28 November 2018Copyright

Disney and Fox strapped into IP theme park suit

The Walt Disney Company and Fox Entertainment Group are at the centre of a $1 billion lawsuit, after they sought to terminate an agreement covering a Fox-branded theme park.

Genting Malaysia Berhad (GENM), the owner and financier of a Malaysia-based theme park, filed its complaint at the US District Court for the Central District of California, Western Division, on Monday, November 26.

The Malaysian company said that it spent $750 million to develop a theme park based outside of Kuala Lumpur, with plans that it would feature Fox’s branding.

IP related to blockbuster films such as “Ice Age”, “Rio”, and “Planet of the Apes” was due to feature in the first ever Fox-branded theme park, Fox World, GENM claimed.

The complaint said that, under the terms of a memorandum of understanding signed in 2013, Fox would receive an annual licensing fee, a cut of retail sales from the park, and approval rights over the design of the park in exchange for providing a licence to some of its IP for use in the park.

GENM said that the theme park would be at the centre of an existing resort complex, Resorts World Genting, which includes a casino. More than 23 million people already visit the resort annually, according to GENM.

The park was due to open in the first half of 2019, but GENM alleged that Fox was delaying the process by using its “unreasonable exercise of its approval rights” and failing to provide style guides for branded digital assets.

“Due to the lack of guidance from Fox concerning the representation of its own IP, GENM’s vendors have had to recreate Fox’s IP from scratch,” GENM said.

The Malaysian company said that it had to recreate characters for a carousel ride which were to be based on characters from “Ice Age” and “Rio”, which “wasted both time and money”.

GENM speculated that Fox was delaying the process in efforts to “leverage” its position and “force a renegotiation of the economic terms” of the deal, as the film studio had not previously negotiated for a share of gate sales.

However, once Disney began “calling the shots”, GENM said that Fox wanted to terminate the whole agreement.

Fox is in the process of being acquired by Disney for $71.3 billion. The acquisition was announced last year, and is expected to close in early 2019.

"Unlike Fox, which was perfectly happy to have the park situated a stone’s throw from the casinos of Resorts World Genting so long as it could continue to extract financial concessions from GENM, Disney wanted no association with a gaming company like GENM due to Disney’s 'family-friendly' brand strategy, as evidenced by its well-documented history of lobbying against the opening of gaming facilities near its parks,” the complaint said.

GENM said that “seller’s remorse” is not a “valid” ground to terminate the agreement.

Against Fox, the Malaysian company is seeking to recover its $750 million investment, in addition to consequential and punitive damages “in excess of $1 billion”, for breach of contract and breach of fair dealing.

GENM also accused Disney of inducing the breaches, and questioned the validity of the contract termination.

Speaking to WIPR, a spokesperson for Disney commented: “The claims made against Disney in this matter are utterly without merit.”

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