USDC C.D. California, August 4, 2011

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  • District court awards MGA attorneys’ fees of more than $105 million and costs of more than $31 million as prevailing party under the Copyright Act.

In the ongoing litigation between Mattel, Inc., the maker of Barbie dolls, and MGA Entertainment, Inc., maker of Bratz dolls, the district court awarded MGA attorneys’ fees of more than $105 million and costs of more than $31 million in connection with MGA’s successful defense of Mattel’s copyright claims. Mattel had claimed that virtually the entire line of Bratz dolls were infringing. The court found “compelling equitable reasons” to award MGA its attorneys' fees, including that MGA’s successful defense had secured the public's interest in a robust market for trendy fashion dolls populated by multiple toy companies, not just Mattel or MGA. MGA’s defense also moved copyright law in the direction of "free expression" by appealing to basic principles about the unprotectability of ideas, rather than technical defenses such as the statute of limitations, laches or the copyright registration requirements, a contribution to copyright law that, according to the court, cannot be understated. The court found that Mattel’s claim for exclusive ownership of all female fashion dolls with a certain type of look, its claim for $1 billion in damage and for injunctive relief against the sale of all Bratz dolls “was stunning in scope and unreasonable in the relief it requested. The claim imperiled free expression, competition, and the only serious competitor Mattel had faced in the fashion doll market in nearly 50 years. MGA's successful defense ensured that well-resourced plaintiffs cannot bend the law to suit their pecuniary interests.” MGA’s failure to vigorously defend against Mattel’s claims in a case of such magnitude and notoriety “could have ushered in a new era of copyright litigation aimed not at promoting expression but at stifling the ‘competition’ upon which America thrives.” The court also found that a fee award would ameliorate the lawsuit's detrimental impact on MGA's sales, as well as compensate for the economic benefit Mattel may have obtained by distracting its primary competitor with litigation.

Section 505 of the Copyright Act allows for the award of full costs and reasonable attorney’s fees to the prevailing party. Noting that the prevailing party is not always entitled to recover its costs, the court reasoned that that the exercise of its discretion in this case is guided by a single equitable inquiry: did the successful prosecution or defense further the purposes of the Copyright Act?

The court dismissed as “factually and legally incomplete” Mattel’s argument that MGA’s defense could not have furthered the purposes of copyright law because Mattel’s underlying claim was reasonable. Acknowledging that a fee award would be inappropriate in cases involving reasonable claims if a successful defense did not further the purposes of copyright law, the court found objective unreasonableness was not a prerequisite to the recovery of costs. The court also indicated that it found Mattel’s underlying claim – that MGA’s reproduction of a doll with the look of a "girl with too much makeup on" must be remedied by damages of a billion dollars and injunctive relief — to be unreasonable. Mattel had claimed that the types and placement of features depicted in the concept sketches and sculpts were protectable because they made the dolls "look younger,” despite well-established law that copyright protection does not extend to ideas, especially not ubiquitous ideas like young and fashionable females.

The court rejected Mattel argument that its claim could not have been unreasonable because the prior district court had granted the injunctive relief it sought. The fact that Mattel convinced a judicial officer to commit legal error further established the value of MGA's persistent defense, since MGA prevented that error from affecting the outcome of the lawsuit and setting poor precedent in the field of copyright. Likewise, the court dismissed Mattel’s argument that its copyright claim did not offend the policies served by copyright law because some evidence did exist that supported its claim of ownership over the concept sketches and sculpts for the dolls, even though those claims were ultimately unsuccessful. Ownership is only one element of a successful copyright claim and even if a plaintiff's assertion of ownership is reasonable or even uncontested, its claim may still seek to stifle works that "build freely upon the ideas and information" in the public domain, and a successful defense against that claim would further the purposes of the Act. Mattel’s over-aggressive copyright prosecution was exemplified not by its assertion of ownership over the copyrighted works but by its pursuit of grossly overbroad monetary and injunctive relief.

Finally, the court dismissed as irrelevant Mattel’s argument that it filed its action in good faith, noting that a finding of bad faith, frivolous or vexatious conduct is not required for an award of costs. Had Mattel filed a meritorious copyright claim, but with a nefarious motive, MGA might not have been entitled to a fee award. The court concluded that Mattel’s claim posed a serious threat to the public's access to free and competitive expression, and good faith could neither excuse the possibility that Mattel ignored decades-old principles about the unprotectability nor diminish the benefits society will reap as a result of MGA's successful defense.

The court awarded MGA the reasonable attorneys' fees it incurred in defending against Mattel’s copyright claim and all the related claims, rejecting Mattel’s argument that MGA was not entitled to an award for claims that were not frivolous, under the Supreme Court’s decision in Fox v. Vice. Unlike fee awards in civil right cases like Fox v. Vice, where the purpose is to compensate defendants for the burden of fending off frivolous claims, fee awards in copyright cases reward a successful defense that enriches the general public through access to creative works. Fee awards in copyright cases should encourage defendants to litigate meritorious copyright defenses to the same extent that they encourage plaintiffs to pursue meritorious claims. Society’s interest having defendants assert meritorious defenses against both reasonable and unreasonable copyright claims would best be achieved through the award of all fees incurred in connection with the claim and related claims involving a common core of facts or legal theories.