Mattel, Inc. v. MGA ENTERTAINMENT, INC.

Citations: 782 F. Supp. 2d 911; 2011 WL 1114250Docket: Case No. CV 04-9049 DOC (RNBx)

Court: District Court, C.D. California; January 5, 2011; Federal District Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

MGA Entertainment, Inc. and its affiliates, along with Isaac Larian, filed a Motion for Summary Judgment in a case involving Mattel, Inc. and others. Concurrently, Mattel submitted a joint Motion for Partial Summary Judgment, along with another motion addressing MGA's counterclaims. The background of the case dates to April 27, 2004, when Mattel accused former employee Carter Bryant of breaching his contractual duties by not disclosing his designs for the Bratz dolls before leaving for MGA. Bryant counterclaimed and sought declaratory relief, leading to the removal of Mattel's state lawsuit to federal court. MGA intervened in the suit against Bryant and subsequently filed its own federal complaint against Mattel, alleging trade dress infringement and other claims. On June 19, 2006, the cases were consolidated due to overlapping legal and factual issues. Mattel's attempt to amend its complaint to include MGA and others as defendants was initially denied on procedural grounds but was allowed to be presented in an amended answer and counterclaim in MGA's case against Mattel.

Mattel filed its First Amended Answer and Counterclaims (FAAC) on January 1, 2007, asserting claims against MGA and Machado, with significant changes in the substance and detail of the allegations. The court ordered that claims about the ownership of the Bratz doll line be tried separately from MGA's affirmative claims and unrelated counterclaims from Mattel. Before the "phase 1" trial, Mattel settled with Bryant, leaving several claims for jury consideration, including intentional interference with contract, aiding and abetting breaches of fiduciary duty and loyalty, conversion, statutory unfair competition, declaratory relief, and copyright infringement against Larian, MGAE, and MGA HK.

Mattel won all claims, with the jury determining that Bryant conceived the Bratz name and design during his employment with Mattel. Consequently, the court imposed a constructive trust on the Bratz trademarks and issued an injunction against MGA for selling dolls similar to Bryant's work. MGA appealed, and while that was pending, discovery continued on other claims. Mattel amended its pleadings multiple times, adding Mattel Mexico as a plaintiff, with claims based on MGA's alleged theft of confidential information and litigation misconduct, some of which were dismissed in 2010.

MGA refined its trade dress infringement claim and filed counterclaims regarding Mattel's market research tactics. On July 22, 2010, MGA succeeded in its appeal, with the Ninth Circuit vacating the constructive trust and injunction due to broad equitable relief and erroneous jury instructions. On October 22, 2010, the court ordered a new trial for all phase 1 claims, discarding the previous bifurcation of claims and scheduling a single proceeding for January 11, 2011. Standard Rule 56 of the Federal Rules of Civil Procedure allows parties to move for summary judgment when there are no genuine issues of material fact, entitling the moving party to judgment as a matter of law.

In adjudicating cross-motions for summary judgment, the Ninth Circuit evaluates each motion separately, favoring reasonable inferences for the nonmoving party. This principle is illustrated in the context of Mattel's counterclaims against Bryant, which involve interpretation of the Employee Confidential and Inventions Agreement signed by Bryant on January 4, 1999. This agreement stipulates that Bryant must promptly communicate all inventions conceived during his employment and assigns his rights to Mattel, encompassing a broad range of intellectual property. 

Prior to trial, Mattel asserted that the agreement covered Bryant's ideas for the names "Bratz" and "Jade," with the jury tasked to determine if these ideas were developed during his employment. The Ninth Circuit indicated that while the agreement could be interpreted to include ideas, it did not definitively compel that interpretation, suggesting the ambiguity could potentially be clarified by extrinsic evidence. 

Mattel contends that both parties intended the agreement to assign Bryant's rights to Mattel for any ideas he conceived during his employment. In contract interpretation, the primary goal is to reflect the mutual intention of the parties, allowing for extrinsic evidence when ambiguity exists. Admissible evidence may include the circumstances of negotiation and subsequent conduct. Mattel references Bryant's testimony from another lawsuit and a corporate designee's deposition to argue that both parties understood the agreement as assigning Bryant's rights. However, generally, undisclosed intent is not relevant for contract interpretation, though subjective intent can be considered when resolving ambiguities.

Bryant testified during a 2007 trial regarding his employment with Mattel and his understanding of the Inventions Agreement. He acknowledged that generating new ideas was part of his job but struggled to recall specifics about the agreement. On his last day of employment, he signed a proprietary information checkout form, which he claimed was the first time he had seen it, and stated that it was not explained to him. When questioned about whether he understood that all inventions conceived during his employment would belong to Mattel, he expressed some awareness but indicated that the details were not clearly pointed out to him.

The checkout form included a provision that purportedly quoted the Inventions Agreement, asserting that all inventions and ideas developed during employment would be the exclusive property of Mattel. However, the form misquoted the Inventions Agreement, as it did not explicitly assign ownership of Bryant's ideas to Mattel. This discrepancy may stem from changes in earlier versions of the agreement, which did include such assignments. The variations between these earlier versions and the one Bryant signed raise a genuine issue of material fact concerning his understanding of the checkout form and its alignment with his prior understanding of the Inventions Agreement.

Mattel's claim regarding the intent behind the Inventions Agreement is weakened by inconsistencies with the checkout form, which treated inventions and ideas separately. Alan Kaye, Mattel's VP of Human Resources, asserted that ideas relevant to Mattel's business were included in the intellectual property assigned, despite the absence of the term "ideas" in the signed agreement. His inability to clarify the omission or define key phrases undermines his credibility. Although previous versions of the agreement included "ideas," this does not conclusively favor MGA, as a reasonable fact-finder could determine Bryant intended the agreement to cover ideas. 

MGA contends that Bryant did not have assignable rights to his ideas, arguing that ideas are not considered property under California law. However, the Ninth Circuit dismissed this claim, asserting that it may impose a narrower constructive trust upon retrial, thus precluding MGA's argument under the law of the case doctrine. The court emphasized that intangible rights can be broadly interpreted, and MGA's previous assertions did not constitute clear error.

Additionally, MGA argues that the assignment of ideas violates reasonable employee expectations and is unconscionable, suggesting that Mattel presented the agreement on a take-it-or-leave-it basis. The determination of whether Bryant was coerced into accepting the agreement hinges on his credibility and is complicated by conflicting declarations regarding the negotiation of assignment terms. The fact-finder must also assess whether the assignment of ideas aligned with a reasonable employee's expectations, considering Bryant's acknowledgment of similar assignments in other agreements with Mattel.

In Graham v. Scissor-Tail, Inc., the court addresses a dispute regarding the assignment of intellectual property rights under an Inventions Agreement. Graham had been involved in numerous contracts with a similar provision, raising a genuine issue of material fact about the potential unconscionability of assigning Bryant's interest in his ideas, particularly given the non-disclosure requirement of employee ideas in the agreement. The court rejected MGA's argument that the assignment of ideas impairs employee mobility, noting that such assignments, if limited to work during employment, are generally enforceable.

The timing of the inventions agreement is contested, particularly the phrase "at any time during my employment," which was interpreted by the Ninth Circuit as ambiguous. This ambiguity, along with the exclusion of certain inventions from the California Labor Code, means the issue must be determined by a jury rather than at summary judgment. The Ninth Circuit referenced deposition testimony indicating that Mattel employees often worked on personal projects outside of their official hours, and Bryant's belief that he owned inventions created during nights and weekends complicates the understanding of mutual intent.

In terms of copyright infringement, Mattel claims it holds registered copyrights for Bryant's concept sketches and sculpts, alleging that MGA, MGA HK, Larian, and Bryant have infringed upon these rights by reproducing and creating derivative works without authorization. Both parties' motions for summary judgment concerning the contract interpretation and copyright claims are denied.

MGA seeks summary judgment on two grounds: (1) its production sculpts, used as templates for marketed dolls, did not infringe on Bryant's concept sculpts or sketches, and (2) MGA's Bratz dolls did not infringe on Bryant's concept sketches. To prove copyright infringement, Mattel must demonstrate ownership of copyrights in Bryant's works and that MGA copied original elements of those works. While Mattel asserts there is a genuine issue of material fact regarding direct copying, it relies on circumstantial evidence, including an MGA business plan and testimony from a sculptor, suggesting inspiration from Bryant's sketches. However, MGA's independent investment in the Bratz design process undermines this claim, as various designers contributed beyond Bryant’s influence.

Furthermore, the features cited by Mattel, such as oversized heads and protrusive lips, are not considered original elements since many fashion dolls exhibit similar exaggerated characteristics, rendering the concept unoriginal and unprotectable. Thus, evidence of MGA copying these features does not establish copyright infringement. Summary judgment is warranted if no reasonable juror could find substantial similarity between the ideas and expressions of the works.

A two-part test—extrinsic and intrinsic—evaluates whether two works are substantially similar, as established in Shaw v. Lindheim. The extrinsic test involves an objective analysis of the concrete elements in both works, while the intrinsic test requires a subjective assessment of their overall concept and feel, typically by a jury. The extrinsic test has evolved to assess articulable similarities in both ideas and expression, focusing on whether the specific details of an author's rendering are substantially similar. Certain elements are deemed unprotectable, including scenes a faire, purely utilitarian features, and elements of expression merged with the underlying idea.

In the case at hand, a genuine issue of material fact exists regarding potential copyright infringement between MGA's Bratz Production Sculpt and Bryant's registered sculpt. The protectable elements are limited due to the constrained nature of the expression of a young female fashion doll with exaggerated proportions. However, a reasonable jury could find substantial similarity in specific features, such as the shape and placement of the ears, the design of the nose, and the overall face shape. Similarities in the midsections, including waist definition and abdominal shape, could also support a finding of substantial similarity, even though the overall concept of the dolls represents an unprotectable idea.

A reasonable jury could find substantial similarity between the Bratz Sculpt and Bryant's Sculpt, particularly in the rounded shoulders, the unnatural flare of the lower arms, the indentation between the shoulder blades, and the S-shaped spine curvature. This establishes a genuine issue of material fact regarding potential infringement, leading to the denial of MGA's request for summary judgment. 

Regarding the first generation of Bratz dolls, MGA argues that they are not substantially similar to Bryant's sketches. However, a genuine issue of material fact exists concerning similarities between the first generation Jade doll and Bryant's Jade sketches. Both portray a young, fashionable female doll with exaggerated physical proportions, which, while unoriginal, do not constitute protectable ideas. Nevertheless, they share numerous protectable features, including specific clothing, hairstyles, and accessories. 

For instance, both the doll and the sketch feature pink, midriff-baring t-shirts with a similar emblem, olive-green flared pants, red sneakers with pink accents, and a silver satchel. Anatomically, both representations display identical eyelash features, despite minor differences in eyelid structure. Overall, while some aspects are part of the public domain, substantial similarities in protectable elements remain evident, warranting further examination.

The excerpt outlines the differences and similarities between a doll and its associated sketches, specifically focusing on the first generation Jade and Cloe dolls. Key distinctions include the materials and design of the pants, shoes, and satchel. The Jade doll features shiny, rolled-up pants resembling alligator skin, while the sketch shows cotton pants with orange piping. The doll's shoes have more white cushioning, and its satchel lacks any lettering, in contrast to the "Purrfect" label on the satchel in the sketch. Additionally, the doll has darker lips and more dramatic, two-toned eyeshadow compared to the sketch. The girl in the sketch has rosier cheeks and shorter hair styled in pigtails.

Despite these differences, the court concludes that there are significant similarities between the protectable expressions of the Jade sketch and the doll, leading to the denial of MGA's request for summary judgment regarding the Jade doll.

In relation to the first generation Cloe doll, there is also a genuine issue of material fact regarding its similarity to Bryant's sketches. Both portray a trendy, young female fashion doll with exaggerated features, including larger eyes and limbs, which are deemed unoriginal and part of the public domain. Nonetheless, a reasonable fact-finder could determine that the specific expressions of these features in the Cloe doll and sketches are substantially similar. Notable comparisons include the cerulean eyes and the differing designs of the eyelids and eyelashes between the doll and the sketches. The overall hairstyles and fashions also share non-anatomical similarities.

The sketch and doll both feature a baby-blue midriff-baring t-shirt embellished with sequins and the word "Angel," sparkling bell-bottom jeans with fringe and a slit at the ankle, and a textured baby-blue belt with a square buckle. The doll includes a jacket similar to the sketch's, both made from sparkly denim, with fold-over collars and fringed hems. The doll also comes with white, weighty boots featuring an orange and brown buckle and shares a one-shouldered bag with a white base and teal piping. Both representations have long, light blonde hair styled with a teal and gold headband and metallic-pinkish lip color, although the doll's lips are closed, while the sketch depicts them slightly parted. Differences include the doll's blue eyeshadow versus the sketch's grayish tone, less flushed cheeks on the doll, and variations in the bag and belt design. The doll's buttons are more metallic, and the shirt exposes more skin compared to the sketch. A reasonable fact-finder could conclude that significant protectable features exist between the Cloe doll and Bryant's Zoe sketches, leading to the denial of MGA's motion for summary judgment regarding the first generation of Cloe dolls.

For the first generation Yasmin doll, there are material factual disputes on the similarities between Bryant's Lupe sketch and the Yasmin doll. Both portray a trendy young female fashion doll with exaggerated features, such as larger eyes and limbs, which are deemed unoriginal and not protectable. Both representations include specific clothing items, such as a purple tube top and flared light-colored pants, which also feature prominent stitching.

Both the Yasmin doll and the girl in the accompanying sketch share several distinctive features, including a tan satchel with a drawstring bow and a purple geometric pattern, as well as a maroon/brown bandana adorned with keyhole designs. Their hairstyles include small front braids amidst longer hair, and both exhibit similar smoky-purple eye makeup and identical lipstick with dark brown lip liner. The Yasmin doll mirrors specific anatomical traits of the sketch's subject, such as dilated pupils and hazel eyes with blue specks, along with a small dark mole beneath the left eye. However, notable differences exist that a fact-finder might find significant, including variations in eye detail, lip proportions, accessory presence, eyeshadow color, hair color and style, and clothing details such as color and pattern. 

In relation to the first generation Sasha doll, there is a genuine dispute regarding the protectable elements shared with Bryant's Hallidae sketches. Both the doll and the sketches portray a young, fashionable female with exaggerated physical traits. However, the overall concept of these exaggerations is deemed unoriginal and part of the public domain. Nonetheless, there are protectable aspects, such as specific fashions and hairstyles, which are similar in both the doll and sketches, including long-sleeved t-shirts with horizontal stripes and orange accents. Thus, MGA's motion for summary judgment regarding the Yasmin doll is denied, as is the consideration of protectable elements in the Sasha doll.

Both the doll and the sketches feature long, oversized, flared denim skirts with cargo pockets, complemented by similar white, orange, and blue sneakers with oversized soles and untied white laces. They also include blue and orange backpacks labeled "hip hop," adorned with images of bunny rabbits. Both representations depict long, kinky black hair under silver triangular hats made of ribbed material, topped with a poof ball, along with prominently defined eyebrows and two-toned eyeshadow, plus makeup featuring purple lip liner and vivid cheek paint.

Significant differences exist between the representations, particularly between TX 17558 and TX 3-5, with lesser differences noted between TX 17558 and TX 1108. TX 3-5 shows brown-toned eyeshadow, unlike the shared purple-toned eyeshadow found in TX 1108 and the doll. The bunny rabbit on TX 3-5's backpack is more cartoonish compared to the realistic depiction on TX 1108 and the doll, although the doll's packaging has a similar bunny. The hats also differ; TX 3-5 features an orange striped hat that covers the ears, while TX 1108 and the doll have silver hats. Additionally, TX 3-5 depicts dreadlocked hair, whereas TX 1108 and the doll present smoother, straight hair.

In terms of clothing, TX 1108's shirt has the word "YUM," while the doll's shirt is devoid of words or images. The pocket on TX 3-5's skirt is located near the thigh, contrasting with the lower calf position of pockets on TX 1108 and the doll. TX 1108 and the doll include a design indicating the skirt can transform into a mini-skirt, which is absent in TX 3-5. Furthermore, TX 3-5 features Timberland boots, while TX 1108 and the doll showcase sneakers.

A reasonable fact-finder might conclude that the Hallidae sketches and the Sasha doll are substantially similar in both the ideas and their expression. The Ninth Circuit criticized the district court for failing to recognize that most Bratz dolls, like “Bratz Funk N' Glow Jade” or “Bratz Wild Wild West Fianna,” are not substantially similar to Bryant's sketches, noting that their fashions and hairstyles differ significantly. Thus, the court's determination on substantial similarity for later generations of Bratz dolls largely undermines Mattel's counter-claim.

Subsequent generations of Bratz dolls exhibit distinct hair styles and fashions that differ significantly from Bryant's original sketches, reflecting only unprotectable ideas rather than original expression. Although these dolls maintain the concept of a trendy, hip female fashion doll with exaggerated physical features, such traits are deemed unoriginal and belong to the public domain. Notably, with the exception of two dolls, the variations in fashion, makeup, accessories, and physical characteristics demonstrate a clear departure from Bryant's specific designs. 

Mattel contends that infringement is evident, citing an expert report by Lee Loetz, who attempts to compare the dolls to Bryant's sketches. However, Loetz's analysis suffers from logical flaws, conflating mere factual copying with the appropriation of original, protectable elements. His conclusions primarily hinge on similarities in ideas and unprotectable expressions, such as the placement of body features, which do not constitute infringement. The report admits that anatomical placements serve to convey age and gender distinctions, further supporting MGA's right to develop the dolls independently, as the underlying concepts are not protected.

Mr. Loetz asserts that the arrangement of facial features in subsequent generation dolls closely resembles Bryant's drawings, emphasizing that the positioning of features is crucial to a character's identity. He notes that variations in facial features can convey different characters, such as a cute baby or an evil witch. However, he acknowledges that the compact features in Bryant's drawings are intended to create an attractive appearance, which is an unprotectable idea distinct from the diverse expressions possible with facial features. Allowing Mattel to restrict others from depicting certain facial placements would effectively grant them a monopoly over the concept of a young, fashionable female doll.

Loetz further claims that specific features in the dolls, such as curvy lips and exaggerated makeup, are substantially similar to Bryant's sketches. Nonetheless, these features are deemed unoriginal and unprotectable, as they pertain to the general idea of a young, fashion-forward doll with exaggerated traits. The excerpt cites legal precedent to argue against granting extensive copyright protection for common doll features, which could stifle competition. The conclusion drawn is that the subsequent generation dolls are not substantially similar to Bryant's specific expressions, as the majority of Loetz's comparisons relate to the first generation of Bratz dolls, and the later examples fail to show significant similarity to the protectable elements of Bryant's work.

The comparison of artistic elements between the designs of dolls reveals significant differences in features such as lip shape and color, eye shape and eyelash density, face shape, and hair characteristics among the dolls produced by Mattel and those sketched by Carter Bryant. Specifically, the analysis of a generation of Sasha dolls against Bryant's Hallidae sketch shows dissimilarities in hairstyles, lips, facial features, and skin tone, undermining any claims of substantial similarity. While Mattel cites Mr. Loetz's observations regarding visual consistency across various doll generations, these subjective assessments do not satisfy the objective criteria required in the "extrinsic" test for copyright protection. Consequently, Mattel fails to establish a genuine issue of material fact regarding the protectable expression of most subsequent generation Bratz dolls.

However, two dolls—Ooh La La Cloe and Formal Funk Dana—present potential substantial similarities to Bryant's sketches. Ooh La La Cloe's fashion ensemble, including a plaid skirt and a specific style of jacket and accessories, resembles elements from the sketches. Similarly, Formal Funk Dana's gown and accessories align closely with those depicted in Bryant's designs. As a result, MGA's motion for summary judgment is granted for all subsequent generation Bratz dolls, except for the aforementioned two.

Regarding lost opportunity damages, MGA contends that Mattel should not recover damages based on a speculative theory of lost opportunities related to the Bratz works. The Copyright Act allows recovery of actual damages and wrongful profits. While MGA does not adequately dispute Mattel's claims for wrongful profits, it challenges the ability to recover actual damages under the lost opportunity theory, arguing that such claims are unsubstantiated.

Mattel's counterclaim asserts that MGA and related parties misappropriated its trade secrets, alleging illegal acquisition and disclosure of proprietary information, including designs and documents, by former employees and associates of MGA and Larian. Under California's Uniform Trade Secrets Act, a trade secret is defined as information providing independent economic value from being unknown and subject to reasonable efforts to maintain its secrecy. Both parties have sought summary judgment regarding whether Mattel's alleged trade secrets had independent economic value. The court finds genuine issues of material fact regarding the economic value of most of Mattel's claimed trade secrets and evaluates whether Mattel made reasonable efforts to protect their confidentiality. Key factors include the requirement for employees to sign confidentiality agreements and the proper marking of documents. However, the court acknowledges that a lack of markings does not automatically negate reasonable efforts to maintain secrecy, particularly if the misappropriating employee was responsible for such markings. Overall, the court identifies unresolved factual questions concerning Mattel's efforts to maintain the secrecy of its trade secret materials.

Mattel implemented comprehensive employee training, required signed agreements, and regulated database access; however, it often provided unclear guidance and neglected to label proprietary documents as confidential, including those relevant to the case. Mattel asserts that the Bratz fashion doll concept, encompassing the name "Bratz," four specific doll names, designs, themes, and marketing slogans, is a trade secret owned under the Inventions Agreement. It is acknowledged that Bryant shared this concept with MGA during his employment at Mattel, leading to the release of dolls named Bratz and Jade by MGA.

The court initially denied Mattel's claim that the Bratz concept was a trade secret due to ongoing phase 1 issues and pending appeal by MGA. Following the Ninth Circuit's ruling, Mattel sought to confirm its trade secret misappropriation counter-claim, which the court granted after thorough review. MGA objected to this amendment, claiming it faced prejudice from Mattel's shift in legal theory, which MGA argued violated the Ninth Circuit's mandate. The court denied MGA's request for reconsideration due to untimeliness and lack of new material facts.

MGA's concerns regarding the trade secret designation were deemed unfounded. The court clarified that Mattel must prove ownership of the Bratz concept to prevail on its counter-claim, emphasizing that identifying it as a trade secret does not lessen Mattel's obligation to demonstrate that Bryant assigned his rights to the ideas involved. Establishing the Bratz and Jade names as trade secrets could potentially undermine MGA's challenge to Mattel's property rights in the concept.

MGA did not successfully argue to the Ninth Circuit that ideas cannot be considered property. The classification of the Bratz concept as a trade secret is independent of whether Mattel formally alleged it as such. MGA's assertion that Mattel's late identification of the Bratz and Jade names as trade secrets hindered MGA's ability to argue that the Uniform Trade Secrets Act (UTSA) supersedes Mattel's claims is misguided; an allegation of trade secret misappropriation is not needed for UTSA supersession. Furthermore, Mattel's identification may have actually aided MGA's argument. MGA claims that Mattel's identification was untimely, but it is established that both parties recognized Mattel’s trade secret misappropriation counterclaim as including the Bratz and Jade names. MGA's contention that the court never ruled on Mattel's request to amend its pleadings is irrelevant, as both parties have accepted that pleadings do not require exhaustive factual detail. Mattel's failure to specify all predicate facts for its counterclaims does not detract from its motion to confirm. In asserting that the Bratz concept and names do not qualify as trade secrets, MGA references Bryant's Inventions Agreement, suggesting that even if some rights were assigned to Mattel, the disclosure and use of the doll names by MGA do not amount to misappropriation, as concepts can hold value independently from the products they inspire.

Mattel invests significant resources in developing product concepts and names, particularly for its dolls, with a dedicated Design Center employing hundreds of people to perfect these elements. Internal communications reveal a strong focus on achieving the ideal doll names, emphasizing the importance of names like "Barbie," which carry substantial emotional and economic value for consumers. MGA contends that product names lack independent economic value from the products they represent, suggesting this is a matter for a fact-finder. MGA's own testimony acknowledges that unreleased toy concepts are valuable trade secrets, and its leader admitted considering product names as trade secrets during development.

Mattel argues that the names "Bratz" and "Jade" derive value from their non-disclosure, countering MGA’s claim that these names lack novelty due to their dictionary definitions. Mattel clarifies that it does not claim these words are trade secrets in isolation but rather as part of a unique combination that is not generally known. MGA's argument against the novelty of these names is unsupported, as it fails to provide evidence of their prior use in doll history. Furthermore, MGA's concerns about the implications of treating easily discoverable names as trade secrets are unfounded, as the Uniform Trade Secrets Act (UTSA) permits the use of independently developed or lawfully obtained trade secret information. The requirements for proving misappropriation of trade secrets demand that the plaintiff shows the information was stolen rather than independently developed or obtained from another source.

A plurality of individual discoverers may hold separate rights to the same trade secret, which is primarily concerned with controlling the dissemination of proprietary ideas. In the case involving MGA and Mattel, the court must determine if the doll names "Bratz" and "Jade" possess independent value as trade secrets, despite MGA's challenges lacking substantial supporting evidence. 

Mattel’s counter-claim alleges misappropriation of its information due to MGA's recruitment of former employees, including Ron Brawer, who was a key figure at Tyco Toys before Mattel's acquisition. Brawer was recruited by MGA with a lucrative compensation package and equity stakes, leading to Mattel's immediate response of escorting him from the premises upon his resignation. Additionally, Mattel employed private investigators to monitor Brawer and his family, collecting video evidence for legal purposes. 

Brawer sought to renegotiate his confidentiality obligations with Mattel before leaving, raising concerns about new language in the company’s Code of Conduct. He did not sign the standard exit documentation regarding confidentiality after his departure. His employment agreement with MGA reiterated the importance of adhering to his prior obligations to Mattel, emphasizing that he should not retain or disclose any confidential information from Mattel while employed at MGA.

Mattel alleges that Brawer violated instructions by revealing its fashion doll concept "Swappin' Styles," which MGA subsequently used for its Bratz dolls. A key issue is whether Mattel's unreleased product idea had independent economic value from not being public knowledge. MGA seeks summary judgment but provides no supporting evidence, relying instead on appellate cases addressing burdens in summary judgment motions. One MGA employee's declaration indicates that unreleased toy concepts are valuable trade secrets, and the premature disclosure of product ideas can hinder a manufacturer’s market advantage. The court notes that while some product ideas may not derive value from secrecy, MGA failed to demonstrate the economic value of keeping Swappin' Styles confidential, making it a matter for a fact-finder. 

Additionally, there is a dispute over whether Mattel took reasonable steps to maintain the secrecy of its product plans. MGA claims Mattel did not adequately inform Brawer of his obligations post-resignation or alert them to potential misappropriation. However, evidence exists showing that Mattel made efforts to ensure employee confidentiality. Brawer received reminders about confidentiality while discussing Swappin' Styles. Nonetheless, Mattel's confidentiality measures lacked specificity regarding what constituted confidential information. There remains a genuine issue of material fact regarding whether Brawer disclosed information and whether MGA wrongfully gained knowledge about Mattel's MyScene Swappin' Styles doll.

MGA developed a line of dolls with interchangeable heads and clothing shortly after the release of Mattel's MyScene Swappin' Styles, suggesting urgency and knowledge of Mattel's product launch. However, MGA's 30(b)(6) designee asserted that the release was planned long in advance and was coincidental, citing Bryant's portfolio as inspiration, despite it only discussing interchangeable fashions. This conflicting evidence leaves room for a reasonable fact-finder to determine whether MGA improperly acquired or used Mattel's trade secrets, precluding summary judgment on Mattel's third counter-claim.

Nick Contreras, a former Mattel employee who joined MGA in 2004, was implicated in the alleged misappropriation of trade secrets. Mattel previously identified 24 trade secrets allegedly stolen by Contreras but later abandoned this claim. The remaining allegations focus on his attempts to recruit a former subordinate, Susan Kim, from Mattel and requests for her to download documents onto a thumb drive. While Kim testified that Contreras asked her to retrieve files, she ultimately decided against it, and Contreras denied making such requests. The existence of factual disputes regarding these interactions does not significantly impact Mattel's third counter-claim.

Evidence demonstrates that Contreras did not misappropriate Mattel's trade secrets, a fact acknowledged by Mattel, which argues that Contreras' actions suggest a broader scheme of theft orchestrated by MGA. However, these claims do not affect the viability of Mattel's third counter-claim since it is based on conduct that Mattel admits does not establish liability under the Uniform Trade Secrets Act (UTSA). Mattel's pleading defines the allegedly stolen materials, including documents and designs, but now concedes it cannot substantiate these allegations, leading to the dismissal of the counter-claim related to Contreras' conduct.

In relation to Jorge Castilla, who was a Planning Specialist at Mattel, he is accused of creating a folder labeled "To Take" on his work network shortly before resigning, which allegedly contained sensitive information about Mattel's operations and future strategies. Castilla transferred this information to a personal email and deleted the folder before leaving. This was discovered through computer forensics, prompting Mattel to involve the FBI. The allegations against Castilla include the misappropriation of seven categories of trade secrets, which encompass proprietary processes and knowledge potentially protected as trade secrets even if not documented. Legal precedents affirm that such information remains the employer's property and employees should not leverage it post-employment without proper authorization.

California law mandates that a party seeking to protect trade secrets must describe the trade secret with sufficient specificity to differentiate it from general knowledge and to allow the defendant to understand its boundaries. This principle is established in case law, notably in Whyte v. Schlage Lock Co. and Diodes, Inc. v. Franzen. While a plaintiff need not provide exhaustive details, they must offer reasonable notice of the issues for trial and guidance for discovery. Vague claims, such as alleging that a former employee misappropriated "business models and implementations," are inadequate. A plaintiff cannot merely identify a type of technology and expect the court to discern the specific trade secrets involved, as illustrated in Imax Corp. v. Cinema Technologies.

In the case concerning Mattel, the court found the company's descriptions of the trade secrets allegedly misappropriated by former employee Castilla to be vague and lacking clarity. Mattel asserted that Castilla took information regarding their forecasting process, which involves ensuring proper inventory levels and product availability. However, Mattel failed to specify the systems involved and instead described the process in general terms, rendering it insufficient to establish that the information had value from secrecy or was subject to reasonable confidentiality efforts. The court pointed out that the methods described were intuitive and lacked independent economic value derived from secrecy, echoing prior rulings. Furthermore, the second category of alleged trade secrets, referred to as Mattel's "demand planning process," was described in such vague terms that it lacked clarity and specificity as well.

Mattel's claims regarding trade secrets lack specificity and fail to demonstrate economic value for several categories. The first category involves unspecified "inputs and outputs" related to demand planning, which Mattel does not adequately define or link to Castilla's knowledge or involvement, rendering it inadequate as a trade secret. The court notes that using general industry knowledge for demand projections does not constitute a trade secret.

The second category concerns Mattel's Enhanced Sales Forecasting Process, where the court finds genuine issues of material fact regarding whether the information derived economic value from its secrecy and whether it was misappropriated. The court questions whether Mattel claims the mere use of common elements as a trade secret or if a unique synthesis process is involved.

The third category encompasses the Demand Planning and Sales Planning Modules of Mattel's ISIS Computer System, described as a customized software and hardware system. The court identifies genuine material issues regarding its economic value, efforts to maintain secrecy, and possible misappropriation.

Lastly, the fourth category relates to Mattel's Manugistics Pilot Program, which was tested but deemed unsuitable for Mattel's needs. Castilla allegedly disclosed insights about the program's efficacy to MGA, but the court distinguishes between sharing general information about what worked and specific elements of the program itself. Overall, the court acknowledges unresolved factual questions regarding the potential trade secrets involved in these categories.

Manugistics is a commercially available software program with easily identifiable features. The court references IKON Office Solutions v. Am. Office Prods., noting that it would be unnecessary for Bradley to contact companies to gather information that is already known. Mattel's stance is that it prefers its former employees to explore software features that they are already familiar with, but this argument does not establish any genuine issue of material fact regarding the ease and low cost of identifying Manugistics' features. 

The sixth category of alleged trade secret misappropriation involves Mattel's International Data Warehouse, which stores and calculates data for its international subsidiaries, including sales forecasts and order information. The court finds that Castilla did not misappropriate this information, as the data warehouse remains with Mattel. Mattel's claim that Castilla enhanced MGA's efficiency in handling sales data does not demonstrate misappropriation of trade secrets. Additionally, the court determines that the information related to general sales variables belongs to general knowledge that employees can take when leaving a company, making Mattel's claims vague and exaggerated.

The seventh category concerns the OMNI order management system, which Mattel claims was customized. However, Mattel fails to specify the trade secret aspects of this commercially available product. The lack of clarity prevents the court from assessing whether the information has independent economic value and thus undermines Mattel's claims. 

Lastly, the documents Castilla returned after leaving Mattel, which summarize sales planning and marketing strategies, raise a genuine issue of material fact regarding their economic value. Notably, a witness from Mattel admitted that the general practice of sales forecasting is not a trade secret, but suggested that the specific methods used by Mattel might be considered as such.

Mattel's method for maintaining competitive advantage in the retail market was scrutinized, particularly regarding the company's efforts to protect sensitive documents amid intense competition for shelf space. A key issue arose concerning the reasonableness of Mattel's efforts to keep certain documents confidential after former employee Castilla created a "To Take" folder on his shared network drive shortly before resigning. Despite being aware of Castilla's job interviews with competitor MGA, Mattel took no action to restrict his access to files until after his resignation. While it could be argued that Mattel's inaction demonstrated a failure to maintain document secrecy, it was also reasonable to assess that the folder's creation alone may not have warranted alarm, considering Castilla might have been organizing personal files.

Further complicating matters, there are genuine disputes regarding whether Castilla disclosed sensitive documents to MGA or if MGA improperly acquired them. Castilla returned a thumb drive containing the documents to authorities and claimed no intent to share them with MGA. However, MGA rapidly revamped its forecasting systems after Castilla joined, raising suspicions about potential misuse of Mattel's proprietary information. The credibility of Castilla’s assertions about not making additional copies of documents from Mattel is also under question, given evidence suggesting he may have initially concealed his attempts to download files.

In a related context, Dan Cooney, who became Mattel's Director of National Accounts in January 2004, resigned to join MGA as Vice President of Sales, National Accounts, on April 28, 2006. Following his resignation, Mattel sent a security team to collect files and equipment from Cooney's home. Unlike other former employees, Cooney was allowed to remain with Mattel for two weeks post-resignation, though he could not perform any work during that period, before starting at MGA on May 15, 2006.

Cooney downloaded files from Mattel to a personal compact disc before leaving the company, subsequently transferring them to his MGA-issued computer days after starting at MGA. Mattel identifies two specific files as trade secrets, both containing portions of a formula from a "Merchant Model Optimization Tool" used by Toys 'R Us. Although Toys 'R Us did not share the complete formula with manufacturers, Cooney and Mattel colleagues reverse-engineered it to understand financial thresholds that influenced Toys 'R Us's purchasing decisions. Cooney aimed to use this understanding for strategic planning at Mattel. There is a dispute regarding whether the reverse-engineered formula holds independent economic value, with evidence suggesting that the resources invested in obtaining the information could support its classification as a trade secret. MGA contends that the reverse-engineering process was neither lengthy nor costly, as Cooney noted challenges in cracking the formula but managed to derive it within three and a half weeks. MGA also argues the formula lacked economic value due to flaws and ongoing modifications by Toys 'R Us. However, testimony indicates that the underlying formula might have retained or increased its value despite the tool's evolution, as it remained consistent across updates. Furthermore, there is contention over whether MGA improperly acquired the formula, as MGA had instructed Cooney not to bring confidential information from Mattel, and Cooney claimed not to have discussed the formula with anyone at MGA.

Cooney's testimony regarding his potential use of the Merchant Model Optimization Tool and its formula upon joining MGA is ambiguous, as he also indicated he used a different modeling tool supplied by MGA. Prior to Cooney's arrival, MGA's relationship with Toys 'R Us was deteriorating, prompting Larian's personal involvement in the management of that relationship. This context raises questions about the credibility of Cooney's statements, especially regarding his possible use of the formula for the benefit of MGA's dealings with Toys 'R Us. 

There is a genuine dispute over whether MGA was aware that acquiring the formula was improper, as Cooney indicated that MGA instructed him not to bring any of Mattel's confidential materials, which contrasts with MGA's informal communications regarding the recruitment of Mattel employees. The evidence thus presents a need for a fact-finder to assess whether MGA implicitly encouraged misappropriation despite formal warnings.

Moreover, there are significant issues regarding whether Mattel suffered harm or if MGA gained an advantage from the alleged misappropriation of the formula. Testimony from Cooney's former supervisor at Mattel highlighted the formula's value, while communications between MGA and Toys 'R Us during that period suggested a competitive, zero-sum relationship among toy manufacturers. A reasonable fact-finder could conclude that MGA benefited at Mattel's expense through the use of the formula. However, there remains the possibility that the formula might not have been advantageous for MGA if it was tailored specifically to Mattel's operations.

Additionally, in late 2003, MGA aimed to establish a direct presence in the Mexican market to improve profitability by engaging directly with retailers rather than relying on licensed distributors like Hasbro.

MGA, aiming to establish a subsidiary in Mexico, tasked Susana Kuemmerle with recruiting personnel from Mattel. Kuemmerle successfully recruited Machado, a Senior Marketing Manager at Mattel Servicios, S.A., Mattel Mexico’s subsidiary. A meeting between Machado and MGA's Larian occurred at the February 2004 New York Toy Fair. Subsequently, Larian, Kuemmerle, and MGA COO Tom Park traveled to Mexico to interview candidates, primarily sourced through a recruiter connected to Machado. During this trip, they met with Machado and his colleagues Mariana Trueba-Almada and Pablo Vargas-San Jose, who were encouraged by Machado to attend.

Machado and Vargas prepared a presentation for MGA, utilizing materials from a report initially created for the president of Mattel Mexico, which they accessed from a shared server. They copied this report onto personal devices before the meeting. The presentation also included data from outside vendors associated with Mattel, which they failed to attribute properly. Following the presentation, Larian interviewed Machado, Trueba, and Vargas in March 2004. On March 19, 2004, Larian emailed offer letters for employment to them, proposing positions at MGA Mexico with salaries of $8,910 per month. An attorney for Machado, Trueba, and Vargas later confirmed their acceptance of these offers via email, indicating they had copied files from Mattel’s servers before departing for MGA.

Machado collected storage devices after Trueba and Vargas had copied files, subsequently downloading them to his computer, deleting the originals, and returning the devices for further use. Trueba also emailed Machado files from other employees prior to her resignation. All three employees, including Machado, formally resigned from Mattel Servicios on April 19, 2004. The following day, Machado informed Larian via email about the chaos ensuing from their resignations, noting significant staff changes. On April 23, 2004, Mattel Servicios sent a post-termination letter to the employees, requiring acknowledgment of their obligation to keep confidential information private; however, none of the employees signed this letter.

Regarding the choice of law, Machado and MGA contend that Mexican law applies to the counterclaim for trade secret misappropriation related to the actions of Machado, Vargas, and Trueba, while Mattel and Mattel Mexico dispute this. The court applies California’s choice of law rules, which involve a three-part "governmental interest" test: first, assessing if the substantive laws of each jurisdiction differ; second, determining if a "true conflict" exists; and third, analyzing which jurisdiction's interests would suffer more if its law were not applied. If different claims involve various interests, separate analyses are required. Each defendant and claim must be individually assessed under both California and New York conflict rules to determine applicable liability laws.

The liability of MGA Mexico and Machado is primarily linked to the actions of Mattel Servicios employees, necessitating a distinct choice of law analysis compared to Larian and MGAE. California and Mexican laws differ significantly regarding trade secret misappropriation claims. Mexico allows civil actions for such misappropriation but does not recognize claims based on the acquisition or use of wrongfully disclosed trade secrets. Consequently, MGA Mexico is immune under Mexican law but not under California law. The statute of limitations for trade secret misappropriation in Mexico is two years from the date damages occur, whereas California allows three years from the discovery of misappropriation. Mattel's counter-claim against Machado, filed in November 2006—nineteen months after the employees left Mattel Servicios—would be untimely under Mexican law. There is uncertainty about whether a "true conflict" exists between the two jurisdictions, as the documents in question were accessed via Mattel Servicios computers. While Mattel argues that possession is critical for trade secret claims, there is a material fact issue regarding whether the documents were stored on California servers. This raises questions about California's interest in applying its laws, which will require further factual determination.

Assuming both California and Mexico have legitimate interests in applying their laws, the Court will evaluate which jurisdiction would be more adversely affected if its laws were not enforced. Key considerations include each forum's commitment to its laws, the prevalence of each law, whether the law serves as the sole means to achieve a policy objective, and the location of the injury. Evidence suggests Mexico is serious about enforcing its trade secrets laws, as demonstrated by its investigation into MGA Mexico and Machado after Mattel reported the theft of its trade secrets. The parties have not discussed the international context regarding statutes of limitations or liability related to trade secret misappropriation. California's statute is noted to provide an exclusive remedy for such cases, while a factual dispute exists regarding the ownership of the documents, the involvement of MGA Mexico or MGA, and the access of certain employees to Mattel's servers.

MGA contends that the Mexico-based trade secret claim fails on choice of law grounds; however, there is only one counterclaim for trade secret misappropriation. Mattel's claim encompasses actions by former employees in the U.S., Canada, and Mexico. Although choice of law can be assessed on a claim-by-claim basis, the Court finds no precedent allowing different states' laws to apply to various aspects of the same claim. The analysis will consider all actions alleged in Mattel's counterclaim. A conflict exists between California and Mexico regarding liability for trade secret misappropriation, as Mexico does not impose liability for acquisition or use and has a more restrictive statute of limitations.

Both jurisdictions have interests in this case: Mexico in protecting entities with no ties to the trade secret owner, and California in safeguarding its residents from unauthorized use of proprietary information. However, California would face greater impairment if its laws were disregarded, given that both Larian and MGA reside in California, the majority of the alleged misconduct occurred there, and the harm, particularly regarding the Bratz concept, was also primarily felt in California. MGAE and Larian failed to address these points, which is their responsibility under existing legal standards.

California law applies to Mattel's third counter-claim against MGAE and Larian. A range of documents downloaded by Machado, Trueba, and Vargas included trade secrets such as a pricing matrix, sales data, market reports, and promotional lists. Mattel asserts that nearly all these documents are trade secrets. However, there are genuine issues of material fact regarding Mattel's standing to pursue claims against the three employees, particularly regarding whether Mattel possesses all the alleged misappropriated trade secrets. The argument that the employees had access to Mattel's servers does not conclusively demonstrate possession, especially since some documents were attached to emails and may not have been on the servers. Furthermore, there are questions about whether the claimed trade secrets provided economic value from being confidential, as some pricing information might have been shared with retailers. While MGA contends that documents lose value shortly after creation, Mattel counters that many documents detailed future marketing and sales projections, not past sales. Additionally, there are disputes about whether reasonable efforts were made to maintain the secrecy of the documents, with MGA arguing that not all documents were consistently marked as "confidential," although it acknowledges that pricing information was treated as such. Mattel executives confirmed that employees were instructed on the non-disclosure of confidential information.

The credibility of Machado, Trueba, and Vargas regarding their training and guidance on document confidentiality is central to determining whether they were clearly informed. There are disputed material facts concerning MGA's knowledge of the misappropriated documents by these former Mattel employees. While MGA denies any awareness of their theft, Machado testified that Larian instructed him not to bring documents to MGA Mexico, though he could not recall the context of that instruction. Evidence shows that the misappropriated documents were later found in MGA Mexico's offices, suggesting potential knowledge on MGA's part.

Additionally, there are genuine issues regarding whether MGA utilized the misappropriated documents. MGA references a Mattel employee's testimony indicating that MGA's promotions mirrored industry practices, but the documents included specific information on pricing, discounts, and marketing strategies, raising questions about MGA's independent organizational methods. Ms. Kuemmerle's testimony, stating that MGA Mexico did not use the documents, must be weighed against the discovery of a digital copy of those documents in MGA's offices post-departure of the employees.

Finally, there is an unresolved question of whether Mattel experienced harm or MGA gained benefit from the alleged misappropriation. While MGA cites testimonies from Mattel witnesses who were unaware of any specific harm to Mattel or benefit to MGA, one witness struggled to differentiate the impacts of MGA's new retail relationships from the alleged theft's consequences. A reasonable fact-finder may conclude that MGA Mexico's retail connections were developed using the stolen information. MGA contests the misappropriation claims related to each document involved, while Mattel relies on broad assertions regarding its document secrecy efforts.

The Court finds summary judgment inappropriate due to the lack of specific arguments regarding alleged trade secrets and questionable credibility of the evidence presented by the parties. Janine Brisbois worked for Mattel Canada, Inc. from 1999 until September 2005, and received a job offer from MGA Canada shortly before resigning from Mattel. After her resignation, she was escorted from the premises and retained a thumb drive containing files related to her work at Mattel, which she claimed to have kept for personal reference. Mattel alleges that Brisbois and MGA misappropriated twenty-one categories of trade secrets, including market analyses, promotional spreadsheets, sales comparisons, and internal memoranda concerning pricing strategies and market threats. Specific examples of the alleged trade secrets include presentations evaluating advertising for Mattel's doll brands, charts comparing pricing with competitors, and a memorandum discussing price reductions for products, among others.

Brisbois, an employee at MGA Canada, is implicated in disclosing confidential information from Mattel Canada, including an organization chart and the company’s product distribution mechanisms to retailers in Canada. Following her transition to MGA Canada, an email from a retailer prompted her supervisor to seek Brisbois's input on the best distributor for the retailer's request, highlighting Mattel’s superior performance with smaller retailers. Brisbois responded by detailing Mattel’s investment in a B2B site and its customer service structure for independent retailers. 

The discussion indicates a genuine dispute regarding whether the information Brisbois allegedly misappropriated had independent economic value due to its confidentiality. The documents in question included pricing strategies tailored to maximize profits, which Brisbois herself acknowledged required significant effort to develop. Although some of this pricing information may have been known within the industry, the difficulty in obtaining such information typically supports its classification as a trade secret. Additionally, some documents detailed Mattel’s marketing strategies, which MGA contends are not trade secrets since they may be public. However, a reasonable jury could determine that specific marketing strategies, particularly those not widely known, provided a competitive edge. Brisbois expressed the importance of retaining certain promotional plans, underscoring the value placed on her contributions.

Brisbois's efforts involved more than simply planning a promotion, as the promotional documents she accessed contained Mattel's confidential analyses, recommendations, and proprietary information regarding specific products. The determination of whether these materials retained value as trade secrets at the time of her departure is a factual question for adjudication. Additionally, Brisbois allegedly misappropriated information pertaining to Mattel Canada's internal processes, including its organizational structure, progress reviews, and distribution network. Although Mattel Canada was a public company, which might limit the economic value of its corporate structure, evidence suggests that its specific organizational details were not widely known and held significance for MGA, potentially aiding in its profitability. 

Brisbois communicated insights about Mattel Canada's organizational structure and resource allocations, sharing detailed information about the teams supporting various product lines, which could indicate the value of this information. Furthermore, the exchange leading to Brisbois's disclosure of Mattel's retailer network reveals its significance, especially when MGA faced challenges with a retailer interested in their products. There are material factual disputes regarding whether Mattel took adequate measures to protect the confidentiality of the documents and information in question, with MGA contending that Mattel did not consistently enforce a policy mandating the marking of documents as "confidential." Mattel's witness confirmed that marking proprietary information was merely a directive rather than a requirement.

Mattel periodically reminded its employees about document confidentiality through presentations and circulars. While a Mattel witness acknowledged that some retailers, including Wal-Mart, were hesitant to sign nondisclosure agreements regarding product information, the documents misappropriated by Brisbois contained data not necessarily shared with Mattel Canada's retailers. MGA contended that Mattel did not mandate email encryption for trade secret information, yet failed to provide evidence supporting the necessity of such encryption, nor did it demonstrate that other corporations involved utilized it. 

There is a material factual dispute regarding MGA's knowledge of the improper acquisition of the documents by Brisbois, who was instructed not to bring any proprietary information from former employers. Conversely, Brisbois’ supervisor prompted her to share Mattel information after her employment began. Testimonies from two Mattel witnesses indicated they were unaware of any instance where Brisbois disclosed Mattel’s information to MGA, although evidence suggested Brisbois used some documents in her role at MGA. 

The extent of any injury suffered by Mattel due to the alleged misappropriation is unclear; one witness could not specify any harm, while another noted MGA's aggressive marketing actions that may have been influenced by knowledge gained from Brisbois during her time at Mattel. There remains uncertainty about Brisbois' involvement in MGA’s marketing strategies and whether these were based on improperly acquired information. Summary judgment was granted in favor of MGA regarding trade secrets abandoned by Mattel and certain allegations, while other summary judgment requests from Mattel, MGA, and Machado were denied.

Mattel asserts several counter-claims against Bryant, Machado, MGAE, and Larian, including breach of fiduciary duty, aiding and abetting breach of fiduciary duty, breach of duty of loyalty, breach of contract, intentional interference with contractual relations, conversion, and unfair competition. Before analyzing these claims, the Court highlights principles regarding the California Uniform Trade Secrets Act (UTSA) and the Copyright Act, which are pertinent to the state law counter-claims. 

The UTSA is established as the governing law for common law claims related to trade secret misappropriation but does not supersede contractual remedies or other civil remedies that do not rely on trade secret misappropriation. A claim must have more than just a different legal theory to avoid the UTSA's supersession. Specifically, it must not rely on the same factual basis as a trade secret misappropriation claim. 

The Court needs to determine if the UTSA supersedes claims related to the misappropriation of information that does not qualify as a trade secret. Mattel contends that the UTSA's savings clause protects such claims, while MGA argues that this interpretation undermines the statute's intent to create a uniform liability standard. The California Supreme Court has yet to address this issue, and while California Court of Appeal decisions are not binding, they may provide guidance. Additionally, courts in other states have reached varying conclusions regarding the UTSA's effect on common law claims involving non-trade secret information.

Decisions interpreting the Uniform Trade Secrets Act (UTSA), while not binding, provide guidance on its application. In Burbank Grease Servs. LLC v. Sokolowski, the Wisconsin Supreme Court supported the idea that the UTSA's language allows for other civil remedies for confidential information, suggesting the statute's purpose is undermined. Conversely, in Mortgage Specialists, Inc. v. Davey, the New Hampshire court ruled that the UTSA overrides state common law claims related to information misappropriation, stating that the UTSA's design aims to standardize remedies across states, despite a claim's relationship to trade secrets.

California courts have aligned with Davey, establishing that the UTSA supersedes any claim linked to the same facts as a trade secrets claim, even if such claims seek additional remedies. K.C. Multimedia affirmed that claims like breach of fiduciary duty, which require additional proof elements, cannot coexist with UTSA claims due to the potential for plaintiffs to exploit less demanding proof standards. The California Court of Appeal rejected the notion that common law conversion claims based on non-trade secret information were exempt from UTSA preemption, emphasizing the need for a consistent application of the statute's intent and interpretation.

UTSA supersedes claims regarding the misappropriation of confidential information, regardless of whether it qualifies as a trade secret. The Copyright Act preempts legal rights equivalent to exclusive copyright rights but does not extend to state law claims that require an additional element making them qualitatively different. For example, trade secret law protects confidentiality independently of copyrightability. The Copyright Act does not preempt UTSA claims for trade secret disclosure and exploitation, as these require secrecy not mandated by copyright law. 

Mattel alleges that MGA and Larian aided and abetted breaches of fiduciary duty by several individuals, while its separate counterclaim for breach of fiduciary duty names only Machado and Bryant as counter-defendants. To succeed, Mattel must demonstrate a breach of fiduciary duty by an employee and that the counter-defendants had knowledge of and significantly encouraged this breach. A breach requires proof of a fiduciary duty, its violation, and resulting damages. UTSA overrides the breach of fiduciary duty claims, which also lack merit concerning the actions of individuals who did not owe fiduciary duties to Mattel.

To establish a fiduciary obligation, a person must either knowingly act for the benefit of another or enter into a legally defined relationship that imposes such duties. In the case referenced, Mattel acknowledges that four former employees—Castilla, Contreras, Cooney, and Bryant—did not enter into relationships imposing fiduciary obligations by law. Instead, Mattel claims these employees accepted fiduciary responsibilities upon signing Confidential Information and Inventions Agreements, which included provisions for confidentiality and positions of trust.

The agreements contained similar clauses regarding trade secrets, defining "Proprietary Information" as any valuable, confidential information developed or discovered during employment. Employees were required to maintain confidentiality, not disclose or use proprietary information for any purpose other than for the company's benefit, and return all materials containing such information upon leaving the company. The fiduciary duty outlined was limited to confidentiality obligations regarding proprietary information, which aligns with the definition of trade secrets under California's Uniform Trade Secrets Act (UTSA). The scope of any trust relationship was defined by the agreements made between the parties.

The existence and extent of fiduciary duty are determined by the parties' agreement. Mattel's counterclaims for breach of fiduciary duty and aiding and abetting such breach rely on the actions of former employees Bryant, Castilla, Contreras, and Cooney, which are fundamentally based on the misappropriation of trade secrets. For MGAE and Larian to be liable, they would need to have provided significant support to these employees' actions. Mattel argues MGAE's liability stems from principles of ratification and agency concerning trade secret misappropriation by departing employees. Consequently, Mattel's counterclaims related to Bryant, Castilla, Contreras, and Cooney are superseded by the Uniform Trade Secrets Act (UTSA).

Additionally, the claims against employees Machado, Vargas, Trueba, and Brawer are similarly superseded by UTSA, as there is no material evidence of misconduct beyond the misappropriation of confidential information. Mattel's attempts to reframe the misconduct as "working for a competitor" or "disloyalty" simply recategorize the same facts underlying its claims. Under UTSA, claims based on information misappropriation cannot be pursued separately from fiduciary duty claims. Even if UTSA did not apply to information not classified as trade secrets, Mattel has effectively waived the right to assert such claims. Mattel defines its trade secrets broadly, encompassing all documents and information allegedly stolen, without exceptions. The evolving identification of trade secrets during litigation complicates judicial processes. Furthermore, fiduciary duty claims cannot be based on actions unrelated to information misappropriation for employees Machado, Trueba, and Vargas, despite Mattel's assertions of fiduciary obligations stemming from their positions and contracts.

Mexico does not recognize common law claims for breach of fiduciary duty or aiding and abetting such breaches, as these obligations must arise from contractual agreements enforceable through breach of contract claims. In this context, there is no "true conflict" of law since only Mexico has an interest in the relationships between a Mexican corporation and its employees. Consequently, the three employees did not owe a fiduciary duty to Mattel Servicios or Mattel Mexico by law. Even if California law applied or Mexico recognized common law fiduciary duties, the employees worked for Mattel Servicios, which is not a party to this lawsuit, preventing Mattel or Mattel Mexico from enforcing any rights related to those employees.

Mattel contends that the employees—Machado, Vargas, and Trueba—assumed fiduciary obligations through agreements. A fiduciary obligation arises when one party voluntarily accepts another's trust. However, any such obligations connected to these employees pertained solely to access to Mattel's confidential information. Mattel's counterclaims for breach of fiduciary duty hinge on allegations of misappropriation of this information, regardless of unauthorized acquisition or use.

The agreements cited by Mattel include an "Individual Employment Contract," where the employees agreed not to disclose business aspects or information to third parties; a "Conflict of Interest Questionnaire" signed by Machado and Trueba, which prohibits divulging company information; and a technology use manual signed by Machado that contains clauses against misuse of intellectual property. A fourth agreement, a Code of Conduct, was distributed globally, but there is no evidence Machado received or signed it. 

Ultimately, any fiduciary obligations derived from these agreements were limited to confidentiality, with no evidence that the employees were trusted or relied upon by Mattel or its subsidiaries to the extent necessary to establish a fiduciary duty. Therefore, Mattel's counterclaims concerning breach of fiduciary duty are not supported, and the alleged breaches relate primarily to the misappropriation of confidential information.

Mattel and its subsidiaries maintain the right to inspect personal property brought into the workplace and monitor electronic communications without prior notice. Employees must obtain permission from supervisors before sending personal electronic messages and are required to forfeit any privacy rights regarding messages or information stored on Mattel's technological resources. This extensive monitoring reflects a lack of trust in employee relationships.

In the legal context, summary judgment is warranted against Mattel on its counter-claims for breach of fiduciary duty and aiding and abetting breach of fiduciary duty. Specifically, Mattel's breach of fiduciary duty claim against Bryant overlaps with its trade secret misappropriation claim, as Bryant's obligations pertain only to non-disclosure of trade secrets. Similarly, claims against MGAE and Larian for aiding and abetting Bryant's breach are based on the same conduct related to trade secret issues.

The claim against Machado for breach of fiduciary duty fails because Mexican law does not recognize such a claim, and Machado's obligations were to Mattel Servicios, not Mattel. Furthermore, Mattel did not establish a trust relationship with Machado. Any potential fiduciary duty Machado might have had would only involve confidentiality regarding Mattel’s information. 

Claims for aiding and abetting breaches of fiduciary duty against other employees are also tied to trade secret misappropriation. Specifically, Vargas and Trueba's claims fail as they had no fiduciary duty to Mattel or its Mexican counterpart. Additionally, Mattel asserts that Machado and Bryant breached their employment agreements and that MGAE and Larian induced employees to steal from Mattel.

Mattel alleges that MGAE and Larian interfered with its contractual relations by bribing or inducing former and current employees, including individuals specifically named, to assist MGA while still employed by Mattel. Regarding the breach of contract claim, it is established that the Uniform Trade Secrets Act (UTSA) does not override Mattel's counterclaim against employees Bryant and Machado. To succeed in this claim, Mattel must demonstrate the existence of a valid contract, its performance or excuse for non-performance, Machado's breach, and resulting damages. Mattel asserts that Machado breached three contracts: a Conflict Questionnaire, a Conflict of Interest Manual, and a Code of Conduct. However, the Conflict Questionnaire and Code of Conduct lacked adequate consideration, as no enforceable promise was made without reciprocal consideration. Mattel argues that Machado's employment constituted ongoing consideration, but this contradicts the assertion that Machado was solely an employee of Mattel Servicios. There is no evidence that Machado accepted the Code of Conduct's obligations, which was distributed without a signature requirement. Although Mattel claims Machado accepted the Code of Conduct through his work, it simultaneously contests that he fulfilled those obligations. Machado does not dispute accepting the Conflict of Interest Manual's obligations but contends that Mattel and Mattel Mexico do not have standing to enforce it, as it was an agreement exclusively between Mattel Servicios and himself.

Mattel asserts that both it and Mattel Mexico are third-party beneficiaries of the relevant agreement, emphasizing that a contract's intent to benefit a third party can be inferred from its terms, as established in Johnson v. Holmes Tuttle Lincoln-Merc. The contract may be enforced by the third party until it is rescinded. The Manual implies an obligation to protect "Mattel" confidential information, but lacks a clear definition of "Mattel," instead referencing "Mattel Servicios, S.A. de C.V." The use of "Mattel" throughout the Manual indicates a specific reference to "Mattel Servicios," and obligations described pertain to its employees, not to Mattel or Mattel Mexico. This ambiguity in terminology is construed against Mattel, leading to the granting of Machado's motion for summary judgment on Mattel's breach of contract counter-claim.

Regarding intentional interference with contractual relations, Mattel's counter-claim largely hinges on allegations that MGAE and Larian encouraged employees to steal trade secrets and proprietary information, which also supports a trade secret misappropriation claim. While the Uniform Trade Secrets Act (UTSA) supersedes certain aspects of the counter-claim related to misappropriation, it does not apply to claims arising from unrelated conduct. Mattel alleges that MGAE and Larian induced employees to assist a competitor while still employed by Mattel, and evidence suggests a genuine issue of material fact regarding these actions. Specifically, MGA independent contractor Veronica Marlow is noted to have directed funds to certain Mattel employees for work related to Bratz dolls. MGA claims a lack of knowledge regarding these actions, but circumstantial evidence may refute that assertion, as indicated by a letter from Marlow explaining her decision to maintain her working relationship with the involved employees.

MGAE and Larian encouraged a Mattel employee to work for MGA during personal time, indicating a potential corporate practice of utilizing Mattel employees while they remained employed by Mattel. However, some emails suggest that Larian and others were unaware that certain employees—Cabrera, Morales, and Salazar—were working for MGA while still at Mattel. Larian expressed concern over the salary of Marlow, hinting at a lack of awareness regarding payments made to Mattel employees. Evidence shows MGA involved Bryant in the Bratz doll project shortly before he signed with them, raising questions about his compliance with his Inventions Agreement, which required him to disclose inventions promptly and not engage in competing work without permission. There are unresolved issues regarding whether MGA encouraged breaches of these agreements, which are unrelated to trade secret disclosures or copyright violations.

Mattel seeks summary judgment on elements of an intentional interference with contractual relations counter-claim, which necessitates proving a valid contract, the defendant's knowledge of it, intentional interference, an actual breach, and resultant damages. Mattel asserts it had valid contracts with several individuals, which MGA does not dispute for most. However, there is uncertainty about Brawer’s connection to Mattel's Code of Conduct due to lack of signature or knowledge. Mattel contends that its former employees breached their contracts, specifically citing Cooney and Castilla's failure to return proprietary information as required by their Inventions Agreements, which aligns with the definition of a trade secret under the UTSA.

Mattel's motion regarding whether materials taken by Castilla and Cooney constituted trade secrets is denied due to genuine issues of material fact. Mattel alleges that employees Cabrera, Morales, and Salazar breached their contractual obligations by working for MGA while at Mattel. These employees were only compensated by Mattel and received payments from independent contractor Veronica Marlow. The term "business" in the contract is ambiguous; it could refer to any revenue-generating activity or be limited to competitive enterprises, which Cabrera, Morales, and Salazar were not engaged in. There is no extrinsic evidence to clarify this ambiguity, necessitating a fact-finder's resolution.

Regarding Tumaliuan, a former intern, Mattel claims he breached his contract by working for MGA without disclosing his prior employment agreement with MGA, signed eleven months before his internship began. The term "engage" in the Inventions Agreement is also ambiguous, potentially referring to ongoing employment or active work for another company. Tumaliuan did not initiate a new employment relationship with MGA during his internship, and there remains a genuine issue of material fact about whether he worked for MGA while at Mattel. Again, the parties failed to provide extrinsic evidence to resolve this ambiguity.

Additionally, there are genuine issues regarding MGA's potential intentional interference with the contracts of Mattel employees, with ambiguous evidence concerning the alleged misappropriation of Mattel's confidential information. MGA claims ignorance of the contracts binding Mattel employees, but its use of contracts with similar disclosure and loyalty clauses may imply recognition of wrongful conduct.

In its counterclaim for conversion, Mattel alleges that MGA and Machado wrongfully converted Mattel property and resources—specifically materials created by Bryant while he was a product designer and Bratz inventory—without Mattel’s permission.

The legal document addresses the misappropriation of trade secret and confidential information by former Mattel employees. The Uniform Trade Secrets Act (UTSA) supersedes any counter-claim based on the misappropriation of Mattel's confidential information, regardless of whether it qualifies as a trade secret. Allowing such claims would contradict the UTSA's aim of establishing clear definitions of trade secrets and misappropriation. It is emphasized that information does not constitute property unless recognized as such by law; thus, Mattel cannot assert property rights over its confidential information outside of trade secrets law. However, MGA acknowledges that counter-claims based on the misappropriation of tangible items, like the Bratz sketches, can proceed since these items possess inherent value beyond their informational content. Conversely, claims for conversion related to physical documents fail because Mattel cannot demonstrate their value apart from the information they contain. Consequently, Machado's motion to dismiss Mattel's conversion counter-claim is granted, while MGA's motion is partially granted and partially denied. 

Additionally, Mattel claims that employees Bryant and Machado breached their duties of loyalty by engaging with a competitor and misusing Mattel's resources for personal gain during their employment. Mattel further alleges that MGAE and Larian aided and abetted this breach by facilitating Bryant's actions against his obligations to Mattel.

MGAE and Larian are accused by Mattel of facilitating breaches of loyalty by certain Mattel employees, including Brawer, Machado, Vargas, Trueba, Castilla, Contreras, Cooney, Cabrera, Morales, and Salazar, who were required to avoid competing with Mattel during their employment. Counter-claims against Bryant and Machado, as well as claims against MGAE and Larian for aiding and abetting these breaches, stem from these allegations. 

The Texas Uniform Trade Secrets Act (UTSA) supersedes claims related to Machado, Vargas, and Trueba's alleged misappropriation of Mattel's information, regardless of whether the information is classified as a trade secret. Specific allegations against Machado include aiding a competitor while employed at Mattel, stealing trade secrets, and inducing other employees to assist in misappropriating confidential information. These actions substantiate Mattel's counter-claim for trade secret misappropriation against Machado. 

Claims against MGAE and Larian for aiding and abetting are also rooted in these actions. However, the majority of the counter-claims are rendered moot under UTSA as they pertain to the employees of Mattel Servicios, who did not owe duties of loyalty to Mattel or Mattel Mexico under California Labor Code Section 2863, which prioritizes an employee's duty to their employer's business over personal interests. Consequently, Machado's motion to dismiss Mattel's counter-claim for breach of duty of loyalty is granted, as it is largely superseded by UTSA and because he owed no loyalty to Mattel or Mattel Mexico. MGA's motion is similarly granted for claims based on the conduct of Mattel Servicios employees for the same reasons. The aiding and abetting breach of duty of loyalty counter-claims against Brawer, Castilla, Contreras, and Cooney are also superseded by UTSA.

No allegations or evidence suggest that the employees acted improperly in ways unrelated to the misappropriation of Mattel's information. MGAE and Larian's actions that induced employee disloyalty form the foundation of Mattel's trade secret misappropriation counter-claim. The impact of the Uniform Trade Secrets Act (UTSA) on the counter-claims related to employees Tumaliuan, Bryant, Cabrera, Salazar, and Morales is limited. Mattel claims Bryant's disclosure of the Bratz fashion doll concept to MGA is a basis for the counter-claim, along with allegations of additional misconduct, such as overseeing the production of Bratz dolls while employed by Mattel and misusing company resources.

There are genuine issues of material fact regarding whether Tumaliuan, Cabrera, Morales, and Salazar acted disloyally in ways unrelated to the misappropriation. Specific conduct includes Tumaliuan potentially signing on as a Mattel intern while having another job and whether Cabrera, Morales, and Salazar transferred loyalty to MGA, which may not have been a direct competitor at that time. There is also evidence suggesting MGA may have aided this disloyalty through recruitment efforts and awareness of the employees' activities.

The court granted Machado's motion regarding Mattel's counter-claim for breach of duty of loyalty due to the UTSA's preemptive effect, noting Machado owed no loyalty to Mattel or its subsidiary. MGA's motion regarding aiding and abetting breach of loyalty was granted for certain individuals but denied for Tumaliuan, Cabrera, Morales, Salazar, and parts of Bryant's actions not tied to trade secret misappropriation. Additionally, Mattel claims MGA and Bryant engaged in unfair competition, including commercial bribery and misappropriation of trade secrets, but this counter-claim is also limited by the UTSA and preempted by the Copyright Act concerning Bryant's works.

The counter-claim is not preempted by the Copyright Act or superseded by the Uniform Trade Secrets Act (UTSA). Specifically, it addresses MGA's inducement of Mattel employees to act against Mattel's interests for MGA's benefit while still employed by Mattel, a point that MGA has not contested. 

Both parties seek summary judgment regarding the timeliness of Mattel's counter-claims, focusing on two key dates: the start of the statute of limitations for each counter-claim and the relation back of Mattel's counter-claims to its original pleading. Mattel filed its original complaint against Bryant on April 27, 2004, and sought to amend it on November 20, 2006, which was denied by the district court. Instead, the court instructed Mattel to file its claims as counter-claims to MGA's complaint, ruling that these counter-claims related back to the original complaint against Bryant. Although this ruling was erroneous, it did not prejudice MGA because Mattel's request would have been granted if the court had followed the general rule regarding the relation back of pleadings.

The law of the case doctrine requires that the district court's decision remain unchanged. Mattel's trade secret claim regarding the Bratz concept is also linked to the original complaint as it arises from Bryant's disclosure of the concept to MGA. Consequently, Mattel's counter-claims for copyright infringement, breach of contract, and other claims related to the Bratz works are considered filed on April 27, 2004.

Regarding the applicable statutes of limitations, Mattel's counter-claim for trade secret misappropriation must be brought within three years of discovery or reasonable diligence should have led to its discovery, as per California Civil Code § 3426.6, which stipulates that a continuing misappropriation constitutes a single claim.

MGA's claim regarding continuing misappropriation of trade secrets by Mattel employees is rejected; once a plaintiff is aware of a trusted defendant's misappropriation, they must investigate further, as this awareness triggers the statute of limitations. Various claims by Mattel must adhere to specific time constraints: copyright infringement claims must be filed within three years of accrual, which occurs upon knowledge of a violation; conversion claims also have a three-year limit but may be tolled if undiscovered; claims under Cal. Bus. Prof. Code § 17200 must be initiated within four years; tort-based counterclaims must be brought within two years; breach of contract claims have a four-year limit; and RICO claims must be filed within four years as well. A new limitations period can restart if a new act inflicts accumulated injury on the plaintiff. 

The background facts reveal that Mattel's Diva Starz dolls predate the concept of Bratz. Although Mattel considered the name "Brats," there is a factual dispute regarding whether Bryant, who left Mattel for MGA, was exposed to this name. Prior to discussing Bratz with MGA on September 1, 2000, Bryant solicited help from Mattel employees to develop Bratz sketches and continued to utilize their resources until his resignation on October 19, 2000.

Bryant resigned without disclosing his next destination, noting he had to seize an opportunity. Mattel's former Marketing Director expressed skepticism about Bryant's reasons for leaving. Around the time of the Bratz launch in summer 2001, discussions among Mattel employees suggested Bryant's involvement with MGA on Bratz, but there was no evidence he conceived or created the Bratz concept while at Mattel. Mattel initially feared that MGA's Bratz dolls infringed its Diva Starz line, leading to an investigation into former employees hired by MGA and potential design similarities. An anonymous letter received by Mattel’s CEO in August 2002 alleged that Bryant was involved in creating Bratz while at Mattel. In July 2003, a Wall Street Journal article identified Bryant as the creator of Bratz, although Larian had previously claimed inspiration for the dolls. The district court ruled that Mattel's claims against MGA related to Bryant accrued on the date of the article, July 18, 2003, and that its copyright infringement claim did not accrue until November 20, 2003, when Mattel first received Bratz drawings. MGA contested the timeliness of Mattel's counterclaims regarding Bryant but did not challenge the timing of claims related to other former employees.

MGA contends that counter-claims concerning Mattel's other employees are invalid under the Uniform Trade Secrets Act (UTSA) and that Mattel's claim of trade secret misappropriation relates to a "continuing misappropriation" whose statute of limitations began when Mattel became aware of Bryant's disclosure of the Bratz trade secret. However, this interpretation is flawed, as "continuing misappropriation" applies to multiple acts by a single individual rather than actions by different employees. The court notes that Bryant's alleged misappropriation does not inherently inform Mattel about Castilla's future actions. In terms of California law, Mattel's motion for summary judgment on its non-Bratz allegations is granted. Although the law of the case doctrine typically enforces previous court decisions on the timeliness of Mattel's Bratz-related counter-claims, new evidence presented after earlier proceedings may warrant re-evaluation. Specifically, Mattel has introduced a redacted consultant's report that may alter perceptions regarding Bryant's timing of the Bratz sketches. The court emphasizes that prior rulings should not limit a fact-finder's assessment of the timeliness of new allegations, particularly when those allegations were not previously considered.

Regarding trade dress infringement, MGA claims that Mattel's sales of doll products in trapezoidal packaging, which MGA had already utilized, and the Wee 3 Friends doll in heart-shaped packaging infringed on its trade dress rights under 15 U.S.C. §§ 1125(a) and (c) as well as California law. MGA holds registered trademarks for a transparent trapezoidal box and a specific cardboard box configuration. MGA previously defended its trademark applications against USPTO rejections by asserting the non-functionality and distinctiveness of its trade dress. However, evidence contradicting MGA's claims to the USPTO suggests that its registrations are not entitled to judicial deference. To succeed in its trade dress infringement claim, MGA must demonstrate specific criteria.

To establish trade dress protection, three criteria must be met: (1) the trade dress is inherently distinctive or has acquired distinctiveness through secondary meaning; (2) there is a likelihood of public confusion due to the infringing use; and (3) the trade dress is non-functional. In the case of MGA's trade dress, it was determined that it is neither inherently distinctive nor has it acquired distinctiveness. An inherently distinctive mark does not require proof of secondary meaning, and its assessment hinges on whether the design is common, unique within its field, or merely a refinement of a well-known form of ornamentation. A product acquires secondary meaning when the public associates it with a specific producer, which is developed through marketing efforts.

MGA's trapezoidal packaging for Bratz dolls is deemed non-distinctive, as such shapes have been commonly used for toys for years. A trapezoid is seen as an ordinary geometric shape, typically requiring proof of secondary meaning for protection. Although MGA cited an internal Mattel document praising the packaging's "unique" and "innovative" aspects, it misrepresented the context, as the terms did not pertain to the trapezoidal shape. The packaging, in isolation, is not recognized as an unusual design and thus fails to demonstrate inherent distinctiveness or acquired distinctiveness through secondary meaning.

MGA's trademark registrations assert that trapezoidal packaging is unique to the Bratz doll segment; however, a review of 62 pages of advertisements and articles fails to mention this packaging specifically. Many Bratz dolls were sold in non-trapezoidal packaging, undermining claims of distinctiveness. MGA's argument that the success of the Bratz line indicates the packaging has acquired secondary meaning is insufficient, as success alone does not confer trade dress protection. The document cites precedents demonstrating that common shapes and functional designs, such as the heart shape and handle in MGA's 4-Ever Best Friends packaging, lack inherent distinctiveness. Additionally, the packaging was not on the market when Mattel began developing a competing product, further complicating MGA's claim of acquired distinctiveness through secondary meaning. Overall, MGA has not substantiated its claims of distinctiveness or secondary meaning for its trade dress.

MGA failed to demonstrate that its trade dress elements, including heart-shaped packaging, a handle, a specific numbering system with the word "friends," and themed accessories, were associated with its brand in consumers' minds due to its limited advertising prior to product launch. The court noted that secondary meaning requires a significant duration of use, which MGA did not establish, particularly in a specific county area where its presence was more recent and shorter than in broader Michigan. Additionally, MGA's heart-shaped packaging did not acquire secondary meaning since it did not exist when Mattel began selling similar products.

Regarding functionality, a trademark or trade dress is considered functional if it is essential to the product's use or affects its cost or quality. The court employs a two-step test to assess functionality: first, whether the trade dress is essential for usage or impacts cost or quality, and second, the aesthetic functionality, which examines if trademark protection would create a significant competitive disadvantage unrelated to reputation.

MGA's trapezoidal packaging was adopted for functional reasons, specifically to enhance product visibility on shelves by mimicking spotlight effects without the expense of actual lighting. Testimony from MGA’s executives confirmed that the design was intended to showcase the product's aesthetics. MGA later attempted to contradict this testimony with self-serving statements regarding the packaging’s potential shortcomings in maximizing light flow. However, the court concluded that such limitations did not diminish the inherent functional advantages of the trapezoidal design.

The functionality analysis centers on whether a trade dress enhances product quality. The trapezoidal packaging used by MGA allows light to flow towards the product, a point MGA failed to contest effectively. MGA's arguments regarding the disadvantages of trapezoidal packaging, such as increased surface area and shelf footprint, are deemed illogical, particularly as the packaging is filled to capacity. Functionality does not require a "superior utilitarian advantage." The trapezoidal design possesses functional and aesthetic aspects, as recognized by the Ninth Circuit. MGA bears the burden of proving the non-functionality of its trade dress.

For the 4-Ever Best Friends packaging, it serves a dual purpose of storage and portability, with a design allowing consumers to see multiple dolls through a viewing window. This packaging is also characterized as aesthetically functional, with the heart shape exemplified as a prototypically aesthetic feature. The design's appeal, evident even before market release, enhances product value beyond mere source identification.

The likelihood of consumer confusion is assessed through eight factors: 1) strength of the trade dress, 2) proximity of goods, 3) similarity in appearance, sound, and meaning, 4) evidence of actual confusion, 5) convergence of marketing channels, 6) type of goods, and 7) the degree of consumer care in purchasing decisions.

Evidence of defendants' intention in selecting and using the allegedly infringing mark, as well as the likelihood of expanding product lines, are key considerations in trademark infringement cases. The strength of a mark is determined by its distinctiveness, which is tied to secondary meaning. MGA has not demonstrated that its trapezoidal packaging has acquired distinctiveness or that consumers associate it with MGA, especially since the packaging was not independently advertised and other types of packaging were used. Additionally, MGA's heart-shaped packaging has not been shown to create consumer association, particularly since the product had not been released before the alleged infringement.

The proximity of goods is essential in assessing potential consumer confusion. MGA argues that both the Bratz dolls and Mattel’s fashion dolls are sold in similar packaging and retail outlets. However, without identifying specific sub-categories between the products, the court finds no genuine issue regarding their relatedness.

Regarding the similarity of the marks, Mattel's packaging does not closely resemble MGA's trapezoidal design; it features different color schemes, fonts, and clearly displays product names prominently, which reduces the potential for confusion. MGA claims that consumers may experience "initial interest confusion" or "reverse confusion," but the Sleekcraft test indicates that the prominent display of Mattel's product names negates any material fact issues concerning the similarity of the trade dress.

Similarity of trademarks is evaluated based on sight, sound, and meaning. MGA's designee acknowledged that consumers familiar with Barbie would not confuse it with Mattel's product. The Wee 3 Friends product differs from MGA's Bratz dolls in packaging shape, design, viewing window, color schemes, and branding. No genuine issue exists regarding the similarity of trade dress elements. MGA failed to provide evidence of actual confusion regarding the packaging, which does not negate the possibility of confusion under the Lanham Act. Despite sharing marketing channels, the lack of direct overlap suggests a likelihood of confusion may still exist. The degree of consumer care varies based on the product's price; consumers purchasing expensive fashion dolls, such as MGA's Bratz, are expected to be more discerning. MGA's pricing suggests a lack of awareness of financial realities for many consumers. Evidence indicates that young female consumers are aware of differences between Bratz and Barbie, with internal documents from Mattel acknowledging the appeal of Bratz dolls to older girls. MGA's current stance contradicts its prior claims about consumer discrimination in the fashion doll market.

Mattel's intent in selecting trapezoidal packaging is undisputed; courts generally presume intent to deceive when a similar mark is knowingly adopted. MGA alleges circumstantial evidence of Mattel's bad intent based on Mattel being aware of MGA's exclusive rights to trapezoidal packaging. However, Mattel only copied the trapezoidal shape and not other elements of MGA's trade dress, such as colors or configurations. Mattel asserts compliance with its licensor's requirements, which MGA has not effectively countered. 

Evidence indicates that Mattel's development of the Wee 3 Friends product line aimed to counter MGA's 4-Ever Best Friends product, but internal communications show that while Mattel was concerned about MGA's competitive threat, the release of MGA's product had not yet occurred. The court found no genuine issue of material fact regarding the distinctiveness or functionality of the trade dress, leading to the granting of Mattel's motion against MGA's trade dress infringement claims.

Regarding dilution, MGA's claim under 15 U.S.C. § 1125 argues that Mattel's actions diluted MGA's trade dress despite no requirement for confusion or competition. The law protects famous trademarks from uses that blur or tarnish their distinctiveness, requiring the mark to have strong consumer associations. Examples illustrate this principle, showing how unrelated uses could diminish the mark's commercial value.

Trademark dilution occurs when a mark's uniqueness is weakened or tarnished by other uses, potentially associating it with negative connotations. The court references the Federal Trademark Dilution Act, which outlines four factors to assess a mark's fame: (1) duration and extent of advertising; (2) sales volume; (3) actual recognition; and (4) registration status. MGA's trapezoidal packaging lacks strong consumer association, as evidenced by the absence of specific evidence linking it to MGA beyond its registration and sales volume of Bratz dolls. MGA did not provide consumer surveys demonstrating this association, and while their corporate testimony claimed the packaging had become famous, it lacked substantiation and a defined timeframe. The trapezoidal packaging was not found to be inherently distinctive or famous. For MGA to succeed in its dilution claim, it needed to prove that Mattel's mark was nearly identical, which it could not, as Mattel's trapezoidal packaging differed in dimensions and color schemes. MGA's claim under the now-repealed Cal. Bus. Prof. Code § 14330 cannot be pursued, as the repeal extinguishes the right to recovery. Additionally, MGA's claim under Cal. Bus. Prof. Code § 14247 also fails since it requires proof of a famous mark, which MGA could not establish. Consequently, Mattel's motion to dismiss MGA's dilution claim is granted. MGA also alleges common law unfair competition and violations under Cal. Bus. Prof. Code § 17200, focusing on Mattel's trapezoidal packaging and the copying of the 4-Ever Best Friends trade dress, although many initial allegations have been dropped.

Mattel engaged in several actions that may constitute unfair competition against MGA, including sending letters to former employees to reinforce confidentiality obligations, threatening licensees, distributors, and retailers associated with MGA, attempting to monopolize the supply of doll hair, and manipulating industry research groups to undermine MGA's credibility. In the context of Business and Professions Code Section 17200, MGA must demonstrate "injury in fact" and a loss of money or property due to Mattel's unfair practices. MGA contends it has suffered financial losses due to Mattel's interference with its relationships with licensees and retailers, which are considered property interests. Additionally, MGA incurred significant costs in securing new licenses because of Mattel's conduct, specifically actions taken by Mattel's CEO, Robert Eckert. 

The definition of "unfair" under Section 17200, which is modeled on federal antitrust laws, includes conduct that threatens antitrust violations or significantly harms competition. MGA has presented sufficient evidence to suggest that Mattel's actions may constitute unfair competition, including potentially conditioning contracts with retailers on the exclusion of MGA's products, which could deny consumers access to diverse offerings.

Mattel CEO Robert Eckert sought advice from executives about potentially terminating Mattel’s relationship with an MGA licensee. Although Eckert attributed Mattel’s actions to a desire to dissociate from MGA products, this rationale is questionable given Mattel's attempts to create competing products similar to MGA's Bratz line. Such actions may have harmed competition by limiting MGA's product availability. Mattel's assertion that MGA lacks evidence of its alleged warnings to other companies against licensing MGA products is deemed incorrect.

Regarding common law unfair competition, it involves fraudulent practices aimed at seizing a rival's trade. While MGA alleged that Mattel's actions, such as using deceptive means to access MGA's showrooms, constituted fraud, these claims do not fit the definition of unfair competition as they do not relate to securing MGA's trade. Although there are questions about whether Mattel pressured retailers to end relationships with MGA, this behavior does not meet the fraud criteria necessary for an unfair competition claim. Consequently, the court granted Mattel's motion to dismiss MGA's common law unfair competition claim but denied it concerning MGA's statutory unfair competition claim.

For the unjust enrichment claim, MGA argues for its validity despite Mattel's contention that such claims are generally not recognized as standalone causes of action in California. Courts are divided on this issue, but if allowed, unjust enrichment claims typically require proof of receiving a benefit unjustly retained at another's expense, usually involving some form of wrongdoing. The court views standalone unjust enrichment claims as redundant to existing legal remedies, potentially complicating the proceedings.

MGA's claim for unjust enrichment is dismissed because it fails to demonstrate the necessary "quasi-contractual" elements, relying instead on Mattel's conduct towards other entities that did not result in MGA conferring a benefit on Mattel. The court grants Mattel's motion regarding this claim. 

Regarding personal jurisdiction over MGA Mexico, both MGA Mexico and Mattel seek summary judgment. The court can exercise jurisdiction based on California's long-arm statute, which aligns with the Due Process Clause, requiring "minimum contacts" with the forum state. General jurisdiction exists when a defendant has "continuous and systematic" contacts with the state, allowing for jurisdiction in any related action. 

MGA Mexico's contacts with California are deemed insufficient for general jurisdiction, as its payments to various California vendors—ranging from legal services to shipping—over five years do not constitute the necessary continuous and systematic business presence. Comparisons to prior cases show that minimal and infrequent contacts do not meet jurisdictional thresholds, as demonstrated by the lack of general jurisdiction despite various business activities and payments.

A product manufactured by a corporation in State A and shipped to an independent contractor in State B does not establish that the corporation is "doing business in" State B for general jurisdiction purposes. Mattel's claim relies on the residency of certain MGA Mexico executives in California, referencing Perkins v. Benguet Consolidated Mining Co. to support its jurisdiction argument; however, no evidence was provided that MGA Mexico conducts general business in California. Testimony indicated that MGA Mexico's accounting occurs in California, but it is unclear whether this is done by an outside vendor or MGAE itself, and it does not imply a business operation in California. The residency of Larian and other executives is relevant to their individual jurisdiction, not to MGA Mexico's jurisdiction.

For specific jurisdiction, the Ninth Circuit employs a three-part test: (1) the non-resident defendant must purposefully direct activities or transact with the forum; (2) the claim must arise from those activities; and (3) exercising jurisdiction must align with fair play and substantial justice. Purposeful availment typically involves business actions in the forum state, while purposeful direction applies to tort cases. Face-to-face interactions between MGA Mexico executives and Mattel employees occurred only in New York and Mexico, with any employment relationships based in Mexico. Despite this, Mattel argues MGA Mexico purposefully availed itself of California through communications between Larian, Park, and Mattel employees.

The three Mattel Servicios employees' efforts to execute their employment agreements with MGA Mexico over the phone, allegedly while Park was in California, lack evidence supporting that any relevant actions occurred in California. Communication between Larian and Machado occurred while Larian was in New York, and interviews with the Mattel employees took place in Mexico City. Furthermore, there is no proof that Park was in California during the execution of the contracts. Consequently, Mattel has not met its burden to prove that MGA Mexico purposefully availed itself of the California forum, which requires showing that the defendant committed an intentional act expressly aimed at the forum, causing foreseeable harm there. The court has identified genuine issues of material fact regarding whether the Mattel employees stole documents in California and whether MGA Mexico directed this conduct, making trial determination preferable. Both parties' motions for summary judgment on this issue are denied.

Regarding MGA's affirmative defenses, Mattel's motion for summary judgment is denied concerning MGA's defense of joint authorship but granted for other defenses such as bad faith claim of misappropriation and lack of standing. MGA can reassert previously waived affirmative defenses due to Mattel's amended pleading, which supersedes prior complaints. Mattel's claim of copyright assignment from Bryant is supported by a recorded Inventions Agreement, while MGA has not recorded its employment agreement with Bryant. Joint authorship requires contributions that are inseparable and original enough to stand independently as copyrightable work.

MGA contends that it contributed original expression to some works claimed by Mattel, creating a genuine issue of material fact. The court denies Mattel's motion regarding MGA's defense that Mattel's alleged trade secrets were readily ascertainable and MGA's claim that Bryant independently decided not to disclose the Bratz concept to Mattel. Although this defense overlaps with MGA's arguments against Mattel's interference claims, Mattel does not challenge it on that basis. The court finds potential evidence supporting the notion that Bryant delayed sharing the Bratz concept with Mattel, suggesting he intended to keep it confidential.

Mattel's motion is partially granted and partially denied concerning MGA's defenses of estoppel, waiver, acquiescence, failure to mitigate, and abandonment. MGA abandons its defenses of abandonment and waiver but maintains its judicial estoppel claim, which goes uncontested by Mattel. The court denies Mattel's motion concerning MGA's laches defense, noting that Mattel's delay in asserting ownership allowed MGA to enhance the Bratz brand's value, leading to clear prejudice against MGA.

Mattel's motion is also denied concerning MGA's comparative fault and failure to mitigate defenses, with some Ninth Circuit courts permitting these as affirmative defenses. However, the court grants Mattel's motion regarding MGA's unclean hands defense in relation to Mattel's counterclaims concerning Bryant's conduct, clarifying that allegations of theft related to Bratz advertising materials do not pertain to the current remedy sought regarding Bryant's non-disclosure and work for MGA. Finally, the court denies Mattel's motion against MGA's justification defense, emphasizing the extensive allegations concerning MGA's recruitment of Mattel employees included in the counterclaims.

Mattel and MGA accuse each other of violating the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961, which aims to prevent corruption in various enterprises, including illegal activities like gambling and loan sharking. The statute protects businesses from being affected by racketeering activities, including murder, extortion, and fraud. Under RICO, a pattern of racketeering involves multiple criminal acts within a decade, and entities cannot use proceeds from such acts to gain interest in any enterprise.

Mattel's counterclaims assert a private right of action under RICO, allowing recovery for injuries to business or property due to violations of the Act's provisions, as outlined in 18 U.S.C. § 1964(c). To succeed, Mattel must demonstrate (1) injury to business or property and (2) that this injury resulted from alleged RICO violations. Mattel claims that counter-defendants committed numerous predicate acts of racketeering, categorized as mail fraud, wire fraud, spoliation of evidence, obstruction of justice, violations of the Travel Act, and criminal copyright infringement. These acts purportedly caused Mattel to suffer property rights losses, including the deprivation of employee honest services.

Mattel identifies five specific types of injury: loss of unimpeded business relations, lost sales and profits from infringements, loss of opportunities to exploit its property, theft and misuse of proprietary information, and salaries paid to disloyal employees. RICO does not cover all property injuries; only those leading to concrete financial losses are actionable. Establishing a valid claim requires defining specific business or property interests, typically assessed under state law.

The plaintiff must demonstrate a tangible financial loss linked to the loss of business or property interest. The Court first evaluates if Mattel has alleged an injury to a legally recognized business or property interest under state law and if it has provided evidence of a corresponding "concrete financial loss." California law acknowledges a property interest in the confidentiality and exclusive use of trade secret information. If Mattel's trade secrets were misappropriated, it would indicate an injury to its business or property. However, Mattel has not established that it experienced any concrete financial loss from the deprivation of its use of the Bratz works or from the loss of confidentiality regarding non-Bryant trade secrets. Unlike a precedent case where the plaintiff faced employment contract issues due to wrongful imprisonment, Mattel maintained access to its materials, which remained on its servers.

Mattel presents three arguments: 1) the loss of exclusive use of confidential materials constitutes a per se concrete financial injury; 2) this loss resulted in lost market share and profits; and 3) it led to lost business opportunities. While Mattel cites a Supreme Court case recognizing the economic value of exclusive access to trade secrets, this does not create a blanket rule that all trade secret plaintiffs automatically suffer concrete financial losses. The perceived loss of "competitive advantage" is characterized as a non-concrete injury to an intangible property interest. Additionally, Mattel claims that lost profits arose from the decline in market share due to the success of the misappropriated Bratz doll line.

MGA allegedly improved its infrastructure using Mattel's materials and misappropriated information to gain a market advantage with its Bratz products, leading to significant financial losses for Mattel, estimated at over $773.7 million in revenue and $237.7 million in lost profits from 2001 to 2009, according to expert Michael Wagner. However, the court finds the connection between Wagner's calculations and the injury to Mattel's property interest too tenuous to support a civil RICO claim. Furthermore, Wagner did not specify how particular contracts or sales were negatively impacted by the alleged trade secret misappropriation. Despite claims of lost market share, the evidence suggests that Mattel continued to successfully market its products after the alleged misappropriation. Mattel's argument referencing Supreme Court and Ninth Circuit cases regarding future profits or business opportunities is deemed inapplicable, as those cases involved actual deprivation of property leading to concrete financial loss. Mattel's assertion that loss of exclusive use constitutes financial loss lacks substantiation without concrete examples of how it would have benefited from its trade secrets. The referenced cases highlight that a tangible loss must be demonstrated for a viable claim.

Plaintiff Mattel failed to demonstrate that it suffered concrete financial loss from the deprivation of exclusive use of its trade secret materials, despite claiming it lost the ability to license those materials. Mattel could not identify any specific relationships, contracts, or business opportunities that would substantiate its claims of lost profits or opportunities, rendering its alleged injury less concrete than that of the plaintiff in Litton. Consequently, summary judgment was granted on Mattel's RICO counter-claims related to the injury of its trade secrets.

Regarding employee salaries, while Mattel held a statutory property interest in the honest services of its employees, the deprivation of such services does not equate to concrete financial loss necessary to support a RICO claim. Mattel attempted to recover salaries paid to disloyal employees despite never losing their services, yet it failed to establish a corresponding property interest for this claimed loss. The cited non-binding cases from the Second Circuit do not apply in California or within the Ninth Circuit, where loss of honest services does not result in concrete financial losses.

Additionally, Mattel's claims of lost sales, profits, opportunities, and theft of valuable property were deemed to stem from the loss of trade secrets and employee services, thus failing to establish distinct financial losses. The case law cited supports that damages related to property interests can include costs of repairs and loss of use, but Mattel did not sufficiently prove its financial injuries.

Property interests include prospective business relations and concrete financial losses, such as the inability to fulfill employment contracts or pursue valuable employment, as identified in Diaz, 420 F.3d at 900. Mattel contends that future profits and business opportunities are standalone property interests under California law, which prohibits interference with current and prospective contractual relations. However, Mattel fails to demonstrate that the loss of its trade secrets and employees' honest services resulted in concrete financial injuries to its business relations. Unlike plaintiffs in similar cases (e.g., Bridge, Diaz, Guerrero), Mattel lacks evidence of specific identifiable profits lost due to the loss of exclusive use of non-Bratz trade secrets, as established in Imagineering, 976 F.2d at 1311, which states that speculative injuries are non-recoverable under RICO’s section 1964(c).

To recover under section 1964(c), a plaintiff must show that the RICO violation was both a "but for" and proximate cause of their injury, as noted in Heini Group, LLC v. City of New York. This requires demonstrating that the injury was caused by predicate acts that constitute a pattern, as discussed in Anza v. Ideal Steel Supply Corp. and Sedima, S.P.R.L. v. Imrex Co. Specifically, at least one predicate act must be the proximate cause of the plaintiff’s injuries. Mattel does not clarify how each alleged racketeering act resulted in injury, instead claiming that defendants stole confidential materials, utilized Mattel employees to create competing products, and sold these products in competition with Mattel. However, this general assertion does not isolate the injury resulting from each defendant's actions.

Mattel's potential recovery for the combined injuries from the alleged racketeering acts is only viable under its conspiracy counterclaim. Most of Mattel's claimed injuries—especially those that are not cognizable—were not directly caused by the alleged racketeering patterns. Specifically, regarding the injury to property interests in the Bratz trade secret, Mattel claims two types of financial loss: (1) lost opportunities to exploit the concept and (2) lost profits from MGA’s sale of the product.

Racketeering acts related to Mattel's property interest involve allegations of mail and wire fraud that compromised Mattel's exclusive rights to the Bratz trade secret materials. Mattel claims to have documented numerous instances where interstate mail and wires were used to facilitate this fraudulent scheme. For criminal liability under mail and wire fraud statutes, such usage must be integral to the scheme. However, the requirements for civil RICO claims are stricter; a plaintiff must demonstrate that the racketeering acts are both "but for" and "proximate causes" of their injury. This means injuries cannot merely be foreseeable outcomes of the fraudulent acts; they must arise directly from those acts. Mattel must connect the alleged racketeering directly to its injuries, rejecting the idea that indirect harm suffices. Bryant is specifically identified as having committed four acts of mail fraud and seven acts of wire fraud against Mattel, with examples including invoices and emails related to the shipment of materials for the Bratz line.

Hollow Saran hair fiber is referenced alongside several communications related to Bryant and MGA, including an internal email discussing hair sample shipments, a fax from Bryant to MGA's attorney regarding his employment offer and concerns about suspicion from Mattel, and an email from MGA's counsel attaching a consulting agreement. Additional communications include an edited agreement from MGA's attorney and an exchange between Bryant and Larian expressing excitement about the Bratz concept. Also noted is a fax concerning a patent application for changeable doll footgear. 

The document asserts that none of these communications can be considered a "but for" or proximate cause of injury to Mattel's property interest in the Bratz trade secret, as most occurred after Bryant's employment with MGA and after the alleged disclosure of the trade secret materials. Furthermore, even under broader interpretations of relevant legal standards, Mattel cannot demonstrate that Bryant's actions involving interstate communications would have preserved its exclusive use and confidentiality of the trade secret.

Mattel's claims of Bryant's racketeering include allegations of spoliation and concealment of evidence, such as hiding the origins of Bratz, altering sketches, removing pages from his sketchbook, and destroying evidence on his computer. However, these actions are deemed not to have a direct connection to the injury of Mattel's property interest. Additionally, Bryant's alleged obstruction, including failing to inform his supervisors of his new employment, occurred after the trade secret was disclosed, making it impossible to quantify damages related to his conduct. Finally, Mattel accuses Bryant of criminal copyright infringement through unauthorized reproduction and derivative works of Mattel's protected materials.

Mattel lacks evidence to support that Bryant's alleged copyright infringement, occurring after his departure from the company, caused harm to its confidentiality and exclusive rights regarding the Bratz trade secret materials, disclosed by September 1, 2000. The 4AAC claims that MGAE and Larian's alleged racketeering activities did not result in property injury to Mattel. The document lists six predicate acts committed by MGAE and Larian: mail fraud, wire fraud, spoliation of evidence, obstruction of justice, violations of the Travel Act, and criminal copyright infringement. 

Mattel presents fifteen exhibits supporting claims of mail fraud, categorized into three areas involving media representations, copyright applications for Bratz characters, and shipments related to Bratz production. Additionally, ninety-four exhibits are cited for wire fraud, primarily involving communications between Bryant, Marlow, and MGA HK, concerning the Bratz dolls and Bryant's consulting agreement. Most of these communications occurred after the September 1, 2000 meeting, which was the last opportunity for disclosure of the Bratz trade secrets. The only relevant communications prior to that date were phone calls between Bryant and Marlow in August 2000. 

However, these calls, being intrastate, do not violate the federal wire fraud statute, and Marlow’s independent contractor status distinguishes her from MGAE, undermining the argument that these communications support claims of racketeering that caused injury to Mattel.

MGA asserts that Bryant's independent contractor status differentiates him from MGAE and argues that there is insufficient evidence to establish that MGAE or Larian caused Marlow to use the wires in a way that would be a "but for" or "proximate" cause of injury to Mattel's property interest in the Bratz trade secrets. Over six years, Mattel has uncovered minimal information regarding phone calls between Bryant and Marlow. In August 2000, Bryant initiated five calls to Marlow, with durations suggesting limited content, particularly the first four lasting no more than 48 seconds each. Mattel's argument posits that it is unreasonable to believe Bryant could have effectively conveyed the Bratz trade secrets during these brief conversations. Moreover, it is argued that MGAE and Larian did not incite Marlow to wait for a call from Bryant to extract trade secrets. Contrarily, Mattel has acknowledged that Bryant was collaborating with MGA by the summer of 2000. Marlow testified that Bryant had already shared the Bratz concept with her prior to the August calls and indicated that she encouraged him to present the concept to MGA, to which she had previously disclosed details. The most favorable interpretation of the calls indicates that Marlow had compromised Mattel’s exclusive rights to the Bratz concept before any alleged misconduct by Bryant. Additionally, Mattel fails to demonstrate a proximate cause linking MGAE and Larian’s actions to the eventual disclosure of the Bratz works, as Bryant's decision to disclose and Marlow's facilitation of the meeting were significant intervening factors. Mattel cannot base its liability claim on the independent actions of third parties. Further communications occurred after Bryant transitioned from Mattel to MGA.

Allegations against MGAE and Larian include various predicate acts such as obstruction of justice, spoliation, violations of the Travel Act, and criminal copyright infringement, all temporally linked to interstate uses of mail and wires. Obstruction and spoliation involve destruction of evidence and misrepresentations about the Bratz origins. However, these acts cannot be considered "but for" causes of Mattel's injury regarding the exclusive use and confidentiality of Bratz materials, particularly since the violations occurred post-September 1, 2000. 

MGAE and Larian's alleged Travel Act violations, involving bribery of Mattel employees, do not implicate Bryant, and are also not causative of his disclosure of Bratz materials. Similarly, the alleged acts of copyright infringement postdate Bryant's disclosure, making it unreasonable for any fact-finder to conclude that Mattel suffered injury related to MGAE and Larian's activities.

MGA HK is accused of seven acts of mail fraud and four acts of wire fraud related to Bratz production, all occurring after Bryant’s disclosure, and thus could not have harmed Mattel’s interests. Machado and MGA Mexico are not seen as contributors to Mattel's loss of exclusive use and confidentiality of Bratz materials.

Mattel also claims injury to its interests in non-Bratz trade secret materials due to counter-defendants' racketeering patterns. However, Mattel did not demonstrate concrete financial loss, as it continued using these materials post-misappropriation and failed to identify affected contracts or business relationships. Specific non-Bratz trade secret materials mentioned include the MyScene concept and documents downloaded by former employees. 

Only Machado is a counter-defendant in the RICO claims, and no reasonable fact-finder could establish that the alleged copyright infringements by MGAE, Larian, MGA HK, and Machado were causative of any deprivation of Mattel’s property interests, as the infringements occurred after the materials were misappropriated.

MGA's potential internal reproduction of non-Bratz trade secret works did not implicate or harm any specific Mattel contracts, including licensing agreements. There is insufficient evidence to establish that the alleged obstruction of justice and spoliation by counter-defendants were direct causes of Mattel's deprivation of property interest in its trade secrets. Specific acts cited by Mattel include Machado's use of a program to delete files post-resignation and MGA's failure to produce documents during litigation. These actions occurred after the alleged misappropriation and cannot be linked as causal factors for Mattel's injuries. Additionally, no direct evidence connects the alleged concealment to any loss of market share in the U.S. or Mexico, as Mattel acted on suspicions of theft shortly after they arose.

However, a material fact remains concerning whether Machado's use of interstate wires contributed to potential injury regarding Mattel's trade secrets. While there is no direct evidence that the materials downloaded by Machado were on Mattel's California servers, it is plausible that he directed colleagues to seek confidential information from Mattel employees and its advertising agency. Mattel identified various acts of mail and wire fraud, including employment offer letters and communications between MGA and former Mattel employees. Of these, only Trueba’s emails to Machado could be viewed as contributing factors to the alleged injury. Nonetheless, no reasonable fact-finder could conclude that MGA caused these emails to be sent, as Trueba forwarded them shortly after receiving them, indicating MGA's lack of involvement. The connection between the emails and the alleged disclosure of materials is considered remote and contingent, with Machado’s actions serving as an intervening cause.

The connection between the alleged racketeering patterns and the actions of Mattel's employees is weak, as none of the former employees utilized interstate communications to obtain the trade secret information. Mattel's claims of mail and wire fraud as causes of its injury are based on four specific communications: an email exchange about Castilla's duties, a congratulatory email regarding Castilla's recruitment, internal emails on forecasting issues, and employment offers to Mattel's employees. These communications did not directly injure Mattel's trade secret rights due to numerous intervening factors, particularly the employees' independent decisions to disclose the trade secrets. 

Additionally, Mattel's claims of "lost profits" and "lost opportunity" related to Bratz sales are presented as separate injuries. However, the loss of access to Bratz did not result in concrete financial harm, as it was not a specific opportunity Mattel was expected to pursue. The injuries claimed stemmed from Bryant's prior disclosure of Bratz materials to MGA, which occurred before any alleged racketeering actions. Consequently, these actions cannot be deemed a "but for" cause of Mattel's injury, as the opportunity to use Bratz was already forfeited. Furthermore, Mattel fails to establish a direct causal link between the racketeering activities and its ability to enforce rights or exploit the Bratz works, especially given that Mattel had little interest in such intellectual property prior to its commercial success.

Mattel abandoned the "Toon Teens" doll concept, which it claimed inspired the Bratz dolls, due to unfavorable reception regarding the dolls' proportions. Additionally, Mattel rejected the name "Brats" for another doll line based on concerns about its connotation. These decisions reflect Mattel's broader skepticism towards concepts and names that did not align with its brand image. Consequently, this skepticism undermines any causal link between Mattel's concealment claims and its attempts to reclaim the Bratz intellectual property. Moreover, Mattel's lack of initiative to license Toon Teens to other manufacturers further suggests it would not have capitalized on the Bratz brand through production or licensing.

Despite asserting significant lost profits from Bratz sales, Mattel failed to demonstrate a direct injury to its business interests, as it could not identify specific contracts or relationships it lost. The court noted that while Bratz's popularity might have affected retailer purchases of Mattel products, there must be a clear connection between alleged racketeering actions and the claimed injury. An internal report indicated various external factors contributing to declines in toy sales, including shifts in consumer behavior and preferences, suggesting that Bratz's success may have even mitigated losses for Mattel by revitalizing interest in fashion dolls.

Mismanagement of the Barbie brand hindered Mattel from capitalizing on the market generated by Bratz, yet Mattel's MyScene product benefited from the Bratz brand's goodwill. While Mattel argues that Bratz sales caused a loss of profits, citing expert declarations, the court points out that the primary issue with Mattel's claim is not the calculation of damages but the lack of a direct link between the alleged racketeering and Mattel's injuries. This connection is emphasized in legal precedents that Mattel referenced, which illustrate that injuries could stem from independent factors. The court notes that Mattel's extensive list of competitive factors affecting Barbie's success, such as marketing and consumer preferences, further weakens the direct relationship to Bratz sales. Additionally, the court warns that allowing such claims could open the floodgates for numerous other toy manufacturers to sue, resulting in convoluted and costly litigation, as demonstrated in the Anza case, which involved a competitor alleging market share loss due to tax evasion by another company.

The Supreme Court determined that the causation requirement under section 1964(c) was unmet because the plaintiff failed to establish a direct link between the racketeering pattern and the alleged injury. The Court highlighted that without such a direct relationship, complex and uncertain inquiries could complicate RICO cases. This principle applies to the current matter, where identifying the causes of Mattel's purported lost profits necessitates a similarly intricate assessment. While Mattel argues that the Anza case focused on attributing the defendant's pricing to its fraudulent conduct, the Court emphasized that businesses experience shifts in customers for various reasons, making it difficult to pinpoint the impact of National's pricing on Ideal's sales.

The Court also noted that claims brought by economic competitors could blur the distinctions between RICO violations and antitrust laws, reinforcing the importance of a clear causal relationship. Although Mattel contends that its injury is tied to the counter-defendants' racketeering, the Court ruled that no concrete financial harm was demonstrated, as previous equitable relief and damages awarded to Mattel had been vacated. Additionally, any claim regarding future judgments against MGA lacks the requisite concreteness required by section 1964(c). Mattel's assertions regarding the counter-defendants' actions hindering its ability to recover the Bratz intellectual property and monetary judgments depend on hypothetical outcomes and require speculative evaluations of the impacts of racketeering on trial processes, which do not satisfy legal standards for injury claims.

No reasonable fact-finder could conclude that Mattel suffered injury to a business or property interest due to the counter-defendants' alleged racketeering activity, as previously determined in the Court's order dismissing Omni 808 Investors, LLC's motion. Mattel's second counter-claim asserts that Larian, MGAE, Bryant, MGA HK, MGA Mexico, and Machado conspired to promote a criminal enterprise, but the Court had dismissed claims against two Larian investment vehicles. To succeed, Mattel must prove that the counter-defendants conspired to violate RICO provisions and suffered injury due to an overt act of racketeering. While co-conspirators can be held vicariously liable, Mattel fails to demonstrate any concrete financial injury linked to the counter-defendants' actions. The alleged loss of profits and opportunity from the Bratz trade secrets resulted from numerous intervening factors rather than direct acts of racketeering. To prevail on its counter-claims, Mattel must show that the counter-defendants' conduct was the "but for" and proximate cause of concrete financial injury to recognized business interests. However, Mattel cannot establish that the loss of exclusive use of the Bratz trade secret materials or employee loyalty caused any concrete financial damage or was directly linked to racketeering acts.

Mattel has successfully argued that MGA's claims of racketeering do not meet the causation requirements outlined in section 1964(c), as MGA fails to demonstrate that any alleged misconduct by Mattel was the "but for" or "proximate" cause of its claimed lost profits. Both of MGA's counter-claims were dismissed. MGA's RICO counter-claim similarly lacks merit, asserting that Mattel fraudulently accessed MGA's toy fair showrooms to misappropriate confidential information and engage in a pattern of racketeering involving wire fraud, copyright infringement, spoliation, and obstruction of justice. However, MGA cannot substantiate claims of concrete financial injury or identify specific contracts or retailer relationships adversely affected by Mattel's actions. MGA's alleged injury regarding the confidentiality of its materials is deemed too vague, and its claims of lost profits do not establish a concrete business or property interest. Furthermore, MGA's assertions that Mattel's actions caused harm are weakened by the fact that the misconduct occurred prior to the alleged concealment of evidence by Mattel. The theft of information was completed before the communications occurred, and thus, no reasonable fact-finder could link these actions to MGA's alleged injuries in a direct manner. MGA also cites litigation misconduct by Mattel related to evidence production, but this does not establish a direct injury connected to the racketeering claims.

MGA alleges multiple grievances against Mattel, including failing to produce evidence related to the market intelligence group prior to phase 1 proceedings and inducing perjury from Vargas during his deposition. MGA contends these actions led to the district court issuing equitable relief that, although vacated on appeal, significantly harmed MGA's business, particularly regarding sales of Bratz products, relationships with retailers and licensees, and brand equity, which they estimate to have been worth one billion dollars. MGA argues that Mattel's misuse of the discovery process misled the court into unjustly favoring Mattel, resulting in wrongful injunctions that nearly drove MGA out of business.

However, the court finds MGA's allegations unfounded and unsupported by the factual record, asserting that the equitable relief awarded was a result of the district court's careful legal reasoning, not influenced by Mattel's non-production of documents. The court emphasizes that MGA's claims of injury lack concrete evidence and that MGA cannot demonstrate that any of Mattel's alleged racketeering acts were the cause of its injuries. Consequently, Mattel's motion for summary judgment is granted regarding MGA's second counterclaim.

The court assesses Mattel's first counterclaim under RICO, noting that Mattel must prove damage to business or property resulting from violations of sections 1962(c) or 1962(d). As MGA disputes the sufficiency of Mattel's evidence, the court outlines the requirements under the RICO statute for establishing an enterprise, which includes a common purpose, relationships among members, and continuity.

An associated-in-fact enterprise can be established based on its activities rather than its formal structure, as highlighted in case law. Mattel asserts that the counter-defendants engaged in the operations of an enterprise involving MGAE, MGA Mexico, MGA HK, Larian, Machado, and Bryant. MGA contends that the enterprise lacks a common purpose, citing three points: (1) its unawareness of Bratz's ownership by Mattel, (2) its ignorance of Bryant's continued work for Mattel after contracting with MGA, and (3) its lack of knowledge regarding the downloading of confidential information by Machado, Vargas, and Trueba prior to their resignation. However, these arguments are inappropriate for resolution at the summary judgment stage. 

Mattel could potentially succeed by demonstrating that Bryant created Bratz-related works during his employment at Mattel, regardless of contract interpretation disputes. The court has determined that genuine issues of material fact exist regarding MGA's shared intent with others to misappropriate Mattel's information. Additionally, for the counter-defendants to be considered distinct from the enterprise, Mattel must show that they were not part of the same entity. MGA argues that MGAE is indistinct from itself and its employees; however, the court previously dismissed this claim, noting that Bryant and Machado were not always employed by MGA. MGA's assertion that the enterprise should be deemed non-distinct during periods when Bryant and Machado were not associated with MGAE is countered by the precedent allowing for distinctness between a corporation and its independent contractors, provided the contractor maintains professional independence.

The Court has identified a genuine issue regarding the professional independence of Bryant from MGAE, suggesting that the distinctness of MGAE from its independent contractors and subsidiaries requires further factual determination. In relation to racketeering activity under 18 U.S.C. § 1962(c), both Mattel and MGA must demonstrate involvement in a pattern of racketeering, which is defined as committing at least two acts of racketeering within ten years that indicate a threat of continued criminal conduct. MGA contends that no pattern exists due to the brief duration of the alleged RICO enterprises, contrasting Mattel's assertion of a single enterprise involving its counter-defendants. The Court has already dismissed MGA's argument regarding the distinctness of MGAE from the enterprise during the employment of Bryant and Machado. Furthermore, the existence of the enterprise is not negated by any claims of MGAE's lack of distinctness.

Regarding Machado, the Court concluded that he did not engage in a pattern of racketeering despite allegations from Mattel of several predicate acts, including fraud, obstruction of justice, and theft of trade secrets. The timeline of Machado's alleged misconduct is concentrated between early 2004 and April 19, 2004, when he allegedly absconded with Mattel's confidential information. Mattel's attempts to assert that Machado continued orchestrating theft after joining MGA Mexico are deemed unconvincing, as evidenced by deposition testimony from his colleague, Vargas, regarding his actions during that period.

Mattel asserts that Machado received additional documents from them for months after joining MGA Mexico, but lacks evidence showing he used or directed others to use interstate communications to defraud Mattel. Consequently, this conduct cannot be classified as a predicate act for racketeering. Mattel also claims Machado used "wiping software" on his hard drive post-resignation, which was, in fact, standard software for hardware performance enhancement, with no evidence of spoliation or obstruction of justice. Regarding the alleged use of misappropriated materials until 2008, the court previously ruled that such use did not constitute a scheme to defraud, as Mattel's interest was in the exclusive use of its trade secrets, not just any use. Additionally, while Mattel alleges Machado committed copyright infringement related to Bratz works, he merely worked at MGA Mexico and distributed products without participating in MGA's infringement. The trade secrets in question were not registered with the Copyright Office, and reasonable evidence of willful infringement by Machado was lacking. Finally, Mattel's claim that Machado's misconduct could continue indefinitely is countered by the fact that he ceased working for them on April 19, 2004, ending any opportunity to misuse his position. Therefore, Mattel cannot prove a pattern of racketeering by Machado, although it may establish such patterns against MGAE, Larian, MGA HK, and MGA Mexico, which are accused of various acts of racketeering, including mail and wire fraud and copyright infringement.

Mattel accuses MGA Entertainment (MGAE), Larian, Machado, MGA Mexico, and MGA HK of orchestrating a fraudulent scheme to undermine Mattel's rights to honest services from its employees and to safeguard its confidential and proprietary information. The allegations include obtaining Mattel's property through false pretenses and obstructing the judicial process, notably by not preserving Mattel's property. The scheme potentially violates mail and wire fraud statutes (18 U.S.C. §§ 1341, 1343), as employers have vested interests in the honest services of employees and their trade secrets. Although MGA asserts it did not intend to devise any fraudulent scheme and instructed departing employees against stealing Mattel's information, the Court found that material facts remain in dispute regarding MGA's involvement in the alleged theft.

MGA also challenges Mattel's claims under the Travel Act (18 U.S.C. § 1952), which necessitates proving interstate travel or facilities used to promote unlawful activity. Mattel claims violations tied to California Penal Code Section 641.3 concerning bribing employees for favorable action. The Court has previously noted that alleged violations extend beyond a single instance to include multiple employees across different locations. There are unresolved factual issues regarding whether MGA induced employees to misuse their access to Mattel’s confidential information.

Regarding criminal copyright infringement, MGA contends it did not willfully infringe on Mattel's copyrights related to Bryant's creative works. However, the Court has determined that genuine issues of material fact exist concerning whether specific iterations of the Bratz dolls infringed on Bryant's sketches.

MGA asserts that its sculptures were infringed by Mattel, which was aware of Mattel's copyrights at the time. In MGA's counterclaim, it contends that Mattel operated an associated-in-fact enterprise involving various parties, including independent contractors and law firms. However, evidence shows that these individuals lacked a common purpose and were engaged in unrelated projects, indicating no cohesive enterprise. 

Mattel argues that the absence of a common purpose means no distinct enterprise exists, and thus, it cannot be considered separate from itself. MGA alleges that Mattel committed wire fraud, criminal copyright infringement, spoliation, and obstruction of justice. Specifically, MGA claims that Mattel devised a fraudulent scheme to acquire trade secrets using interstate wires. For this claim to survive summary judgment, evidence must demonstrate a genuine issue regarding Mattel's intent and use of wires. Mattel counters that MGA lacks evidence of any wrongful scheme, although internal emails could imply an intent to execute the scheme. Additionally, MGA claims that Mattel criminally infringed its copyrights by re-publishing MGA's materials in internal documents and displaying them to employees.

To prove criminal copyright infringement, MGA must demonstrate three elements: infringement, willfulness, and profit motive. MGA fails to establish these criteria. Even if MGA holds valid copyrights, Mattel's use of MGA's materials constitutes fair use due to several factors: the minimal nature of the usage, the factual content of MGA's works, and the absence of competitive harm to MGA's copyrights. MGA's allegations of spoliation and obstruction of justice against Mattel lack evidentiary support, as MGA does not provide proof of redacted evidence, misconduct, or intent to impede justice. Furthermore, MGA cannot show any injury to business or property due to violations of applicable statutes, resulting in summary judgment against both Mattel's and MGA's counterclaims. Additionally, neither party can demonstrate participation in racketeering activity, warranting further summary judgment against both claims.

MGA alleges that Mattel engaged in trade secret misappropriation through deceptive practices since at least 1992. Mattel operated a market intelligence group that attended major international toy fairs, including those in Hong Kong and New York, to gain insights into competitors' upcoming products. To do this, employees were instructed to pose as retailers or members of the press, fabricating identities and details about their fictional stores to gain access to competitors’ showrooms. This included using fake phone numbers and scheduling appointments on-site to avoid background checks. Reports from these activities provided Mattel with information about MGA's future product releases, such as new characters and accessories in 2002. Additionally, in 2004, Mattel hired Sharon Rahimi, a former employee, to further investigate MGA's product lines by posing as a freelance writer at toy fairs and compiling detailed reports on competitors’ products, which were disseminated within Mattel.

Mattel contends that MGA's counter-claim for trade secret misappropriation is barred by the statute of limitations, arguing that MGA should have filed the claim within three years of discovering the misappropriation as mandated by California Civil Code § 3426.6. The determination of when the claim accrued hinges on whether it was a compulsory counterclaim, which would relate back to the date of Mattel's initial complaint.

Mattel challenges the Court's previous determination that MGA's counter-claim was compulsory, arguing that a lack of a developed factual record shows no logical relationship between Mattel's counter-claims and MGA's counter-claim in reply. The Court had previously linked Mattel's allegations of document theft by Machado and Brawer to MGA's claims regarding the reception of internal memoranda, establishing a logical relationship. Mattel now asserts that recent discovery indicates no overlap between the documents misappropriated by Brawer or Machado and those prepared by Mattel's market intelligence group. However, the Court maintains that the assessment of whether a counter-claim is compulsory is based on the pleadings at the time they are filed, not influenced by later discovery findings. The Court emphasizes that allowing ongoing reassessment of claims could mismanage judicial resources and create uncertainty. Mattel’s broad counter-claims prevent it from limiting MGA's claims effectively. Additionally, regarding the timing of MGA's trade secret claim, Mattel argues it is time barred if it accrued before November 20, 2003, pointing to hearsay testimony from an MGA employee about a Mattel employee. However, the Court finds no admissible evidence indicating that the employee was aware of any infiltration activities before joining MGA, nor that MGA had showrooms before a certain date. Finally, Mattel contends that information shared by MGA at toy fairs lacks independent economic value because it was publicized. The Court clarifies that pre-release product information can still hold significant value for manufacturers due to potential market advantages.

MGA's advance notifications to journalists and retailers regarding product releases do not undermine the competitive advantage gained from keeping product details confidential, which prevents competitors from copying or disrupting MGA's retailer relationships. Although Mattel contends that MGA did not make reasonable efforts to maintain secrecy during toy fairs, there is a genuine dispute about this claim. While MGA allowed limited press access without non-disclosure agreements and some product information was displayed in retailer planogram rooms, evidence indicates MGA took specific steps to protect sensitive information, such as segregating girls' brands in exclusive planogram areas. The assessment of MGA's secrecy efforts is left to the fact-finder, particularly given that any disclosures might have implied restrictions on use or sharing.

Mattel's argument that MGA's product information was easily obtainable is countered by the assertion that MGA's press releases did not convey the comprehensive details available at toy fairs, such as pricing and marketing strategies. Moreover, the significant resources Mattel allocated to market intelligence suggests that relying solely on press releases would have been inadequate for obtaining detailed insights into MGA's products.

Regarding harm, Mattel claims that MGA cannot demonstrate damages from the alleged misappropriation of information about 111 products, asserting that MGA's expert failed to provide specific loss evidence. Instead, the expert offered a general calculation of total harm with only illustrative examples for three products. The resolution of whether Mattel misappropriated MGA’s trade secrets will influence the determination of damages, pending a jury's findings on the extent of misappropriation.

MGA's expert testimony on damages for misappropriation of trade secrets was deemed ineffective for the jury's consideration. The court denied Mattel's motion for summary judgment regarding MGA's first counterclaim. MGA's motion was also denied concerning Mattel's counterclaim for declaratory relief due to existing genuine issues of material fact. Most evidentiary objections were overruled, and MGA's Request for Judicial Notice was denied as moot. 

The court ordered the following dispositions: 
1. MGA's motion was granted for Mattel's counterclaims related to aiding and abetting breach of fiduciary duty and violations of 18 U.S.C. §§ 1962(c) and (d).
2. MGA's motion was partially granted and partially denied for Mattel's counterclaims involving copyright infringement, misappropriation of trade secrets, and others.
3. Machado's motion was granted regarding several counterclaims from Mattel.
4. Mattel's motion was granted concerning MGA's claims for trade dress infringement and related claims.
5. Mattel's motion was denied about MGA's claim for statutory unfair competition and counterclaim for trade secret misappropriation.

Additionally, the court granted Mattel's unopposed motion to consolidate the summary judgment motions. The document outlines distinctions between owning ideas versus designs, and permits extrinsic evidence to clarify contractual interpretations. Labor Code § 2870 restricts the assignment of inventions created on an employee's own time unless certain conditions are met. The court emphasized that only protectable elements should be compared to avoid granting a monopoly on ideas through copyright claims.

The Ninth Circuit has shifted its approach regarding the intrinsic and extrinsic tests for copyright infringement. Initially, the analytical dissection of similarities was included in the intrinsic test, but it now occurs at the extrinsic stage, which establishes the standard for infringement applicable at the intrinsic stage. If a work has a broad range of expression, it may infringe if it is substantially similar; if the range is narrow, it must be virtually identical to infringe. 

MGA asserts that Bryant's sculpture did not infringe certain drawings but fails to specify which drawings are at issue, leading the court to refrain from addressing the matter independently. Conversely, a jury could reasonably conclude that the sculpts are virtually identical. The court has granted summary judgment on the issue of whether subsequent generation dolls infringe, making that decision final. 

MGA's motion for summary judgment concerns several sketches, which MGA claims were jointly authored by them and Bryant. The court identifies a genuine issue of material fact regarding this joint authorship. It also notes that variations in cheek tones may arise from the limitations of mass production. 

Mattel argues that all generations of Bratz dolls infringe on Bryant's original character sketches. To determine character similarity, courts assess the totality of characters' attributes and traits. A character infringement claim requires that the original conception of the character is sufficiently developed and that any copying goes beyond mere general ideas. If no reasonable fact-finder could find substantial similarity in the protectable expression, Mattel cannot succeed on the extrinsic test. Additionally, while other jurisdictions may require only possession of a trade secret for infringement, Mattel's possession of the Bratz concept relies on the assignment of Bryant's ideas. The court also disregards hearsay notes from a meeting.

Mattel claims that the Swappin' Styles theme contains one or more trade secrets but lacks specificity, limiting its claim to an unreleased product idea for swappable fashions and heads. The court notes that Mattel has abandoned its counter-claim regarding other allegedly misappropriated information, granting MGA's motion as unopposed. MGA has not provided evidence to suggest that the concept of a doll with interchangeable heads and fashions was novel or valuable. While Mattel argues that its secrecy efforts indicate the information's value, it fails to show that these materials were protected differently from other documents. The court denies Mattel's request for an adverse inference related to Castilla's Fifth Amendment invocation, stating that Mattel was not prejudiced and had already discovered Castilla's wrongdoing through forensic analysis. Mattel's motion for summary judgment concerning alleged information theft by employees Machado, Vargas, and Trueba is denied, as the misappropriation of non-trade secret information is irrelevant under the Uniform Trade Secrets Act (UTSA). Additionally, despite acknowledging that Machado was a Mattel Servicios employee, there's no genuine issue of material fact regarding his employment status. Lastly, there is a noted dispute among circuits regarding the resolution of factual issues pertinent to choice of law.

The Court notes that the factual dispute central to Mattel's claim against Machado necessitates an examination of evidence not presented by the parties. Different legal issues may be governed by varying state laws, but MGA does not pursue applying these laws to each element of its third counter-claim regarding misappropriation of trade secrets. Under Mexican law, Mattel's claim is time-barred, prompting the Court to evaluate the counter-claim solely under the Uniform Trade Secrets Act (UTSA). Mattel's objection to certain statements made by Larian to Machado is overruled, as these statements are not offered for their truth. Machado's request for summary judgment regarding the use of various documents is denied, with circumstantial evidence being sufficient to prove the issue of use.

MGA's arguments regarding the documents are minimal, with more specific points found in its Statement of Uncontroverted Facts. MGA did not waive its right to assert a supersession argument by not raising it before the phase 1 trial, as Mattel did not identify the Bratz concept as a trade secret then, and its broad amendment allows for new affirmative defenses. MGA contends that allegations related to trade secrets disclosed by Bryant are preempted by the Copyright Act, although these claims rely on the additional element of secrecy.

Brawer, an officer at Mattel, owed a fiduciary duty to the company that exceeded the obligations of other employees; however, Mattel does not allege any misconduct by Brawer beyond misappropriation of information. MGA argues that the Copyright Act preempts Mattel's counter-claim concerning Bryant's inducement to join MGA while still employed by Mattel, but Mattel's claim is based on inducing Bryant to withhold his inventions from Mattel. It is noted that Bryant could not have breached the assignment clause of his works, as the assignment was automatic.

Section 1125 of the U.S. Code allows the owner of a famous mark to seek an injunction against commercial use of the mark that dilutes its distinctive quality. Lastly, the principle that an amended pleading renders prior pleadings void does not apply to new affirmative defenses if the amendment significantly alters the case's scope.

Mattel does not specifically claim certain injuries in its legal pleadings. Ninth Circuit rulings suggest a lack of property interest in honest services, which may conflict with the federal honest services fraud statute. Additionally, Mattel lacks evidence that Trueba's emails to Machado qualify as "communications in interstate or foreign commerce," as both parties resided in Mexico City during the correspondence. While it is theoretically possible for a wire communication to be routed through another state, Mattel fails to demonstrate this in the current case. There is also no consensus on whether future revenues, even if readily calculable, qualify as "business or property," leaving unresolved whether the City’s claims of lost tax revenue represent an injury to its business interests. Furthermore, Mattel contends that it, as the direct victim, suffers unique injuries distinct from those of other manufacturers; however, the intent behind MGA's actions is deemed irrelevant to the RICO proximate cause requirement. Finally, Mattel’s request to add Cabrera, Morales, and Salazar as parties to the case is denied.