MGA Seeks Review to Redefine Punitive Damages in IP Cases

MGA Entertainment, the toy company behind L.O.L. Surprise! dolls, wants to avoid a fourth jury trial in a long-running legal battle with the OMG Girlz music group. They’ve asked a higher court to step in and decide whether judges—not juries—should be the ones to rule on certain penalties, like punitive damages, especially when those penalties don’t involve actual financial loss.

A federal judge in California is reviewing MGA’s request to appeal two earlier decisions: one that says a jury must decide on punitive damages, and another that allows those damages even without proof of financial harm.

MGA’s lawyers argue that these rulings raise questions about how such penalties should be handled and who has the authority to impose them. Since the judge has already approved a fourth jury trial, MGA wants the appeals court to weigh in before that trial begins.

The upcoming trial will focus on whether MGA intentionally copied the OMG Girlz when creating certain dolls in its “L.O.L. Surprise! O.M.G.” line. Earlier this year, the judge threw out a $53.6 million penalty awarded to the music group, which had been tripled from a $17.8 million profit MGA was ordered to give up.

Meanwhile, a lawyer for the OMG Girlz said they strongly disagree with MGA’s latest arguments and plan to fight the appeal.

Finnegan attorneys Mark Sommers and Patrick Rodgers, told the Daily Journal that  MGA's appeal raises rare and consequential questions about when punitive damages can be sought in intellectual property cases and who has the authority to decide them.

Mark said that plaintiffs often combine federal Lanham Act claims with state-law misappropriation claims because those state statutes "often permit the recovery of punitive damages," adding that if punitive damages are limited to cases with proven losses, "the plaintiff loses a significant offensive arrow in their quiver, and a significant pressure point to bring a defendant to the settlement table."

Patrick explained that under the Seventh Amendment, "the right to a jury [exists] only in civil cases involving legal claims and remedies - not purely equitable claims," meaning if punitive damages are treated as equitable, "plaintiffs seeking only equitable relief like disgorgement cannot secure a jury trial by tacking on a request of punitive damages as they otherwise could now."

The matter is scheduled to be heard before the judge next month.

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