LOS ANGELES -- A U.S. appeals Thursday court threw out a multimillion dollar award against toy manufacturer Mattel (IW 500/163) in a long-running dispute with a rival over Bratz children's dolls.
Mattel was ordered to pay its competitor MGA Entertainment $170 million in 2011, along with nearly $140 million in legal fees, in the dispute over ownership claims for the lucrative doll line aimed at pre-teen girls.
But the Ninth Circuit Court of Appeals ruled that the claim was improperly litigated, so it quashed the verdict -- and urged both sides to "play nice."
MGA launched Bratz dolls in June 2001 and they quickly became the top competitor to Mattel's world-famous Barbie, racking up more than $1 billion in annual sales and cutting into Mattel's market dominance with Barbie.
In a first trial in 2008, a jury sided with Mattel and awarded $100 million in damages. MGA was ordered to turn over the franchise to Mattel and stop making and selling Bratz products -- but the order was overturned on appeal and sent back for a retrial.
Mattel argued that Carter Bryant, Bratz's creator and a former Barbie designer, invented the dolls in 1999 during his second stint with the company and that he violated the terms of his employment by taking his ideas to MGA.
MGA, meanwhile, accused Mattel of spying on its rivals, including using false identification cards to enter the MGA premises to photograph its products without authorization.
A jury also last year rejected copyright infringement claims by Mattel against MGA Entertainment, and awarded MGA $88.4 million in damages.
Thursday's ruling appears unlikely to be the end of the legal war -- even as the federal appellate panel cautioned the rival toymakers against throwing any new judicial tantrums.
"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," it said.
Following the appeals court's decision, Mattel issued a statement, which read in part: "While MGA can in theory bring a new lawsuit based on its toy fair claims, we are confident that such a lawsuit will be barred by the statute of limitations. We look forward to the speedy and final resolution of this dispute, and will continue to focus our efforts on successfully competing in the marketplace."
Copyright Agence France-Presse, 2013; IW contributed to this report