Mattel recently appealed a $310 million award for its alleged misappropriation of MGA’s trade secrets and MGA’s attorney’s fees and costs in defense of Mattel’s copyright claim. In its opening brief, Mattel requests the Ninth Circuit to vacate or reverse the award on grounds that MGA’s trade secret counterclaim was untimely and barred by the statute of limitations. Mattel also requests that the Court reverse or vacate the trade secret damages award on grounds of insufficient evidence, and reverse or vacate the attorneys’ fees and costs award on grounds that Mattel’s pursuit of its copyright claim was objectively reasonable.

Statute of Limitations

The statute of limitations for trade secret misappropriation under the California Uniform Trade Secret Act (Cal. Civ. Code § 3426.7) is three years after the plaintiff discovers, or should have discovered, the misappropriation.

MGA filed a trade secret counterclaim against Mattel in August 2010, on grounds that Mattel allegedly stole trade secret information about upcoming Bratz Doll lines during toy fairs. Mattel alleged that the statute of limitations accrued in 2004, when MGA had reason to suspect the alleged misappropriation after it hired two Mattel employees that were aware of Mattel’s alleged “toy fair conduct.” Thus, Mattel argues that more than three years had passed and MGA’s trade secret counterclaim was untimely and barred.

In addition, Mattel argues that the district court erred when it found that MGA’s trade secret counterclaim compulsory and related back to Mattel’s own trade secret claim in 2006, because the two sets of claims involved different trade secrets that were allegedly stolen at different places and times; by different actors; and through different means.

Insufficient Evidence for Judgment of Trade Secret Liability and Damages

Mattel also requests that the Ninth Circuit reverse or vacate the judgment of Mattel’s trade secret liability. Mattel writes in its brief that the “evidence was insufficient to support the jury’s verdict that each of the 26 products on which it found liability and damages was a trade secret.” Mattel acknowledges that MGA provided evidence that MGA generally made reasonable efforts to protect its trade secrets at toy fairs by protecting information from the press, locking products in separate rooms, and requesting visitors to sign Non-Disclosure Agreements. Mattel argued that the evidence, however, failed to demonstrate that MGA took these reasonable efforts of protection for each of the 26 products the jury found liability and damages.

In addition, Mattel argues that the evidence is insufficient to support the $85 million for trade secret damages because there is no evidence of identical uniform damages of $3.4 million for each of the 26 products. Mattel requests that the Court vacate or remand the trade secret damages award for a new trial limited to determining damages on these 26 trade secrets.

Attorneys’ Fees and Costs

Finally, Mattel argues that the $137.2 million in attorneys’ fees and costs awarded to MGA under the Copyright Act for MGA’s defense against Mattel’s copyright claims should be reversed or vacated. Section 505 of the Copyright Act grants courts the discretion to award reasonable attorney’s fees and costs to a prevailing party. The 9th Circuit requires that courts shifting copyright fees and costs to consider the objective unreasonableness, frivolousness, motivation and need for deterrence. Mattel argues that its copyright litigation against MGA was objectively reasonable considering Mattel prevailed before the first, jury, obtained substantial relief, and had the Appellate Court remand the case for a new trial.

MGA has yet to file its response brief. This appeal merits attention and we will keep you updated.