Milne, et al. v. Stephen Slesinger, Inc.

• The district court grants Disney’s motion for summary judgment, dismissing Slesinger’s copyright, trademark and trade dress infringement claims relating to the Winnie the Pooh characters; the court also grants Disney’s motion for summary adjudication of Slesinger’s claims based on judicial estoppel

British author A.A. Milne, and then the Milne Trustees, granted certain of his rights in the Winnie the Pooh stories and characters to Stephen Slesinger and his corporation (SSI) in a series of agreements from the 1930s through the 1980s. Slesinger in turn granted the rights he acquired from Milne to Disney.

In the 1990s, Slesinger sued Disney in state court for royalties based on Disney’s exploitation of the Winnie the Pooh works. During this litigation, Slesinger claimed that he had granted all of the rights he acquired from Milne to Disney. The state court action was dismissed by the California Superior Court in 2005 as a sanction against Slesinger.

Subsequently, Slesinger amended his counterclaim in the litigation at hand to include, for the first time, copyright, trademark and trade dress infringement claims, asserting that he had retained some of the Winnie the Pooh rights and that Disney was infringing those rights through its exploitation of the Winnie the Pooh works. Faced with cross-motions for summary judgment, the court held that the language of the contracts between Slesinger and Disney unambiguously described a transfer of all of Slesinger’s rights in the works, leaving Slesinger without any copyright, trademark or trade dress rights to be infringed.

The district court relied on the language in the agreements which stated that Slesinger received “certain rights” from Milne and “further rights” in later agreements and granted “those rights it had acquired” to Disney. The court also held that this interpretation of the contracts was strongly supported by the conduct of the parties over a nearly 50 year relationship. “Both parties have treated the agreements as constituting a transfer from SSI to Disney of all of SSI’s interests in the Pooh characters, entitling SSI to royalties for all uses. Such a lengthy period of consistent behavior is powerful evidence of SSI’s intentions.” Furthermore, the court noted that over their 50 year relationship, Disney registered dozens of copyrights and trademarks in the Pooh works and characters and Slesinger did not register any rights or oppose Disney’s registration of these rights before filing his claims for infringement.

Although Slesinger did not prevail in the state court litigation, and judicial estoppel was not a perfect fit, the court also held that Slesinger was estopped from asserting such an argument because he had claimed just the opposite during the lengthy state court litigation – that he had granted all of his rights to Disney. Finally, the court dismissed Slesinger’s unfair business practices claim against Disney over Disney’s alleged inducement of Milne’s heirs to serve copyright termination notices on Slesinger. The court noted that, assuming Disney persuaded the heirs to serve termination notices, no law was violated because Milne’s heirs’ service of termination notices, though invalid, was not unlawful.