‘A Stunning Warning for Corporates’: How the Spaniels Effect Cost MGA $71M

A federal jury in California awarded $71 million in damages to the management team of the Atlanta-based pop group OMG Girlz after finding that the toymaker MGA Entertainment infringed on their trade dress. This case emphasizes how recent changes in First Amendment defenses can impact trademark infringement lawsuits.

The jury awarded $17.9 million in real damages and trebled this to $53.6 million as punitive damages, asserting that MGA acted with “malice, oppression, or fraud.” This ruling comes after MGA successfully defended non-infringement allegations in the same case just over a year ago.

Finnegan partner Mark Sommers, told World Intellectual Property Review, "Even though a ‘free expression’ defense was available for the right of publicity claim, the jury found that it did not apply, and that MGA was liable for misappropriation of likeness too." Mark noted the strategic narrowing down of claims as an important factor. “Strategically carving down the core claims to only the strongest rights likely played an important role, as it avoided jury saturation with heaps of ‘colorable’ rights,” he said.

The Supreme Court’s decision influenced the turnaround in MGA’s fortunes in Jack Daniels v. VIP Products, which restricted the First Amendment defense. This effectively made MGA's primary defense in their successful second trial obsolete, leading to a retrial based on this new legal landscape.

According to Mark, “What’s interesting is how starkly the case outcome changed when retried,” reflecting the significant impact of the revised legal doctrines.

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