Mattel suffers surprise defeat in retrial over the ownership of the Bratz dolls.
A jury has found that Mattel misappropriated trade secrets from MGA and awarded MGA $88.5 million in damages.
The jury also found that Mattel acted willfully and after the verdict MGA attorneys said they would seek to triple the damages award.
It was also decided by the jury that MGA had interfered with Mattel's contract with designer Carter Bryant, awarding $10,000 in damages to Mattel.
The news is the latest development in a case that began in 2004, when Mattel accused MGA of stealing its designs by hiring Carter Bryant.
The most recent case was a retrial after a jury decided that Mattel owned the franchise and ordered MGA to pay $100 million in 2008.
Mattel CEO Robert Eckert said in an email: "We remain committed to protecting the intellectual property that is at the heart of business success."
Mattel will soon file for a new trial, said Susan Estrich, a lawyer for the company. "This is not the final word in this case," she said.
MGA chief executive Isaac Larian, meanwhile, said the case has been a prolonged battle for his family. "It very well shows that in America, even huge corporations are not above the law," Larian told Reuters after the court hearing.
US District Judge David Carter said the trade secrets damages could be lowered to $88.4 million due to a calculation mistake by the jury.
The next court hearing has been set for May 24th.