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This excerpt taken from the DIS 10-K filed Dec 7, 2005. Milne and Disney Enterprises, Inc. v.
Stephen Slesinger, Inc. On
November 5, 2002, Clare Milne, the granddaughter of A. A.
Milne, author of the Winnie the Pooh books, and the
Company’s subsidiary Disney Enterprises, Inc.
(DEI) filed a complaint against Stephen Slesinger, Inc.
(SSI) in the United States District Court for the Central
District of California. On November 4, 2002, Ms. Milne
served notices to SSI and DEI terminating A. A. Milne’s
prior grant of rights to Winnie the Pooh, effective
November 5, 2004, and granted all of those rights to DEI.
In their lawsuit, Ms. Milne and DEI seek a declaratory
judgment, under United States copyright law, that
Ms. Milne’s termination notices were valid; that
SSI’s rights to Winnie the Pooh in the United States
terminated effective November 5, 2004; that upon
termination of SSI’s rights in the United States, the 1983
licensing agreement that is the subject of the Stephen
Slesinger, Inc. v. The Walt Disney Company lawsuit
terminated by operation of law; and that, as of November 5,
2004, SSI was entitled to no further royalties for uses of
Winnie the Pooh. SSI filed (a) an answer denying the
material allegations of the complaint and (b) counterclaims
seeking a declaration that (i) Ms. Milne’s grant
of rights to DEI is void and unenforceable and (ii) DEI
remains obligated to pay SSI royalties under the 1983 licensing
agreement. SSI also filed a motion to dismiss the complaint or,
in the alternative, for summary judgment. Subsequently, the
Court ruled that Milne’s termination notices are invalid
and dismissed SSI’s counterclaims as moot. Following
further motions SSI filed an amended answer and counterclaims
and a third-party complaint against Harriet Hunt (heir to E. H.
Shepard, illustrator of the original Winnie the Pooh stories),
who had served a notice of termination and a grant of rights
similar to Ms. Milne’s. By order dated August 3,
2004, the Court granted SSI leave to amend its answer to assert
counterclaims against the Company allegedly arising from the
Milne and Hunt terminations and the grant of rights to DEI for
(a) unlawful and unfair business practices; and
(b) breach of the 1983 licensing agreement. In November
2004, the District Court granted a motion by Milne to dismiss
her complaint for the purpose of obtaining a final appealable
order of dismissal, so as to permit her appeal to the Court of
Appeals to proceed. Oral argument of that appeal was heard on
September 13, 2005.
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