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Disney and Pooh heir court ruling

Suit comes after Disney announced deal to secure worldwide rights

The Walt Disney Co. and Clare Milne, the heir of Winnie the Pooh author A.A. Milne, Tuesday filed a lawsuit seeking a court ruling that Milne can terminate the North American merchandising rights license held by the Slesinger family and grant those rights to Disney.

The lawsuit comes one day after Disney announced a deal to secure worldwide rights starting in 2004 to Pooh, which is a $1 billion-a-year franchise for the company.

Disney and the Slesingers have been in a decade-long legal battle in which the Slesingers claim they have been underpaid royalties by as much as $1 billion. Immediately following Disney’s Monday announcement, lawyers for the Slesingers — who have held the North American merchandising rights since the 1930s — said Milne could not cut off their rights and they would challenge the termination.

The complaint, filed in U.S. District Court in Los Angeles, alleges that Clare Milne and Minette Hunt, the granddaughters of A.A. Milne and Pooh illustrator E.H. Shepard, terminated rights in the works of their respective grandfathers on Tuesday. (Hunt is not a plaintiff in the suit).

In terminating, Milne and Hunt invoked a section of the 1998 U.S. Copyright Law that allows heirs to terminate rights granted under the copyright 75 years after the copyright came into existence. (Pooh was first published in the late 1920s). A window to recapture rights existed under previous copyright law; the 1998 Act, which lengthened the copyright term by 20 years, provided a new window.

‘Wrong section of the law’

Slesinger attorney Bert Fields said: “They’re reading the wrong section (of the copyright law) because the grant in question — the 1983 agreement — was made after 1978 and is governed by different rules. Disney’s announcement that they will not pay Slesinger after two more years is a repudiation of the 1983 agreement between Disney, Slesinger and the Milnes and enormously strengthens Slesinger’s claim that it can terminate Disney’s rights.”

A major claim in the long-running Slesinger suit against Disney is that the family can terminate Disney’s Pooh license and shop the bear elsewhere.

Referring to Disney’s prior indications that Clare Milne originated the idea of terminating Slesinger’s rights, Fields added, “If Disney has encouraged a Milne heir to try to cancel the Milne grant to Slesinger, it may have liability going far beyond breach of contract.”

The original agreement between A.A. Milne and Stephen Slesinger, according to the complaint, provided for an advance of $1,000 against future royalties for Pooh rights. Disney acknowledges that Pooh now brings in annual revenues of $1 billion, a number some analysts think is low.

The complaint outlines rights Disney acquired from the Milne estate and from the Slesingers in 1961. It describes the 1983 agreement between Disney and the Slesingers, which is central to the Slesinger lawsuit, as an adjustment on royalty payments.

Fields’ partner, Bonnie Eskenazi, added: “This is just a sham pleading. The 1983 agreement between Disney, SSI (the Slesingers) and the Milnes expressly revokes and regrants the rights to Slesinger. Disney conspicuously omits to tell the court that this is the purpose of the1983 agreement.”

In addition to Dan Petrocelli, lead counsel on the Slesinger case, Disney has brought in copyright expert David Nimmer to handle the new litigation.