by Joe Shea
American Reporter Correspondent
April 1, 2007
DISNEY DUCKS POOH SETTLEMENT CONFERENCE ORDERED BY JUDGE
LOS ANGELES -- In a still-confidential hearing, a federal judge ordered the Walt Disney Co. to settle the 16-year dispute over Winnie The Pooh rights and royalties, The American Reporter has learned, but the studio has refused.
A confidential source said that Disney ducked out of a mandatory settlement conference last week after the judge ordered the studio to produce a board member with authority to settle the long-running Winnie the Pooh lawsuits in federal and state Courts in California.
A settlement discussion of the details of Disney's risks and potential outcomes, with a member of the board present, may have obligated Disney to disclose the potential $1 billion-dollar impact of the lawsuit to shareholders.
"Instead of facing off with Slesinger, they ran for cover," the source said. Disney asseryed that the parties were too far apart before the conference started, the person said.
Slesinger was prepared to support its federal claims for damages and target Disney's inconsistent defenses and "schemes" to destroy Slesinger's rights, according to the source. Disney succeeded in getting a state case thrown out in 2003, but the state case has no impact on Slesinger's federal claims. The studio was reportedly concerned that Slesinger can cancel Disney's license for Pooh products, and about the financial impact of losing Pooh television and merchandising rights across all of Disney's operating segments, would have been key points at that conference.
The two sides last met in the U.S. Supreme Court, where Disney failed to win review of a ruling by Ninth Circuit Federal Judge Florence Cooper in Los Angeles denying its right to recapture Pooh marketing and branding rights from the grandchildren and heirs of author A.A. Milne that the late Stephen Slesinger acquired in 1929. Cooper appointed the settlement judge who ordered the mandatory settlement conference after claering away issues made moot by Slesinger's victory in the Supreme Court.
The studio reportedly earns as much as $2 billion in Pooh merchandise and properties, including stuffed bears, DVDs and televised cartoons. The most recent suit brought by Slesinger seeks to have Disney's patents to derivative characters declared the property of Stephen Slesinger Inc., which licensed certain rights to studio founder Walt Disney in 1961.
"'Slesinger is unreasonable,' they'll tell you. but where is their support for that statement?" the source asked. "Beyond being mud-slinging chickens, with a tiresome press-spin about Slesinger's greed and unworthiness, where are any credible defenses to Slesinger's federal and material counter-claims?"
"It's pretty clear they didn't want to educate a member of Disney's board about the weakness of Disney's position or any of the details of Disney's liabilities," the source said. "Nor did they want to run the risk of having a federal judge telling a board member that Disney had a problem and should settle.
"As long as their risks remain clouded under wraps, they can continue to delay the day of reckoning."