At last, the long-running legal dispute over the ownership of the merchandising rights to Winnie the Pooh seems to be reaching its conclusion. The case will come to court for the final time in America early in 2005, with the outcome sure to have a significant financial impact on the two parties involved: the Disney Corporation and Stephen Slesinger.
The case stretches back more than 60 years but at its heart is the destination of lucrative royalty income associated earned through licensing activities involving the creations of AA Milne and illustrator EH Shepherd.
The United States is regarded as the home of “character licensing” with a business estimated to be worth more than £4 billion a year at retail value. It is a business that Disney virtually created themselves, with some of the first licensed products featuring Mickey Mouse.
Characters which are generally derived from the entertainment world such as television, comics and films are developed as “brands” by their owners, with plans to maximise the commercial value of the property through agreements with third-party manufacturers. Other forms of licensing include art licensing , sports licensing and brand licensing, the latter being particularly strong in the US with corporations such as Coca-Cola , General Mills and The Ford Motor Company leading the way.
Characters such as Spider-Man which now straddles comic, television and movie formats are developed into extensions as diverse as confectionery products and logos for mobile phones. Revenue is earned for the property owner by the royalties generated from all product sales bearing the licensed image – rights owners take a percentage of the retail price.
The use of the image is controlled by contracts which set out business terms and standards. Manufacturers work to a controlled design palette to ensure a consistent image is portrayed globally. This level of control also helps minimise one of the big threats to property owners: piracy.
With licensing now regarded as a global industry – outside of the US the strongest markets are Britain, France, Germany and Australia – the value of intellectual property rights seems to be rising with companies recognising the commercial potential of rights.
Which is where the Pooh case comes in. The Milne stories have always had an enduring charm, and the Disney-fication of the characters in the 1960s has furthered their appeal, especially in the commercial sense. When it comes to licensing, endurance is all-important to ensure steady earnings.
Disney was enlisted to market Pooh-related goods, which have ballooned into a multi-million-dollar concern spanning movies, books, toys and games and hi-tech products. The Slesingers sued Disney in 1991, arguing that they had not been given their share of the profits generated by the character. Now, the Shlesingers are to get their day(s) in court, accompanied by celebrity lawyer Johnnie Cochran (the man who got OJ Simpson off his murder charge), while Disney will be supported by Clare Milne, the English grandaughter of the author.
The landmark case is sure to be followed closely by many of those companies that now specialise in this field. British players such as Entertainment Rights have built portfolios by acquiring rights from smaller firms or individuals, typically the original creators of properties – recent examples include Postman Pat and Basil Brush.
Other firms, such as DC Thomson, the Dundee-based publishers of the iconic comics Beano and Dandy, have developed character portfolios alongside other business activities. In DC Thomson’s case, more than 60 years of comic publishing has spawned some of the world’s most loved characters like Dennis the Menace and Desperate Dan. Licensing is now interwoven with their publishing activities.
Investors are looking for properties with a long-term pedigree, classic status and international potential. Recent reports suggest that Entertainment Rights are interested in purchasing the Mr Men characters, but are in competition with Chorion, the owners of Noddy.