Disney rues court's denial of appeal

The Hundred Acre Wood is abuzz with the sound of litigation as the near-moribund Pooh case stirs back to life.

Late last month, a California appellate court denied the Disney Co.’s emergency appeal of an order levying $90,000 in sanctions for destroying documents and approving jury instructions that are potentially devastating to Disney. Court also denied Disney’s request to keep the appeal sealed.

The long-running case — 11 years and counting — pits Stephen Slesinger Inc., the company that holds the bulk of North American Rights to A.A. Milne’s “Winnie the Pooh,” against Disney, which has been licensing the Pooh characters since the 1960s. Hundreds of millions of dollars are at stake; last year, Disney bought the rights still held by the Milne estate for $350 million.

The Slesinger family contends they were shortchanged on royalties on items such as stuffed animals. More importantly, they also claim they should have received royalties on videocassettes and computer games, a position Disney denies. Upping the ante further, the Slesingers maintain that if they are victorious at trial, they have the right to terminate the license.

Daniel Petrocelli, who represents Disney, dismisses the notion of cancellation as a remedy. “This case is just about money. There is no way they can cancel the license,” he said.

“Mr. Petrocelli can say that till the cows come home, but he’s not the judge and jury,” said Bonnie Eskenazi, who along with Bert Fields reps the Slesingers. “Under California law, we can ask for termination.”

The recent appeal was of an order by L.A. Superior Court Judge Ernest M. Hiroshige. In addition to the monetary sanctions for destroying documents, the judge ruled that the jury will be told that a now-dead Disney executive promised to pay royalties on Pooh videocassettes, and Disney will not be able to dispute that promise.

“Denial of the (emergency appeal) just means that we must wait until the end of the case to get a review,” Petrocelli said.

In other Pooh news, media organizations were successful in unsealing the court record in the case. In March, Hiroshige will hear arguments on which documents Disney claims should still remain confidential because they contain trade secrets.

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