The Winnie-the-Pooh War: At the Intersection of Intellectual Property Law and Estate Planning
February 27, 2008

A creative individual may spend a lifetime composing books, songs, plays, movie scripts, software code and other creative works. Although he may understand that these creative works are subject to copyright protection and may even pursue such rights, he does not typically foresee what will happen to his works upon his death nor does he understand that decisions early in life can drive the final outcome. If he transfers or licenses his rights early on, it may be difficult - if not impossible - to recover those rights for his children and grandchildren. The resolution of these issues occurs at the intersection of intellectual property law and estate planning. Recently, in Milne v. Stephen Slesinger, Inc., 430 F.3d 1036 (9th Cir. 2005), the granddaughter of the creator of the Winnie-the-Pooh® series of books and characters found herself at such crossroads.

The history of the legal war regarding the intellectual property rights in the Winnie-the-Pooh works is long and dramatic. A.A. Milne created the Winnie-the-Pooh characters and series of books in the 1920s and owned the copyrights in those works. At that time, the duration of the copyrights in the Winnie-the-Pooh works was for an initial period of 28 years and a renewal period of an additional 28 years. Milne entered into a contract in 1930 with Stephen Slesinger, a New York comic-book creator and television-film producer, to grant merchandising and other rights in exchange for royalties. Slesinger subsequently created Stephen Slesinger, Inc. ("SSI"), to which he assigned his rights in the Winnie-the-Pooh works.

A.A. Milne died in 1956, and he was survived by his wife, Dorothy, and his only child, Christopher Robin. Milne's will bequeathed all interests in his Winnie-the-Pooh works to a trust for Dorothy's benefit for her lifetime. Subsequently, Walt Disney Productions was granted SSI's and certain of Dorothy Milne's rights in exchange for royalties. Walt Disney Productions subsequently turned Winnie-the-Pooh into the $3 - $6 billion per year business that it is today. After Dorothy's death, her interest in the Winnie-the-Pooh works went into another trust (the "Pooh Properties Trust"), whose beneficiaries included Christopher Robin and, ultimately, Christopher Robin's only child, Clare.

In 1976, the Copyright Act was amended to extend the duration of copyright protection. The amendment to the Copyright Act extended the duration of the existing copyrights in the Winnie-the-Pooh works for an additional 19 years. The amendment to the Copyright Act also enabled a copyright holder or his heirs to terminate a grant of rights in copyrighted works made to a third party prior to January 1, 1978. 17 U.S.C. §304. In implementing the termination rights, Congress was attempting to protect authors, who are often at a huge disadvantage when entering into contracts with publishers and other licensees because of the uncertainty of a work's value at publication and because of their sometimes limited negotiating leverage. The termination rights run somewhat contrary to established contract law in that these rights give authors an escape from a previous unfavorable contract. Even an attorney practicing outside the area of intellectual property law may incorrectly conclude that such an agreement may not be terminated.

Fearing that Christopher Robin would exercise the option to terminate the grant of rights his parents had made in the Winnie-the-Pooh works, Walt Disney Productions approached him in 1983 to negotiate a new deal for the Pooh Properties Trust, which he accepted. There is no doubt that the Milne family benefited as a result of the 1983 agreement. As a result of the new agreement, the Milne family received double SSI's share of the royalties, which amounted in a net gain of hundreds of millions of dollars. However, it was still less than desired.

In 1998, the Copyright Act was amended to extend the duration of copyrights for an additional 20 years. In 2002, while SSI and Walt Disney Productions were battling in court over SSI's allegations that Walt Disney Productions had been cheating them out of royalties for over a decade, Clare Milne served SSI with notice of termination of the 1930 agreement her grandfather entered into. Clare Milne then sought a declaratory judgment that her termination notice was valid under the Copyright Act. SSI argued that Clare did not have any rights because her father had terminated the 1930 agreement in 1983 when he negotiated the new agreement. The court agreed with SSI and found that the 1930 agreement was terminated when the 1983 agreement was executed. The right to terminate that Clare was seeking applied only to copyright transfers or licenses executed before January 1, 1978, and there was no pre-1978 agreement with regard to the Winnie-the-Pooh works to be terminated when the amendment to the Copyright Act went into effect.

Clare later petitioned the U.S. Supreme Court to hear her case on appeal. However, the Supreme Court declined to hear her case on June 26, 2006, and now Clare is left with no recourse to attempt to regain those rights. In the meantime, SSI and Walt Disney Productions continue to squeeze Winnie-the-Pooh for every dollar they can get before the copyrights enter the public domain in the 2020s. Perhaps if she had discussed her feelings about the Pooh Properties Trust's rights in the Winnie-the-Pooh works with her father before he signed the 1983 agreement, Christopher Robin might have served a termination notice instead of signing the agreement, thereby possibly allowing the Milne family to negotiate a better deal for their rights to the Winnie-the-Pooh works.

One should be aware of what copyrights he owns, what copyrights are owned by his family and whether any part of such rights have been granted to any third party. Because the duration of copyright protection today generally last for the life of an author plus 70 years, copyrights can span across multiple generations. Planning appropriately now will help avoid pitfalls in the future, including those that came to plague A.A. Milne's granddaughter.

1. Vasilios Peros is a member at the firm of Thomas & Libowitz, P.A. and heads the firm's Technology & Intellectual Property practice. He can be reached at (443) 927-2118 or vperos@tandllaw.com.

2. “Winnie-the-Pooh” is a registered trademark of Disney Enterprises, Inc.

3. This article is provided for informational purposes only and should not be construed as a legal opinion or legal advice. The reader should not rely on this article in making business, legal or other decisions on any matter without first consulting an attorney regarding any such decision or undertaking.

If you have questions, please contact:
Vasilios Peros, Esq.

vperos@tandllaw.com
(443) 927-2118