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UPDATE: Scope of Pooh Product Deal In Question

4 Feb, 2002 By: Holly J. Wagner

Lawyers for the Walt Disney Co. and a family-owned company that owns the merchandising rights to A.A. Milne's Winnie The Pooh characters have been slugging it out in court over millions in royalties for videocassettes, DVDs and computer software based on the Pooh characters.

Literary agent Stephen Slesinger bought some rights from author A.A. Milne in 1929, long before merchandising was a billion-dollar industry. While Slesinger died many years ago, his wife and daughter sued Disney in 1991, alleging the Mouse House has erroneously excluded packaged media from royalties paid under a licensing deal forged in 1961, according to court papers.

"The major issue in the case is, what commercial uses of Pooh does Disney have to pay us royalties on," said Bonnie Eskenazi, co-counsel for the Slesinger heirs. "We say that's ‘every time you make money, we make money.' That means video, computer software, theme parks, all that stuff." At stake, she said, is "hundreds of millions of dollars."

Disney attorney Daniel Petrocelli has contended the rights only cover merchandise like clothing and accessories.

"The Slesingers only obtained, many many years ago, very small license form Mr. Milne, which was merchandise. That applies to objects and things," Petrocelli said. "Mr, Slesinger, whenever he wanted to use the characters even to put on a puppet show, he would call and ask Mr. Milne for permission."

Video is outside the scope of an agreement negotiated in 1983 with then-Disney attorney Vincent Jefferds, who died in 1992, Petrocelli said. Disney decades ago bought up all the Pooh rights the Slesingers didn't own, includinf film and television rights, he said.

"Over the years, the Slesingers have tried to argue that their merchandise rights are much broader than they are. They say whenever a Disney employee dresses as Winnie the Pooh and walks down Main Street and hugs kids, they should get paid for that," Petrocelli said. "New technologies have emerged and new products have appeared in the marketplace. We have an extremely strong case and the Slesingers know it. When they filed this case, they were not focused on video."

Meanwhile, Judge Ernest Hiroshige has yet to rule on arguments made last year that Disney underpaid the Slesinger family for the merchandise it did pay royalties on. Fields has sought to have the court appoint a forensic accountant to comb the books regarding those payments to determine whether Disney paid all it was supposed to.

"The accounting deals with the T-shirts and stuffed Pooh bears and things like that," Eskenazi said.. "That claim is the minor part, the pennies that have fallen off this case. That is worth $35 million."

Beyond that, Eskenazi noted, Pooh licensing continues and the case may extend to items newly added.

"We haven't been paid on those new Pooh juices," Eskenazi said. "Now we've got to quantify all that, once we've determined what's in the basket we have to determine its value."

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