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CA No. 09-55673
DC No. 04-cv-9049 SGL (RNBx)
IN THE
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT____________
MGAENTERTAINMENT,INC.,MGAENTERTAINMENT HKLTD.,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)
____________
EMERGENCY MOTION UNDER CIRCUIT RULE 27-3
APPELLANTS EMERGENCY MOTION FOR
STAY PENDING APPEAL
OF PERMANENT INJUNCTION
(Redacted for Public File)
____________
Thomas J. Nolan (Bar No. 66992)Jason D. Russell (Bar No. 169219)SKADDEN,ARPS,SLATE,MEAGHER &FLOM LLP300 South Grand Avenue, Suite 3400Los Angeles, CA 90071-3144Telephone: (213) 687-5000Facsimile: (213) 687-5600
Russell J. Frackman (Bar No. 49087)Patricia H. Benson (Bar No. 60565)MITCHELL SILBERBERG &KNUPP LLP11377 West Olympic BoulevardLos Angeles, California 90064-1683Telephone: (310) 312-2000Facsimile: (310) 312-3100
Mark E. Haddad (Bar No. 205945)Robert A. Holland (Bar No. 174642)Alycia A. Degen (Bar No. 211350)SIDLEY AUSTIN LLP555 West Fifth Street, Suite 4000Los Angeles, California 90013Telephone: 213-896-6000Facsimile: 213-896-6600
Attorneys for Appellants
MGA Entertainment, Inc., MGA Entertainment HK, Ltd., and Isaac Larian
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CIRCUIT RULE 27-3 CERTIFICATE
A. Telephone Numbers And Office Addresses Of All Attorneys For
The Parties To The Appeal
Mark E. Haddad (Bar No. 205945)[email protected] A. Holland (Bar No. 174642)[email protected] A. Degen (Bar No. 211350)[email protected] AUSTIN LLP555 West Fifth Street, Suite 4000Los Angeles, California 90013Tel: 213-896-6000Fax: 213-896-6600
Counsel for Appellants MGAEntertainment, Inc., MGAEntertainment HK, Ltd., and IsaacLarian
Thomas J. Nolan (Bar No. 66992)[email protected] D. Russell (Bar No. 169219)
[email protected], ARPS, SLATE, MEAGHER &FLOM LLP300 South Grand Avenue, Suite 3400Los Angeles, CA 90071-3144Tel: (213) 687-5000Fax: (213) 687-5600
Counsel for Appellants MGAEntertainment, Inc., MGAEntertainment HK, Ltd., and IsaacLarian
Russell J. Frackman (Bar No. 49087)[email protected]
Patricia H. Benson (Bar No. 60565)[email protected] SILBERBERG & KNUPP LLP11377 West Olympic BoulevardLos Angeles, California 90064-1683Tel: (310) 312-2000Fax: (310) 312-3100
Counsel for Appellants MGAEntertainment, Inc., MGA
Entertainment HK, Ltd., and IsaacLarian
Ronald L. OlsonDaniel P. [email protected], TOLLES & OLSON LLP355 South Grand Avenue, 35th FloorLos Angeles, CA 90071-1560Tel: (213) 683-9100Fax: (213) 687-3702
Counsel for Appellee Mattel, Inc.
John B. [email protected] T. [email protected]
Counsel for Appellee Mattel, Inc.
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Jon D. [email protected] Dylan [email protected] EMANUEL URQUHART OLIVER& HEDGES LLP
865 S. Figueroa Street, 10thLos Angeles, CA 90017-2543Tel: (213) 443-3000Fax: (213) 443-3100
Sanford I. [email protected] EMANUEL URQUHART OLIVER& HEDGES LLP51 Madison Avenue, 22nd FloorNew York, NY 10010Tel: (212) 849-7170Fax: (212) 849-7100
Counsel for Appellee Mattel, Inc.
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A. Facts Showing The Existence And Nature Of The Emergency
MGA1 is the maker of the hugely successful Bratz brand of fashion
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
Mattel and its iconic Barbie brand.
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-
willful infringement, but, in a stinging repudiation of Mattels injury claim,
awarded Mattel a relative pittance on its copyright infringement claim $10
million, a fraction of a percent of the damage Mattel claimed to have suffered.
Mattel never sought a preliminary injunction or the rights to the Bratz
trademark prior to trial. Nevertheless, after the trial, it pressed these demands, and
despite the jurys 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
litigation objective to KILL BRATZ. Sealed Exs. 43 at 0547; 44 at 0564.
1MGA refers to appellants MGA Entertainment, Inc. (MGAE), its subsidiaryMGA 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
court found to be infringing, as well as to thousands of Bratz brand accessories,
from clothes to cars to furniture, all products that the district court acknowledged
MGA created independently. Ex. 4 at 2-3; Ex. 7 at 9 n.6; Ex. 37 at 60:24-61:13.
The court also ordered perhaps the largest toy recall in U.S. history. Come New
Years, MGA must impound and/or destroy all MGA Bratz products that remain
on retailers shelves. Ex. 2 at 6-7; Ex. 6 at 11, 22; Ex. 7 at 7, 11.
The courts orders go beyond enjoining MGA from selling products
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
2The orders were initially entered December 3, 2008, finalized with only veryminor modifications on April 27, 2009, and initially implemented through an orderon 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 Barbies unrivaled hegemony
in the market for fashion dolls. Ex. 4 at 2-3.
Worse yet, in its order last week denying MGAs 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
make available to a court-appointed monitor for transfer to Mattel any portion
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,
intellectual property, marketing assets, customer information, and other trade
secrets, not limited to those covered by the Injunctive Orders). MGA is now at the
mercy of the monitors judgment as to which of MGAs assets and most critical
trade secrets will be given to its arch-rivallong before this Court will have a
chance to review the underlying verdict and orders.
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 MGAs 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.
MGA seeks emergency consideration also because
As the district court
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,
but literally now. Ex. 39 at 111:24-112:1.
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See, e.g., Ex. 39 at 92:15-21; 93:8-9 (district court
acknowledging arguably irreparable damages to MGA, including by
compromising MGAs contracts and relationships with the people that
[MGA] is selling to now.);
; Ex. 7 at 12 V.B.1.o. (district court refusing to limit Mattels
ability to initiate legal proceedings anywhere in the world to assert its newly
awarded rights in the Bratz brand).
Retailers, suppliers, distributors, licensees, and MGA thus all need to
know now whether MGA has authority to present its Bratz line pending appeal.
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Even if Mattel chooses to sell Bratz in Spring 2010
Mattel could not copy MGAs
existing line even if it wanted to, because, under the district courts orders, MGA
still owns thousands of complementary and independently developed Bratz
products (even though MGA can no longer call them Bratz).
A brand is not a broach. Mattel cannot just borrow it
for a season and return it to MGA unscathed.
From any practical or legal perspective, implementing the district
courts 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,
only once. A court-appointed monitor is in place to ensure that MGA properly
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 courts orders. So long as this Court lacks the power
to purge MGAs trade secrets from Mattels mind, to resuscitate a dead brand, or to
reset consumer predilections and partner expectations, the damage will be done.
The motion warrants emergency consideration.
Finally, MGA has sought an emergency stay at the earliest
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
among MGAs retailers, suppliers, distributors, and licensees. MGA immediately
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.
B. The District Courts Denial Of A Stay
On May 8, 2009, MGA filed an ex parte application in the district
court for a stay pending this appeal. That application and its supporting
declarations explained the irreparable harm to the Bratz brand, and to MGAs
business reputation and financial viability, that the district courts 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
MGAs 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 [Mattels] hands. What you do
with it beyond then is going to be [Mattels] business. Ex. 39 at 64:9-12.
C. Notice To And Service Of Counsel For Other Parties
On May 22, 2009, MGAs counsel notified Mattels counsel via e-
mail that MGA would be filing this Emergency Motion on May 26, 2009. Mattels
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.
D. Request For Expedited Briefing Of This Motion
MGA asks the Court to shorten the briefing schedule for this motion
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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CORPORATE DISCLOSURE STATEMENT
(Fed. R. App. P. 26.1)
MGA Entertainment, Inc., and MGA Entertainment HK, Ltd., are
corporations. No publicly held corporation owns 10% or more of the stock of
either of these corporations.
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TABLE OF CONTENTS
Page
FACTUAL AND PROCEDURAL BACKGROUND ..............................................1A. The Jury Trial..............................................................................2B. The District Courts Injunctive Orders .......................................6C. MGAs Initial Appeal And Application For A Stay...................8
ARGUMENT.............................................................................................................9I. This Court Is Likely To Overturn The Injunctive Orders...................11
A. The Injunction Lacks Any Lawful Foundation ........................111. The Injunction Violates The Seventh Amendment
Because It Conflicts With The Jurys Verdict AndRole.................................................................................11
2. The District Court Applied The Wrong StandardFor Infringement.............................................................13
3. The District Court Failed To Follow eBay .....................15B. The District Court Impermissibly Imposed A
Constructive Trust.....................................................................16C. The District Court Based Its Orders On A Jury Verdict
Tainted By Ethnic Bias .............................................................20II. MGA Will Suffer Irreparable Harm Without A Stay .........................22III. A Stay Will Not Cause Irreparable Harm To Mattel ..........................24IV. The Public Interest Strongly Favors A Stay........................................26
CONCLUSION........................................................................................................26
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Page(s)
FEDERAL CASES
Advanced Med. Optics, Inc. v. Alcon Labs., Inc.,No. Civ. A. 03-1095, 2005 WL 3454283 ...........................................................24
Aliotti v. R. Dakin & Co.,831 F.2d 898 (9th Cir.1987) ...............................................................................14
Apple Computer, Inc. v. Microsoft Corp.,35 F.3d 1435 (9th Cir. 1994) ..............................................................................14
Brookfield Commcns, Inc. v. W. Coast Entmt Corp.,174 F.3d 1036 (9th Cir. 1999) ............................................................................17
Concrete Co. v. MMC Holdings, Inc.,201 F. Supp. 2d 1192 (M.D. Ala. 2001) ............................................................24
Conversive, Inc. v. Conversagent, Inc.,433 F. Supp. 2d 1079 (C.D. Cal. 2006) ..............................................................17
Danjaq LLC v. Sony Corp.,
263 F.3d 942 (9th Cir. 2001) ..............................................................................12Dimick v. Schiedt,
293 U.S. 474 (1935)............................................................................................12
Dyer v. Calderon,151 F.3d 970 (9th Cir. 1998) (en banc) ..............................................................20
eBay Inc. v. MercExch., LLC,547 U.S. 388 (2006)......................................................................................15, 16
Golden Gate Rest. Assn v. City and County of San Francisco,512 F.3d 1112 (9th Cir. 2008) ............................................................................11
Grosso v. Miramax Film Corp.,383 F.3d 965 (9th Cir. 2004) ..............................................................................17
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Haley v. Blue Ridge Transfer Co.,802 F.2d 1532 (4th Cir. 1986) ............................................................................21
Herbert Rosenthal Jewelry Corp. v. Kalpakian,446 F.2d 738 (9th Cir. 1971) ........................................................................13, 15
Hilton v. Braunskill,481 U.S. 770 (1987)............................................................................................11
Johansen v. Combustion Engg, Inc.,170 F.3d 1320 (11th Cir. 1999) ..........................................................................12
Kennon v. Gilmer,
131 U.S. 22 (1889)..............................................................................................12
Kiernan v. Van Schaik,347 F.2d 775 (3d Cir. 1965) ...............................................................................21
L. & J.G. Stickley, Inc. v. Canal Dover Furniture Co., Inc.,79 F.3d 258 (2d Cir. 1996) .................................................................................24
Los Angeles Police Protective League v. Gates,995 F.2d 1469 (9th Cir. 1993) ............................................................................12
Mattel, Inc. v. Azrak-Hamway Intern., Inc.,724 F.2d 357 (2d Cir. 1983) ...............................................................................14
Mattel, Inc. v. Goldberger Doll Mfg. Co.,365 F.3d 133 (2d Cir. 2004) ...............................................................................14
McCoy v. Goldston,652 F.2d 654 (6th Cir. 1981) ..............................................................................21
MDY Indus., LLC v. Blizzard Entmt, Inc.,No. CV-06-2555-PHX-DGC, 2009 WL 649719 (D. Ariz. Mar. 10, 2009) .......23
Metro-Goldwyn-Mayer Studios, Inc. v. Grokster,518 F. Supp. 2d 1197 (C.D. Cal. 2007) ..............................................................15
Miller v. LeSea Broad., Inc.,927 F. Supp. 1148 (E.D. Wis. 1995) ..................................................................24
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Mister Donut of Am., Inc. v. Mr. Donut, Inc.,418 F.2d 838 (9th Cir. 1969) ..............................................................................18
Multi-Channel TV Cable Co. v. Charlottesville Quality Cable Operating
Co.,22 F.3d 546 (4th Cir. 1994) ................................................................................23
Natl Basketball Assn v. Motorola, Inc.,105 F.3d 841 (2d Cir. 1997) ...............................................................................18
Newsome v. Up-To-Date Laundry, Inc.,219 F.R.D. 356 (D. Md. 2004) ...........................................................................13
Ohio-Sealy Mattress Mfg. Co.v. Sealy, Inc.,585 F.2d 821 (7th Cir. 1978) ..............................................................................12
Robinson v. Metro-North Commuter R.R. Co.,267 F.3d 147 (2d Cir. 2001) ...............................................................................13
Satava v. Lowry,323 F.3d 805 (9th Cir. 2003) ..............................................................................13
Self-Realization Fellowship Church v. Ananda Church of Self-Realization,
59 F.3d 902 (9th Cir. 1995) ................................................................................20
Simon Prop. Group, Inc. v. Taubman Ctrs., Inc.,262 F. Supp. 2d 794 (E.D. Mich. 2003) ............................................................24
Standard Havens Products Inc. v. Gencor Indus., Inc.,897 F.2d 511 (Fed. Cir. 1990) ...........................................................................23
Thompson v. Altheimer & Gray,248 F.3d 621 (7th Cir. 2001) ..............................................................................21
United Drug Co. v. Theodore Rectanus Co.,248 U.S. 90 (1918)..............................................................................................18
United States v. Gonzalez,214 F.3d 1109 (9th Cir. 2000) ............................................................................22
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United States v. Henley,238 F.3d 1111 (9th Cir. 2001) ......................................................................20, 21
Velez v. Roche,335 F. Supp. 2d 1022 (N.D. Cal. 2004)..............................................................12
Wang Labs., Inc.. v. Toshiba Corp.,No. 90-1477-A, 1991 WL 333701 (E.D. Va. Aug. 23, 1991) ............................24
Whitfield v. Lear,751 F.2d 90 (2d Cir. 1984) .................................................................................17
STATE CASES
Chandler v. Roach,156 Cal. App. 2d 435 (1957) ..............................................................................18
City of Hope Natl Med. Ctr. v. Genentech, Inc.,43 Cal. 4th 375 (2008) ........................................................................................20
Communist Party v. 522 Valencia, Inc.,35 Cal. App. 4th 980 (1995) ...............................................................................16
Desny v. Wilder,46 Cal. 2d 715 (1956) ...................................................................................17, 18
Donahue v. Ziv Television Programs,Inc., 245 Cal. App. 2d 593 (1966) ......................................................................18
Haskel Engg & Supply Co. v. Hartford Accident & Indem. Co.,78 Cal. App. 3d 371 (1978) ................................................................................16
K.C. Multimedia, Inc. v. Bank of Am. Tech. & Operations, Inc.,171 Cal. App. 4th 939 (2009) .............................................................................19
CONSTITUTIONAL PROVISIONS
U.S. Constitution, Seventh Amendment..................................................7, 11, 12, 21
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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
RESTATEMENT (FIRST) OF RESTITUTION 210 cmt. .................................................19
1 MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION 2:15 (4th ed.2008); 3 MCCARTHY 18:2 (4th ed. 2008) ........................................................18
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FACTUAL AND PROCEDURAL BACKGROUND
In October 2000, a young fashion designer named Carter Bryant
transferred ownership to MGA of several two-dimensional drawings of four
proposed Bratz dolls (Sealed Ex. 46) and became a consultant to MGA. Ex. 16 at
3048:10-15. After months of intensive design and development, MGA introduced
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 Mattels
market dominance in fashion dolls, and prompted Mattels strategy to KILL
BRATZ. Sealed Ex. 44 at 0564.
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
Bryants drawings, as well as for conversion, unfair competition, interference with
contractual relations, and aiding and abetting breaches of fiduciary duty and duty
of loyalty. Sealed Ex. 41 82-87, 116-66.
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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
5655:24-5656:4. The court characterized Juror No. 8s remarks as grossly
inappropriate and her presence as a cancer in the proceedings, and dismissed
her. Ex. 22 at 5694:5; Ex. 20 at 5662:6; Ex. 21 at 1-2.
Even though Juror No. 8 deliberated and voted in Phase 1(a), the
district court denied MGAs 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. 8s statements reflected only her husbands
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. 6s 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
because [c]ourts do not require that jurors . . . be without preconceived notions,
and because perfect justice is not of this world. Id. at 11.
MGA sought a writ of mandamus ordering a new trial. This Court
denied the petition, on the ground that mandamus is inappropriate when relief is
available on appeal. CA No. 08-73438.
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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
Mattel itself acknowledged (Ex. 33 at 8154:2-9; 8155:14-15) Mattel asked the
jury to award it all profits from all Bratz sales since 2001, which Mattel estimated
at over $1.4 billion. Id. at 8157:19-8158:22. Mattel argued no alternative
calculation. MGA, however, presented evidence that MGAs profits from all Bratz
products were $405 million (Ex. 29 at 7693:21-25), then provided the jury with
options for attributing profits to infringement related to Carter Bryants
contribution, particularly infringement related to only the first generation dolls.4
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 jurys 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
4See, e.g., Ex. 29 at 7784:1-9 (calculating profits from first generation dolls at $4million); Ex. 29 at 7709:14-17, 7711:14-18 (identifying revenues from firstgeneration 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 concerningindirect profits from different categories of merchandise).
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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.
Nevertheless, in orders issued on December 3, 2008, the district court
imposed a constructive trust on all of MGAs worldwide trademarks, service marks
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 Bryants
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
contact all retailers, distributors, wholesalers, importers, exporters, licensees, and
customers, and post a notice on its website, to recall and impound all such MGA
Bratz products. Ex. 2 at 2-4, 7-9.
The district court admitted that the jury returned an award of
damages that was far less than that sought by Mattel and that, under the Seventh
Amendment, it was bound by the jurys implicit or explicit factual
determinations. Ex. 1 at 9. Nevertheless, it concluded that it could make no
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decision soon. Ex. 38 at 82:22-83:2. But soon did not come for over two more
months, or nearly five months after the original orders.
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
MGA to immediately make available . . . for transfer to Mattel those MGA
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
its own Bratz line. Id. at 9-10 n.6, 13 B.3.
ARGUMENT
It may be, as the district court said, that perfect justice is not of this
world. But the imposition of the Injunctive Orders is a gross miscarriage of
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 MGAs Bratz trademarks and their
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associated value and goodwill. The district courts 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
Amendments mandate that a court respect the jurys factual findings when
fashioning equitable relief, it wrongly chose the overbroad substantial similarity
test to analyze infringement. The court further erred in giving Mattel MGAs
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 MGAs 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
standards,5 the Injunctive Orders should be stayed pending appeal.
5In evaluating a stay pending appeal, this Court considers: (1) whether the stayapplicant 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) whetherissuance of the stay will substantially injure the other parties interested in the
(footnote continued )
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I. THIS COURT IS LIKELY TO OVERTURN THE INJUNCTIVE ORDERSA. The Injunction Lacks Any Lawful Foundation
1. The Injunction Violates The Seventh Amendment BecauseIt Conflicts With The Jurys Verdict And Role
The district courts injunction violates the Seventh Amendment.
Mattel attributed all of MGAs profits from all dolls and products $1.4 billion in
Mattels estimation to willful copyright infringement based on the final sculpt
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 Mattels
theory. The jurys verdict is irreconcilable with the district courts independent
findings that all the Bratz full-sized female fashion dolls infringe because all use
the same final sculpt. That was Mattels theory, too, and the jury rejected it.
The Seventh Amendment right to a jury trial prohibits a district court
from imposing equitable relief based on a factual finding that conflicts with the
jurys verdict. The Seventh Amendment prohibits re-examination of a jurys
determination of the facts, which includes its assessment of the extent of plaintiffs
(footnote continued)
proceeding; and (4) where the public interest lies. Hilton v. Braunskill, 481 U.S.
770, 776 (1987); Golden Gate Rest. Assn v. City and County of San Francisco,512 F.3d 1112, 1115 (9th Cir. 2008). Moreover, the required degree ofirreparable harm increases as the probability of success [on the merits] decreases.Golden Gate Rest. Assn, 512 F.3d at 1116 (citation omitted). Thus, if thebalance of hardships tips sharply in . . . favor of a stay, that relief is warranted ifthe appeal presents serious legal questions. Id. (citation omitted).
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injury. Johansen v. Combustion Engg, 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 jurys explicit holding, but merely ignore a jury
finding implicit in the level of damages it awarded. Los Angeles Police
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 courts view that the verdict permits no principled
inferences does not justify denying MGA its constitutional right to a jury trial.
The jurys verdict would have expressly identified whether any later generation
dolls infringed if the district court had accepted MGAs special verdict form. The
district court was obliged, under the Seventh Amendment, to structure the trial to
ensure that thejury 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
run afoul of the Seventh Amendment by ordering bifurcation in a way that
permits reexamination of facts decided by jury). Even where a case is bifurcated
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and tried to two separatejuries, 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); seeNewsome 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
factfinder is the judge.
2. The District Court Applied The Wrong Standard ForInfringement
The district courts injunction fails for another independent reason: it
applies the wrong legal standard to the analysis of infringement. This error infects
the jurys initial infringement finding as well as the courts subsequent (and
constitutionally impermissible) infringement finding, because both jury and judge
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,
notwhether it is substantially similar.
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 inHerbert
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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
1435 (9th Cir. 1994) (applying virtual identity standard).
The district court rejected the virtual identity standard because it
found the human form capable of a wider range of expression than jellyfish. Ex.
30 at 2. This analysis conflicts with the Ninth Circuits 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, inMattel, 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 Barbies 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
Mattels realization of those particular features. Id. at 135. The court explained
that because [o]ne artists version of a doll face with upturned nose, bow lips, and
widely spaced eyes will be irresistible to an eight-year-old collector [and] [a]nother
artists version . . . will be a dud . . . getting the dolls face and expression exactly
rightis 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
the particularized expression of a muscleman body in a fighting pose).
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Copyright thus protects only one particular realization of human
features, and not another artists 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 inRosenthal. 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. Bryants drawings and the draft sculpt. Under the
correct standard, the jury likely would not have found any infringement. Without
these predicates, there is no basis for the courts equitable relief.
3. The District Court Failed To Follow eBayFinally, the injunction violates the Supreme Courts holding in eBay
that an injunction does notautomatically follow[] a determination that a copyright
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
infringement satisfies the irreparable harm requirement. Ex. 1 at 11-12. Whether
this rule negates the holding in eBay is an important question this Court should
decide. See, e.g., Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 518 F. Supp. 2d
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1197, 1211 n.13 (C.D. Cal. 2007) (After eBay, Plaintiffs cannot rely on the pure
fact of infringement in order to establish irreparable harm.).
B. The District Court Impermissibly Imposed A Constructive TrustThe district courts errors do not stop with the injunction against
MGA selling any Bratz full-sized female fashion dolls. If anything, the courts
error in giving all of MGAs 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
associates with the trademark BRATZ after MGAs investment of hundreds of
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
vehicle of a constructive trust to hand these trademarks to Mattel. At the hearing
on post-trial motions, the district court admitted that the constructive trust was
something which is bothering the Court. Ex. 38 at 37:16-38:13. For good
reason. No court has afforded such a remedy in comparable circumstances,6 and to
do so here violates federal and state law.
First, Mattel is not entitled to a constructive trust unless it can point to
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,HaskelEngg & Supply Co. v. Hartford Accident & Indem. Co., 78 Cal. App. 3d 371(1978), was an inapposite tracing of property case.
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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
created the BRATZ trademarks. SeeBrookfield Commcns, Inc. v. W. Coast
Entmt Corp., 174 F.3d 1036, 1046 (9th Cir. 1999); Conversive, Inc. v.
Conversagent, Inc., 433 F. Supp. 2d 1079, 1089-90 (C.D. Cal. 2006).
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 Mattels 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
creator of an idea may be entitled, through contract, to compensation for conveying
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)
7See 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 Natl Basketball Assn v.
Motorola, Inc., 105 F.3d 841, 849-50 (2d Cir. 1997) (state law cannot expand
protection over matters not protected in copyright).
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.,
appreciation is an enhancement of the value of land. Rather, a trademark is an
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. SeeUnited 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,
842 (9th Cir. 1969); 1MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION
2:15 (4th ed. 2008); 3 MCCARTHY 18:2.
As the jurys verdict reflects, virtually all of the value represented by
the trademarks is the product of MGAs independent efforts and investments over
several years, including its development of Bratz products that have nothing to do
with Bryants drawing or ideas.
8See alsoDesny, 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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Equity does not entitle Mattel to the
benefits of MGAs independent investments and innovations.9
Finally, there is no basis for the state law claims on which the
constructive trust is based. Mattels constructive trust claim depends heavily on
Bryants 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
fashion designer owed Mattel a fiduciary duty.10
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
of law, to impose a fiduciary relationship. As the California Supreme Court has
held, every contract to some extent requires a party to repose trust and confidence
9See, 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 defendants own laborsor legitimate efforts); RESTATEMENT (FIRST) OF RESTITUTION 210 cmt. b (1937)(constructive trust extends to only a share in such proportion as the trust propertybears 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. SeeK.C. Multimedia, Inc. v. Bank of
Am. Tech. & Operations, Inc., 171 Cal. App. 4th 939, 954-62 (2009) (state statutepreempts common law claims, including breach of confidence claims, based onthe same nucleus of facts as would support a trade secrets claim).
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in the other, but that alone does notgive rise to a fiduciary duty. City of Hope
Natl 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 partys particular
secret idea in return for royalties. Id. at 387-92. Bryant merely signed a form
employment agreement. Whether Bryant owed a fiduciary duty to Mattel was, at
the very least, an issue to be considered by the trier of fact (id. at 391), which
independently requires vacating the constructive trust.
C. The District Court Based Its Orders On A Jury Verdict TaintedBy Ethnic Bias
The courts equitable remedies depend on the jurys underlying
liability verdict, and yet that verdict is tainted. It is the product of deliberations
that included a biased juror.11
The constitutional right to a jury trial is violated by the bias or
prejudice of even a single juror. SeeUnited 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 alsoDyer, 151 F.3d at 985. Here, the racist comment of Juror No.
11This Court may address this issue in this appeal, because matters whichprovide[] the legal authority to issue an injunction are inextricably bound upwith the injunctive order. Self-Realization Fellowship Church v. Ananda Churchof 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 courts 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
are not racially biased).
The district courts rationale that civil litigants have no
constitutional protection against biased jurors is wrong. That ruling conflicts
with the plain language of the Seventh Amendment, is unsupported by any
decision of this Circuit, and is contrary to decisions in other circuits. McCoy v.
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).
The district court compounded the denial of due process by refusing
to provide any access to the record of its juror interviews. Contrary to the district
courts view, Federal Rule of Evidence 606(b) does not justify its decision. Rule
606(b) is inapplicable on its face, because Juror No. 6s spontaneous complaint
about Juror No. 8s 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).
II. MGAWILL SUFFER IRREPARABLE HARM WITHOUT ASTAYIf this Court does not immediately stay the Injunctive Orders pending
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
Exhibits 48 to 53, absent a stay, the Injunctive Orders will cause
See, e.g., Ex. 39 at 92:15-21; 93:8-9
(district court acknowledging arguably irreparable damages to MGA, including
by compromising MGAs contracts and relationships with the people that
[MGA] is selling to now.).
The
district court has not limited Mattels ability to initiate legal proceedings
anywhere in the world to assert its newly awarded rights in the Bratz brand
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further undermining MGAs business relationships. Ex. 7 at 12 V.B.1. This is
precisely the sort of irreparable harm that justifies a stay.12
12See, e.g.,Multi-Channel TV Cable Co. v. Charlottesville Quality CableOperating Co., 22 F.3d 546, 552 (4th Cir. 1994) (irreparable harm shown bypossibility 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 facedirreparable harm in the form of employee layoffs, immediate insolvency, and,possibly, extinction);MDY Indus., LLC v. Blizzard Entmt, Inc., No. CV-06-2555-PHX-DGC, 2009 WL 649719, at **2-3 (D. Ariz. Mar. 10, 2009) (granting stay ofcopyright injunction because, without one, defendants likely will have lost all oftheir market share to competitors during the duration of the appeal and will beunable to regain their business).
13
That qualified statement was made by a Mattelemployee who was admittedly out-thought and out-executed by MGA (SealedEx. 44 at 0561),
after failing at Mattels stated mission to KILLBRATZ. Sealed Ex. 44 at 0564.
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Courts routinely grant stays
where asset transfers cannot readily be undone.15
III. ASTAY WILL NOT CAUSE IRREPARABLE HARM TO MATTELMattel, in contrast, faces no irreparable harm. Unlike many who
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 MGAs 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 proveirreparable harm.).
15Miller v. LeSea Broad., Inc., 927 F. Supp. 1148, 1152 (E.D. Wis. 1995) (grantingstay of injunction requiring sale of television station where it "could be difficult, ifnot 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 certainsteps 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 wherethe difficulties involved in reinstating [him] promise to be substantial).
16SeeWang 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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Ex. 54 at 5. But the district court
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 MGAs 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 monitors oversight, another few months pending appeal will
cause Mattel no irreparable harm.
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
collect MGAs monthly Bratz profits in amounts and by accounting to be
determined (Id. V.B.1.g.; V.B.2,) and (iii) otherwise authorize the Monitor and
Mattel to implement the Injunctive Orders (Id. V.B.1.e; V.B.1.o). The
remaining, exceptionally broad provisions, which, e.g., allow the Monitor full
access to all of MGAs Bratz operations and accounting for all Bratz-related
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revenues and profits, are more than sufficient to protect Mattels interests pending
appeal.17
IV. THE PUBLIC INTEREST STRONGLY FAVORS ASTAYGiving Bratz to Mattel now creates a substantial risk that the Bratz
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.
The repercussions of transferring Bratz to Mattel also extend beyond
MGA and Mattel. They implicate relationships with retailers, suppliers,
distributors, licensees, and customers worldwide. Sealed Exs. 52; 53 at 0688.
Should such a massive disruption ever occur, it should happen only after this Court
has reviewed the decision below.
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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