-7170
Fax: (212) 849-7100
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dolls and accessories. Over the past eight years, Bratz became the only brand of
fashion dolls in half a century to challenge the market dominance of the behemoth
When MGA introduced Bratz, Mattel had never sold any product
called Bratz, or any doll that looked remotely like Bratz. After its attempts to
create competing products failed, Mattel filed this lawsuit, accusing MGA of
copyright infringement and seeking $1.4 billion in damages. A jury found non-
trademark prior to trial. Nevertheless, after the trial, it pressed these demands, and
despite the jury’s verdict, the district court gave Mattel all it asked for. In a series
of sweeping Injunctive Orders, the court allowed Mattel to achieve its professed
MGA Entertainment HK, Ltd. (“MGA HK”), and founder and CEO Isaac Larian.
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First, the district court barred MGA from selling not just the particular
female dolls that the court found infringed the copyright, but from using the name
Bratz on any item in the full line of Bratz products.2 Ex. 4 at 3, Ex. 2 at 4-5. The
ban thus extends to many other character dolls that neither the jury nor the district
from clothes to cars to furniture, all products that the district court acknowledged
The court also ordered perhaps the largest toy recall in U.S. history. Come New
Year’s, MGA must impound and/or destroy all MGA Bratz products that remain
under the Bratz name. They also require MGA to give Mattel all of the Bratz
trademarks so that Mattel can sell its products under the Bratz brand that MGA
built. Thus, in a matter of months, Mattel will have the exclusive right to extract
2
The orders were initially entered December 3, 2008, finalized with only very
minor modifications on April 27, 2009, and initially implemented through an order
on May 21, 2009, that also denied a stay pending appeal. See Exs. 1-7.
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the benefit of the Bratz trademarks MGA spent hundreds of millions of dollars
fostering – or to simply to let the brand die, restoring Barbie’s unrivaled hegemony
Worse yet, in its order last week denying MGA’s request for a stay
pending appeal, the district court ordered MGA to start immediately transferring its
trade secrets to Mattel. The district court directed that “MGA shall immediately
of the Bratz Assets necessary to enable Mattel to begin preparation of its own
Bratz line for the Spring, 2010 sales season.” Ex. 7 at 13 ¶ V.B.3; see id. at 11 ¶
V.B.1.h; id. at 9-10 n.6 (broadly defining “Bratz Assets” to include products,
secrets, not limited to those covered by the Injunctive Orders). MGA is now at the
mercy of the monitor’s judgment as to which of MGA’s assets and most critical
trade secrets will be given to its arch-rival—long before this Court will have a
If these orders are not immediately stayed, the harm to MGA will be
devastating and irreversible. To start with, rivals like Mattel and MGA spend
millions of dollars devising their strategies for how to design, brand, and market
their products and how to appeal to ever-evolving consumer tastes. E.g., Sealed
Exs. 49, 51; see generally Sealed Ex. 53 at 0665-91. They spend more still to
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protect those plans from their competitors. Starting now, however, the district
court has given a monitor access to all of MGA’s Bratz-related assets, including its
secret branding and marketing plans (Ex. 7, at 9-10 n.6), and required MGA to
begin transferring its assets and secret information to its most ardent rival.
recognized at a hearing on May 18, 2009, “there are things that need to be done for
the 2010 [Bratz] line now. Not a month from now or even two months from now,
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ability to initiate “legal proceedings anywhere in the world” to assert its newly
know now whether MGA has authority to present its Bratz line pending appeal.
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existing line even if it wanted to, because, under the district court’s orders, MGA
court’s orders before this appeal is decided makes no sense. An unopposed motion
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to expedite is pending, and this appeal can be fully briefed by September. See Dkt.
Entry 6921899. The disruption of a massive brand transfer should occur, if ever,
accounts for Bratz profits and promotes the Bratz brand during this appeal. Ex. 7
at 9-13. Nothing this Court might order later, after considering this stay motion on
a standard schedule, could repair the damage MGA faces now from
implementation of the district court’s orders. So long as this Court lacks the power
to purge MGA’s trade secrets from Mattel’s mind, to resuscitate a dead brand, or to
reset consumer predilections and partner expectations, the damage will be done.
opportunity, because the district court effectively insulated its orders from
appellate review until now. The district court initially released its unexpectedly
broad but seemingly final orders on December 3, 2008, causing mass confusion
sought relief in the district court, filed multiple declarations in support of a stay,
obtained a stipulated briefing schedule and hearing date, and noticed an appeal.
See CA No. 08-57015. The district court then unexpectedly took the hearing off
calendar, and the court went dark. MGA promptly sought an emergency stay from
this Court, whereupon the district court set a new hearing date. The district court
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then indicated that its December 3rd Injunctive Orders were not final and would
not become final until after the court decided then-pending post-trial motions; the
court also stated that it was ordering a limited stay in any event through the end of
2009. Ex. 5 at 1. Although the district court stated that it expected to finalize its
Injunctive Orders quickly, it did not do so until April 27, 2009. Ex. 38 at 82:22-
83:2; Ex. 6.
court for a stay pending this appeal. That application and its supporting
declarations explained the irreparable harm to the Bratz brand, and to MGA’s
business reputation and financial viability, that the district court’s orders already
are causing and would cause if the stay is not extended pending appeal. See Sealed
Exs. 47-53. The court expedited briefing on the motion, and heard argument on
May 18, 2009. On May 21, 2009, the district court denied the stay. Ex. 7 at 7. At
the same time, the court appointed a monitor with powers, inter alia, to oversee
MGA’s operations related to Bratz and the accounting of the revenues and profits
from the sale of Bratz through 2009 – far more protection for Mattel that would be
usual in a case like this and even more reason for a stay. Ex. 7 at 9-13. The
district court provided no protection for MGA pending appeal against Mattel
harming or destroying the brand. The court instead stated that “[a]t the end of the
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2009 year . . . the intellectual property will be in [Mattel’s] hands. What you do
mail that MGA would be filing this Emergency Motion on May 26, 2009. Mattel’s
counsel in Los Angeles will be personally served with this motion and the
supporting papers on May 26; other counsel will be served by overnight delivery.
to stay. The issues are well-known to the parties, as MGA and Mattel briefed
motions to stay last December in both the district court and before this Court, and
briefed them again this month in the district court. The district court recognized
the urgency of determining who will be producing and selling Bratz for 2010, and
shortened the briefing and hearing schedule for the stay motion before that court.
Because significant deadlines are fast approaching for whichever company is going
to produce Bratz for 2010, MGA respectfully asks the Court for expedited briefing.
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TABLE OF CONTENTS
Page
FACTUAL AND PROCEDURAL BACKGROUND ..............................................1
ARGUMENT .............................................................................................................9
CONCLUSION........................................................................................................26
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TABLE OF AUTHORITIES
Page(s)
FEDERAL CASES
Dimick v. Schiedt,
293 U.S. 474 (1935)............................................................................................12
Dyer v. Calderon,
151 F.3d 970 (9th Cir. 1998) (en banc) ..............................................................20
TABLE OF AUTHORITIES
Page(s)
Hilton v. Braunskill,
481 U.S. 770 (1987)............................................................................................11
Kennon v. Gilmer,
131 U.S. 22 (1889)..............................................................................................12
McCoy v. Goldston,
652 F.2d 654 (6th Cir. 1981) ..............................................................................21
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TABLE OF AUTHORITIES
Page(s)
Satava v. Lowry,
323 F.3d 805 (9th Cir. 2003) ..............................................................................13
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TABLE OF AUTHORITIES
Page(s)
Velez v. Roche,
335 F. Supp. 2d 1022 (N.D. Cal. 2004)..............................................................12
Whitfield v. Lear,
751 F.2d 90 (2d Cir. 1984) .................................................................................17
STATE CASES
Chandler v. Roach,
156 Cal. App. 2d 435 (1957) ..............................................................................18
Desny v. Wilder,
46 Cal. 2d 715 (1956) ...................................................................................17, 18
Haskel Eng’g & Supply Co. v. Hartford Accident & Indem. Co.,
78 Cal. App. 3d 371 (1978) ................................................................................16
CONSTITUTIONAL PROVISIONS
U.S. Constitution, Seventh Amendment..................................................7, 11, 12, 21
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TABLE OF AUTHORITIES
Page(s)
RULES
Federal Rule of Evidence 606(b) .............................................................................21
OTHER AUTHORITIES
2 DAN B. DOBBS, DOBBS LAW OF REMEDIES § 6.6(3) (2d ed. 1993) .......................19
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proposed Bratz dolls (Sealed Ex. 46) and became a consultant to MGA. Ex. 16 at
its version of Bratz dolls in 2001. Ex. 8 ¶ 8; see also, e.g., Ex. 25. MGA has since
invested hundreds of millions of dollars creating over 14,000 new Bratz products
and developing a strong brand, and it has been a huge success. Ex. 23 at 6380:22-
6381:3. With the Bratz brand, MGA became the only credible threat to Mattel’s
Mattel filed suit years after Bratz was introduced to the market
alleging that Bryant “create[d] the concept, design and name of Bratz” and
drawings and models of Bratz dolls, and began assisting MGA in producing Bratz
dolls, before his Mattel contract expired. Sealed Ex. 41 at 35 ¶ 26. Mattel claimed
ownership over and asserted claims against MGA for copyright infringement of
contractual relations, and aiding and abetting breaches of fiduciary duty and duty
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In Phase 1(a) of a two-phase jury trial, the jury found that Bryant had,
alone or together with others, created Bratz drawings and a preliminary “sculpt” –
Mattel, and that MGA was liable to Mattel on the state law claims. Ex. 17 at 1-5.
In Phase 1(b), the jury addressed the damages on these state law claims and the
Ex. 20 at 5647:5-11) but refusing to let any party or counsel see the
transcripts (Ex. 22 at 5693:11-19), the court found that, on the last day of Phase
1(a) deliberations, when the jury was deadlocked over certain issues, Juror No. 8
“indicated that her husband, an attorney, [had] told her about [a] client or clients
who are Iranian and who are stubborn, rude, . . . and have stolen other person’s
3-4. These revelations were disturbing, not only because Mr. Larian, the founder
and CEO of MGA, immigrated to the U.S. from Iran when he was 17 years old, but
because the jurors were told about his background in voir dire and were questioned
whether they could be fair in a case involving someone from “the Middle East.”
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Ex. 11 at 317:21-25. The court expressed shock that this juror would “go through
the voir dire process that we went through and then harbor and make such a
statement, harbor such a feeling and then make such a statement.” Ex. 20 at
Even though Juror No. 8 deliberated and voted in Phase 1(a), the
district court denied MGA’s motion for a mistrial. The court held that the
constitutional right to unbiased jurors applies only in criminal, not civil, cases. Ex.
24 at 8-10. It found that Juror No. 8’s statements reflected only her husband’s
views, and did not establish that “she herself held certain preconceptions regarding
Persians and/or Iranians.” Id. at 7. The court did not reconcile this finding with
Juror No. 6’s concern that Juror No. 8 was not objective or with her dismissal from
Phase 1(b), but did find that that Juror No. 8 was not “biased . . . in the legal sense”
denied the petition, on the ground that mandamus is inappropriate when relief is
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The trial continued with Phase 1(b), where the court instructed the
similarity” test and not the (correct) “virtually identical” test. Ex. 32 at 29-30.
between the Bryant drawings and the four “first generation” Bratz dolls,3 which
were on the market only through early 2003. For later generation dolls, Mattel
pointed to MGA’s use of the same, blank production sculpt. Ex. 33 at 8153:21-
the first generation dolls, particularly the fashions, and Bryant’s drawings. Ex. 25
differences between Bryant’s drawings and the preliminary sculpt that Bryant
commented on and the final sculpt that took many more months to create and that
was used in making the dolls, and demonstrated that the dolls were given a new
look each season, to keep pace with the changing tastes of their young consumers.
See generally Exs. 25, 26. MGA also demonstrated that the profits from later
generation dolls were driven by changing themes, characters, fashions, face paint
and hair, which MGA contended reflected only MGA’s independent and extensive
3
See, e.g., Ex. 18 at 5422:8-5424:12 (opening statement comparisons of first
generation Sasha, Jade, Chloe, and Yasmin dolls to Bryant drawings), Ex. 33 at
8141:20-8142:1 (closing argument comparisons of drawings and 2001 dolls –
“Let’s look at some of the dolls and drawings side by side.”); Id. at 8142:19-21
(more of same).
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creativity and resources. See, e.g., Ex. 27; Ex. 34 at 8187:1-9, 8188:1-6, 8220:14-
8222:18, 8224:5-17.
Despite the differences between the first and later generations – which
jury to award it all profits from all Bratz sales since 2001, which Mattel estimated
calculation. MGA, however, presented evidence that MGA’s profits from all Bratz
products were $405 million (Ex. 29 at 7693:21-25), then provided the jury with
MGA also proposed a special verdict form that would have allowed
the jury to identify the infringing categories of dolls. Ex. 28 at 2-6. But Mattel
opposed this, arguing that the jury’s “damages award will reflect” the scope of
infringement, and the district court acquiesced and used a general verdict form.
Ex. 31 at 7978:5-10, 7981:22-7982:1; Ex. 36. The court instructed the jury to
4
See, e.g., Ex. 29 at 7784:1-9 (calculating profits from first generation dolls at $4
million); Ex. 29 at 7709:14-17, 7711:14-18 (identifying revenues from first
generation dolls as 2.5% of total Bratz revenues); Ex. 34 at 8233:5, 8234:21
(calculating profits from later generation dolls at $18.9 million); Ex. 34 at 8225:13-
8226:11, 8229:9-16, 8232:14-8235:2 (providing various calculations concerning
indirect profits from different categories of merchandise).
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award the damages it found were attributable to infringement, but did not request
On the next-to-last day of deliberations, the jury sent the court a note
stating that it had a “dilemma” about “appropriation [sic] of the first generation, $4
million profit,” and asking: “Can we find that the first generation dolls violate the
copyright of Mattel but that subsequent generations of dolls do not violate the
copyright?” With the parties’ consent, the court said it could. Ex. 35.
Evidently, the jury did exactly that. The jury awarded Mattel only
$10 million total on its copyright claim ($6 million for MGA, $3 million for
Larian, and $1 million for MGA-HK). Ex. 35 at 5. The jury also awarded Mattel
zero damages on Mr. Larian’s ownership percentage of MGA, which Mattel had
related profits. Id. The jury also awarded identical damages on each of the three
state law claims of $20 million against MGA and $10 million against Mr. Larian.
Id. at 2. Finally, the jury found the infringement was not “willful.” Id. at 4-5.
based on the jury’s verdicts. The district court later noted that “the measurable
value to Bratz, the brand Bratz, to the dolls Bratz, to everything that came of it, is
so much a function of what Isaac Larian and his team at MGA have put into it,”
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that giving Mattel “everything that is of value” relating to Bratz was “quite a leap.”
Ex. 37 at 60:24-61:13.
and domain names that include “Bratz” and “Jade,” enjoined MGA from using
these trademarks “anywhere in the world,” and ordered MGA to transfer and
assign all “Bratz” and “Jade” trademarks and domain names to Mattel, so Mattel
can sell its own Bratz line. Ex. 4 at 2-3. It also made all copyrights in Bryant’s
drawings and doll sculpt subject to the constructive trust. Ex. 3 at 5. It further
declared that Mattel owns all “Bratz-related works, ideas, and concepts that Carter
Bryant conceived or created while employed by Mattel, as found by the jury in this
case, including the idea for the [Names].” Id. at 2. Finally, it enjoined MGA from
selling Bratz female fashion dolls or related Bratz materials, and required MGA to
customers, and post a notice on its website, to recall and impound all such MGA
damages that was far less than that sought by Mattel” and that, under the Seventh
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principled inferences” from the jury’s outright rejection of Mattel’s $1.4 billion
demand “and must therefore engage in its own factfinding.” Id. at 10 (emphasis
added). After conducting its own review of evidence, the court concluded that
every full-sized female Bratz doll was “substantially similar” to the drawings and
preliminary sculpt that the jury found were created by Bryant while he worked at
Mattel. Id. at 11. In explaining its orders, the court referred to the “hundreds of
millions of dollars” that MGA had earned from Bratz. Id. at 13.
from the district court pending appeal of the Injunctive Orders, explaining through
extensive supporting declarations the catastrophic harm that they would impose,
and providing a stipulated briefing schedule and hearing date. When the district
court, sua sponte, took the hearing date off calendar without replacing it, MGA
filed an emergency stay motion in this Court. Case No. 08-57015, Docket # 6.
The district court then restored the stay hearing to its calendar.
retailers to purchase Bratz through December 31, 2009, and stated that its
Injunctive Orders would not become final until after the court decided the parties’
February 11, the court heard argument on the post-trial motions and promised a
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decision soon. Ex. 38 at 82:22-83:2. But “soon” did not come for over two more
On April 27, 2009, the court resolved the post-trial motions and
officially finalized, with only very minor modifications, the Injunctive Orders. Ex.
6. MGA filed a timely Notice of Appeal from the Injunctive Orders on May 4,
2009, and moved for a stay pending appeal, again supported by substantial
evidence, on May 8, 2009. On May 21, 2009, the district court denied the stay and
appointed a monitor to facilitate the transfer of Bratz from MGA to Mattel and
begin taking Bratz net profits into escrow. Ex. 7 at 7, 9-13. The court ordered
“Bratz Assets” – which are defined to include all Bratz-related materials, whether
or not covered by the Injunctive Orders – that Mattel needs to begin production of
ARGUMENT
It may be, as the district court said, that “perfect justice is not of this
justice. For conduct that the jury found caused relatively minor harm to Mattel, the
district court not only barred MGA from selling any Bratz female fashion dolls and
required a massive recall, but barred MGA from ever selling any product named
Bratz again and bestowed upon Mattel all of MGA’s Bratz trademarks and their
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associated value and goodwill. The district court’s disproportionate orders rest on
multiple stark errors of law, any one of which would require reversal.
For example, the district court not only disregarded the Seventh
Amendment’s mandate that a court respect the jury’s factual findings when
test to analyze infringement. The court further erred in giving Mattel MGA’s
Bratz trademarks on the legally impermissible theories that a party can own an
“idea for a name,” and that a standard form employment contract creates a
fiduciary relationship. The underlying verdicts were also tainted by the presence
of a juror outspoken in her bias against the ethnicity of MGA’s founder and CEO,
yet the district court mistakenly held that the Constitution protects only criminal,
and not civil, defendants from racially and ethnically biased jurors.
Unless this Court stays these orders pending appeal, however, MGA
will not get the benefit of a successful appeal. In the absence of a stay, a
successful appeal will be of little value to MGA, for the Injunctive Orders will
have destroyed the Bratz brand and irreparably harmed MGA. Under the familiar
5
In evaluating a stay pending appeal, this Court considers: “(1) whether the stay
applicant has made a strong showing that he is likely to succeed on the merits; (2)
whether the applicant will be irreparably injured absent a stay; (3) whether
issuance of the stay will substantially injure the other parties interested in the
(footnote continued …)
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Mattel attributed all of MGA’s profits from all dolls and products – $1.4 billion in
of the female dolls, and claimed the loss of that profit as its harm. By awarding
Mattel only $10 million for copyright infringement, the jury flatly rejected Mattel’s
theory. The jury’s verdict is irreconcilable with the district court’s independent
findings that all the Bratz full-sized female fashion dolls infringe because all use
the same final sculpt. That was Mattel’s theory, too, and the jury rejected it.
from imposing equitable relief based on a factual finding that conflicts with the
determination of the facts, which includes its assessment of the extent of plaintiff’s
(… footnote continued)
proceeding; and (4) where the public interest lies.” Hilton v. Braunskill, 481 U.S.
770, 776 (1987); Golden Gate Rest. Ass’n v. City and County of San Francisco,
512 F.3d 1112, 1115 (9th Cir. 2008). Moreover, ‘“the required degree of
irreparable harm increases as the probability of success [on the merits] decreases.”’
Golden Gate Rest. Ass’n, 512 F.3d at 1116 (citation omitted). Thus, if ‘“the
balance of hardships tips sharply in . . . favor”’ of a stay, that relief is warranted if
the appeal presents ‘“serious legal questions.”’ Id. (citation omitted).
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injury.” Johansen v. Combustion Eng’g, Inc., 170 F.3d 1320, 1328 (11th Cir.
1999) (citing Kennon v. Gilmer, 131 U.S. 22, 29 (1889)); Velez v. Roche, 335 F.
Supp. 2d 1022, 1037 n.5 (N.D. Cal. 2004) (same); see Dimick v. Schiedt, 293 U.S.
474, 486 (1935) (litigants “entitled” under Seventh Amendment “to have a jury
properly determine the question of liability and the extent of the injury by an
assessment of damages”). This Court has reversed judicial conclusions even when
they do not conflict with the jury’s explicit holding, but merely ignore a jury
Protective League v. Gates, 995 F.2d 1469, 1474 (9th Cir. 1993); see Ohio-Sealy
Mattress Mfg. Co. v. Sealy, Inc., 585 F.2d 821, 844 (7th Cir. 1978).
The district court’s view that the verdict permits “no principled
inferences” does not justify denying MGA its constitutional right to a jury trial.
The jury’s verdict would have expressly identified whether any later generation
dolls infringed if the district court had accepted MGA’s special verdict form. The
district court was obliged, under the Seventh Amendment, to structure the trial to
ensure that the jury would decide all factual issues equally relevant to both
damages and equitable relief, and its failure to do so alone warrants reversal. See
Danjaq LLC v. Sony Corp., 263 F.3d 942, 961-62 (9th Cir. 2001) (trial court can
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and tried to two separate juries, “the court must carefully craft the verdict form for
the first jury so that the second jury knows what has been decided already.”
Robinson v. Metro-North Commuter R.R. Co., 267 F.3d 147, 169 n.13 (2d Cir.
2001); see Newsome v. Up-To-Date Laundry, Inc., 219 F.R.D. 356, 364 (D. Md.
2004). Compliance with that requirement is essential where, as here, the second
applies the wrong legal standard to the analysis of infringement. This error infects
the jury’s initial infringement finding as well as the court’s subsequent (and
applied the “substantial similarity” standard. Exs. 19, 30, 32 at 29-30. As this
Court and the Second Circuit have held, the correct standard in cases involving
natural forms is whether the accused copy is “virtually identical” to the original,
Most recently, in Satava v. Lowry, 323 F.3d 805, 812-13 (9th Cir.
2003), this Court held that a jellyfish sculpture receives only “thin” protection
against “virtually identical” copying, because an artist “may not prevent others
from copying elements of expression that nature displays for all observers.” The
Ninth Circuit has recognized this principle at least since its decision in Herbert
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Rosenthal Jewelry Corp. v. Kalpakian, 446 F.2d 738, 742 (9th Cir. 1971), the
“jeweled-bee pin” case. Cf. Apple Computer, Inc. v. Microsoft Corp., 35 F.3d
found the human form capable of a wider range of expression than jellyfish. Ex.
30 at 2. This analysis conflicts with the Ninth Circuit’s repeated invocation of the
thin copyright standard when confronted with natural forms, e.g., Aliotti v. R.
Dakin & Co., 831 F.2d 898, 901-02 (9th Cir.1987), and with the other cases the
district court relied upon. For example, in Mattel, Inc. v. Goldberger Doll Mfg.
Co., 365 F.3d 133, 135 (2d Cir. 2004), the Second Circuit confronted allegations
that a competitor had copied the “central expressive features of Barbie’s face.”
The court held that the scope of protection accorded the human form – specifically
as expressed in dolls – was “of course, quite limited” and extended only to
“Mattel’s realization” of those particular features. Id. at 135. The court explained
that because “[o]ne artist’s version of a doll face with upturned nose, bow lips, and
artist’s version . . . will be a dud . . . getting the doll’s face and expression exactly
right is crucial to success.” Id. at 136 (emphasis added). See also Mattel, Inc. v.
Azrak-Hamway Intern., Inc., 724 F.2d 357, 360 (2d Cir. 1983) (protecting “only
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features, and not another artist’s effort to get his own realization of those features
“exactly right.” Applying the substantial similarity rather than the virtual identity
test in a context like this gives the copyright holder far too great a power to restrict
competition and consumer choice – precisely the concern first recognized more
than three decades ago by this Court in Rosenthal. If the district court had applied
the correct legal standard, it could not have concluded that every female Bratz doll
was virtually identical to Mr. Bryant’s drawings and the draft sculpt. Under the
correct standard, the jury likely would not have found any infringement. Without
has been infringed” because infringement alone does not create irreparable harm.
eBay Inc. v. MercExch., LLC, 547 U.S. 388, 392-93 (2006). Invoking a pre-eBay
rule, the District Court held that past infringement plus a likelihood of future
this rule negates the holding in eBay is an important question this Court should
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1197, 1211 n.13 (C.D. Cal. 2007) (“After eBay, Plaintiffs cannot rely on the pure
MGA selling any Bratz full-sized female fashion dolls. If anything, the court’s
error in giving all of MGA’s Bratz trademarks to Mattel – and thus precluding
MGA from selling even non-infringing products under the Bratz name – is even
more stark. The trademarks represent all of the goodwill and value that the market
millions of dollars, and the sale of over 14,000 MGA Bratz products, over nearly
nine years. Yet the district court, in one breathtaking order, invoked the legal
on post-trial motions, the district court admitted that the constructive trust was
a “res” that rightfully belongs to Mattel. Communist Party v. 522 Valencia, Inc.,
6
The only case cited by the district court for its extraordinary remedy, Haskel
Eng’g & Supply Co. v. Hartford Accident & Indem. Co., 78 Cal. App. 3d 371
(1978), was an inapposite “tracing” of property case.
16
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35 Cal. App. 4th 980, 990 (1995). Neither Bryant nor Mattel ever owned the
trademarks or rights to the Bratz name. Such rights to a name can be established
only through use in commerce, and it is undisputed that MGA is the company that
Entm’t Corp., 174 F.3d 1036, 1046 (9th Cir. 1999); Conversive, Inc. v.
The district court, however, found that because Mr. Bryant had the
“idea for the name” Bratz while at Mattel, Mattel owned the name Bratz, which
MGA merely enhanced by acquiring trademark rights to it.7 Treating an idea for a
name as the “res” – Mattel’s property – to support a constructive trust over the
trademarks was erroneous as a matter of law. Under California law, ideas are not
protectable property. See Desny v. Wilder, 46 Cal. 2d 715, 732, 733-34 (1956); see
also Whitfield v. Lear, 751 F.2d 90, 92 (2d Cir. 1984) (“Under California law … an
idea is not recognized as a property right” and cannot support claims “actionable
only to vindicate legally protected property interests”). As this Court has held, the
the idea; but “the bargain is not for the idea itself, but for the services conveying
that idea.” Grosso v. Miramax Film Corp., 383 F.3d 965, 967 (9th Cir. 2004)
7
See Ex. 1 at 7; see also id. at 3, 5-6 & n.2; Ex. 3 ¶ 1; Ex. 6 at 5; Ex. 9 at 3.
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(emphasis added)).8 Treating ideas for a name as protectable property would also,
in any case, be preempted by the Copyright Act. See Nat’l Basketball Ass’n v.
Motorola, Inc., 105 F.3d 841, 849-50 (2d Cir. 1997) (state law cannot expand
Second, even if Mattel had some interest in the name “Bratz,” the
BRATZ trademarks are not an “enhancement” of that name in the way that, e.g.,
independent symbol of goodwill, the significance and value of which are created
by and are inseparable from the investment and the business – in this case, MGA –
associated with the marks. See United Drug Co. v. Theodore Rectanus Co., 248
U.S. 90, 97-98 (1918); Mister Donut of Am., Inc. v. Mr. Donut, Inc., 418 F.2d 838,
the trademarks is the product of MGA’s independent efforts and investments over
several years, including its development of Bratz products that have nothing to do
8
See also Desny, 46 Cal. 2d at 733-34; Donahue v. Ziv Television Programs, Inc.,
245 Cal. App. 2d 593, 609 (1966); Chandler v. Roach, 156 Cal. App. 2d 435, 441
(1957) (contract enforceable only between parties; does not create ownership).
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Finally, there is no basis for the state law claims on which the
Bryant’s purported breach of fiduciary duty to Mattel. Yet the district court erred
in ruling, before trial and as a matter of law, that Bryant – a low-level, employee
The court imposed a fiduciary duty merely because the Mattel form
contract recited that new employees were accepting a position and obligations of
“trust.” See Ex. 9 at 5-6, Ex. 12 at 3-4. This recitation is insufficient, as a matter
held, “every contract to some extent requires a party to repose trust and confidence
9
See, e.g., 2 DAN B. DOBBS, DOBBS LAW OF REMEDIES § 6.6(3) (2d ed. 1993)
(equity does not allow plaintiff to capture “the fruits of the defendant’s own labors
or legitimate efforts”); RESTATEMENT (FIRST) OF RESTITUTION § 210 cmt. b (1937)
(constructive trust extends to “only a share in such proportion” as the trust property
bears to the entire fund of commingled property).
10
The other state law claims (to the extent not preempted by the Copyright Act)
could not support a constructive trust as opposed to an ordinary damages remedy,
and are in any case preempted by state law. See K.C. Multimedia, Inc. v. Bank of
Am. Tech. & Operations, Inc., 171 Cal. App. 4th 939, 954-62 (2009) (state statute
preempts common law claims, including breach of confidence claims, “based on
the same nucleus of facts” as would support a trade secrets claim).
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in the other,” but that alone “does not give rise to a fiduciary duty.” City of Hope
Nat’l Med. Ctr. v. Genentech, Inc., 43 Cal. 4th 375, 391 (2008) (emphasis added)
(alteration and internal quotation omitted); see id. at 389. Indeed, in City of Hope,
the California Supreme Court refused to impose a fiduciary duty as a matter of law
even where one party had expressly bargained to develop another party’s particular
“secret idea” in return for “royalties.” Id. at 387-92. Bryant merely signed a form
the very least, an issue to be “considered by the trier of fact” (id. at 391), which
liability verdict, and yet that verdict is tainted. It is the product of deliberations
prejudice of even a single juror.’” See United States v. Henley, 238 F.3d 1111,
1120 (9th Cir. 2001) (quoting Dyer v. Calderon, 151 F.3d 970, 973 (9th Cir. 1998)
(en banc)); see also Dyer, 151 F.3d at 985. Here, the racist comment of Juror No.
11
This Court may address this issue in this appeal, because matters which
“provide[] the legal authority to issue an injunction” are “inextricably bound up
with the injunctive order.” Self-Realization Fellowship Church v. Ananda Church
of Self-Realization, 59 F.3d 902, 905 (9th Cir. 1995).
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8, the complaint of Juror No. 6 that Juror No. 8 was not objective or trying to be,
and the court’s dismissal of Juror No. 8 from Phase 1(b) as a “cancer,” demonstrate
that the Phase 1(a) deliberations were corrupted by the presence of a biased juror.
See Henley, 238 F.3d at 1121 (rejecting assertion that people who use racial slurs
Goldston, 652 F.2d 654, 657 (6th Cir. 1981); Thompson v. Altheimer & Gray, 248
F.3d 621, 622 (7th Cir. 2001); Kiernan v. Van Schaik, 347 F.2d 775, 778 (3d Cir.
1965); Haley v. Blue Ridge Transfer Co., 802 F.2d 1532, 1535 n.4 (4th Cir. 1986).
to provide any access to the record of its juror interviews. Contrary to the district
court’s view, Federal Rule of Evidence 606(b) does not justify its decision. Rule
606(b) is inapplicable on its face, because Juror No. 6’s spontaneous complaint
about Juror No. 8’s bias was not made “[u]pon inquiry into the validity of a verdict
or indictment.” Even where Rule 606(b) is implicated, this Court has explained the
“powerful case” that Rule 606(b) “is wholly inapplicable to racial bias.” See
Henley, 238 F.3d at 1120. The only constitutionally permissible conclusion is that
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the deliberations with Juror No. 8 were invalid and the verdict must be vacated.
United States v. Gonzalez, 214 F.3d 1109, 1111-12 (9th Cir. 2000).
appeal, MGA will suffer irreparable harm. As set forth in detail on pp. iii – xi,
supra, and in the declarations submitted to the district court and attached here as
The
district court has not limited Mattel’s ability to initiate “legal proceedings
anywhere in the world” to assert its newly awarded rights in the Bratz brand –
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12
See, e.g., Multi-Channel TV Cable Co. v. Charlottesville Quality Cable
Operating Co., 22 F.3d 546, 552 (4th Cir. 1994) (irreparable harm shown by
“possibility of permanent loss of customers to a competitor or the loss of
goodwill”); Standard Havens Products Inc. v. Gencor Indus., Inc., 897 F.2d 511,
515 (Fed. Cir. 1990) (granting stay pending appeal where defendant faced
“irreparable harm in the form of employee layoffs, immediate insolvency, and,
possibly, extinction”); MDY Indus., LLC v. Blizzard Entm’t, Inc., No. CV-06-2555-
PHX-DGC, 2009 WL 649719, at **2-3 (D. Ariz. Mar. 10, 2009) (granting stay of
copyright injunction because, without one, defendants “likely will have lost all of
their market share to competitors during the duration of the appeal and will be
unable to regain their business”).
13
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complain of infringement and fend off stays, Mattel never sold the original goods.
It has no association with Bratz products in the minds of customers or any third
parties, and thus faces no irreparable damage to its reputation or market share, or
any job losses, from MGA’s continued sale of Bratz.16 Mattel expresses
14
E.g., L. & J.G. Stickley, Inc. v. Canal Dover Furniture Co., Inc., 79 F.3d 258,
262 n.2 (2d Cir. 1996) (“The likelihood of consumer confusion also tends to prove
irreparable harm.”).
15
Miller v. LeSea Broad., Inc., 927 F. Supp. 1148, 1152 (E.D. Wis. 1995) (granting
stay of injunction requiring sale of television station where it "could be difficult, if
not impossible, to undo the sale" after a successful appeal); see, e.g., Simon Prop.
Group, Inc. v. Taubman Ctrs., Inc., 262 F. Supp. 2d 794, 798-99 (E.D. Mich. 2003)
(granting stay of injunction pending appeal where it was uncertain whether certain
steps under injunction “would be reversible or compensable if Defendants prevail
on appeal”); Concrete Co. v. MMC Holdings, Inc., 201 F. Supp. 2d 1192, 1195
(M.D. Ala. 2001) (granting stay of injunction removing business partner where
“the difficulties involved in reinstating [him] promise to be substantial”).
16
See Wang Labs., Inc.. v. Toshiba Corp., No. 90-1477-A, 1991 WL 333701, at *1
(E.D. Va. Aug. 23, 1991); Advanced Med. Optics, Inc. v. Alcon Labs., Inc., No.
Civ. A. 03-1095, 2005 WL 3454283, at *11; GTE Prods., 772 F. Supp. at 920-21.
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has now given Mattel far more protection than other litigants have when a stay
pending appeal is granted: the court has appointed a monitor who will report
monthly on MGA’s operations and inform the district court if MGA is not
adequately supporting Bratz or accounting for Bratz profits during the appeal. Ex.
7 at 9-13. Mattel waited eight years without seeking an injunction giving it control
of Bratz; given the monitor’s oversight, another few months pending appeal will
MGA therefore is not seeking a stay of all of the May 21, 2009, Order
Appointing MGA Monitor. Rather, MGA is seeking a stay of only the provisions
that (i) require MGA to provide the Monitor its assets and trade secrets to assist
Mattel in selling a Bratz line (Ex. 7 ¶¶ V.B.1.h; V.B.3); (ii) require the Monitor to
determined (Id. ¶¶ V.B.1.g.; V.B.2,) and (iii) otherwise authorize the Monitor and
remaining, exceptionally broad provisions, which, e.g., allow the Monitor full
access to all of MGA’s Bratz operations and accounting for all Bratz-related
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revenues and profits, are more than sufficient to protect Mattel’s interests pending
appeal.17
brand will be destroyed. It would allow Mattel to “KILL BRATZ” before the
appeal is decided. Sealed Exs. 43 at 0546-47; 44 at 0564. That would disserve the
public interest, because Bratz is one of the few brands to succeed against Mattel.
Should such a massive disruption ever occur, it should happen only after this Court
CONCLUSION
The Court should stay, in their entirety, the Injunctive Orders (entered
December 3, 2008) (Exs. 1-4), the Order Lifting Stay On Permanent Injunction
(entered April 27, 2009) (Ex. 6), and the Order Denying Ex Parte Application For
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