In the Name of The Pharaoh – Japanese Yu-Gi-Oh! Duel Monsters Episodes – Raw and Subbed

4Kids to Sell Yu-Gi-Oh! License for $10+ Million

Yesterday, 4Kids Entertainment filed a motion with the U.S. Bankruptcy Court for the Southern District of New York seeking approval to sell its entire Yu-Gi-Oh! business, which includes the Yu-Gi-Oh! License and the complete Yu-Gi-Oh! anime library. 4Kids seeks to auction off the property to interested parties.

An initial (“stalking horse”) bid of $10 million for the Yu-Gi-Oh! property has been made by Kidsco Media Ventures, who signed a letter of intent with 4Kids on March 7. Kidsco Media Ventures is a private Delaware-based entertainment company that was founded just earlier this month and is backed by the Saban Capital Group, the same investment firm who is behind the Power Rangers franchise.

A hearing to approve the auction process and sale dates will take place on April 27. Currently, parties interested in the Yu-Gi-Oh! property have until May 31 to place a bid. If the sale attracts additional bidders, an auction will take place on June 5, with a hearing to finalize the sale to occur on June 7. (Update: The sale hearing will take place on June 11.)

Kidsco Media Ventures notes that it is only interested in making the purchase if the parties can seal the deal by June 30. Kidsco would like to be in a position to capitalize on the ad sales during the children’s advertising “upfront” market — the all-important period during which the advertisers spend a significant portion of their budget. This year, the “upfront” market runs from mid-February to late spring.

Looks like things are on the upswing for 4Kids, who just last month reached an $8 million settlement with the Japanese licensors after triumphing in the lawsuit over control of the Yu-Gi-Oh! rights!

Yu-Gi-Oh! Lawsuit Concludes: TV Tokyo, NAS, ADK to Settle with 4Kids for $8 Million

Today, 4Kids Entertainment filed a motion with the U.S. Bankruptcy Court for the Southern District of New York seeking approval for an $8 million settlement between itself and TV Tokyo Corporation, Nihon Ad System, Inc. (NAS), and Asatsu-DK, Inc. (ADK). When approved, the settlement will effectively end the nearly one-year-old Yu-Gi-Oh! lawsuit between the Japanese licensors and 4Kids.

In addition to awarding 4Kids $8 million, the terms of the settlement reaffirm the court’s December 29 ruling in favor of 4Kids: both parties acknowledge that the Yu-Gi-Oh! License was not terminated and remains in effect with 4Kids. Furthermore, the settlement dismisses with prejudice all claims and counterclaims between the licensors and 4Kids and prohibits either party from taking additional action against the other for any matters that may have existed prior to the settlement.

As is commonplace for many settlements, neither the licensors nor 4Kids is admitting to any wrongdoing. The settlement also forbids both parties from releasing comments to the press about the lawsuit or its outcome (other than through the typical press release), so don’t expect to hear any groundbreaking new details as the dust settles.

A court hearing is scheduled for March 9, where the settlement is expected to be approved.

Mediations and Considerations

Since mid-December, 4Kids and the licensors have been participating in several non-binding mediation sessions overseen by the court. Throughout those weeks, it appeared that nothing good would come out of the meetings and that both parties would eventually be dragged through another trial, so the emergence of this settlement is a welcome sight. The settlement will allow both 4Kids and the licensors to finally refocus their resources and attention back on the Yu-Gi-Oh! property. Ultimately, both sides merely want to continue growing the Yu-Gi-Oh! brand in the U.S. and abroad.

In crafting the settlement, 4Kids, TV Tokyo, NAS, and ADK considered a myriad of factors that eventually led to the $8 million damage figure. It’s worth thinking about the different aspects of the lawsuit that may have influenced their decisions. For example:

• The hefty legal fees
• The harm that may have been caused when 4Kids filed for bankruptcy, like
  • 4Kids’ loss of clients
  • 4Kids’ inability to obtain new clients
  • 4Kids’ loss of sublicensing and distribution opportunities (DVDs, TV network deals, etc.)
  • Additional legal fees
• The harm to 4Kids’ business reputation
• The direct loss of Yu-Gi-Oh!-related business due to confusion over who holds the rights
• The disruption to the production of the Yu-Gi-Oh! Zexal anime based on material availability

What role did each of these factors play in leading up to the settlement? What other reasons could have led the parties to settle? Eight million dollars is certainly no small number for the companies involved. I’ll leave the thought experiments to you.

Previously:
- Yu-Gi-Oh! Lawsuit Results: 4Kids Retains Yu-Gi-Oh! License; TV Tokyo, NAS Fail to Terminate Licensing Agreement

Related Tags:
- lawsuit

Yu-Gi-Oh! Lawsuit Results: 4Kids Retains Yu-Gi-Oh! License; TV Tokyo, NAS Fail to Terminate Licensing Agreement

The fun’s over.

The lawsuit brought against Yu-Gi-Oh! licensee 4Kids Entertainment by Japanese licensors TV Tokyo Corporation and Nihon Ad Systems, Inc. (NAS) has concluded. On December 29, Shelley C. Chapman, the presiding judge of the case at the U.S. Bankruptcy Court for the Southern District of New York, released her 152-page ruling, concluding that the licensors did not justifiably terminate the Yu-Gi-Oh! License with 4Kids. As such, 4Kids retains the Yu-Gi-Oh! License and can continue to manage and market the property outside of Asia, as it has been doing since 2001.

The reasons for the ruling are numerous. As this case was a contract dispute, the heart of the outcome was the result of the court’s scrutiny of the language within the two parties’ agreements and communications.

Terminating the Yu-Gi-Oh! License

The court concluded that the TV Tokyo and NAS did not properly terminate their agreement with 4Kids. First, the Yu-Gi-Oh! License requires that any party who violates the terms of the License be given 10 business days to correct (“cure”) the offense before the License can be terminated. Despite this stipulation, the licensors, in their communications with 4Kids, never invoked this 10-day cure period by using the sort of strict, objective language that satisfied the court.

Even if TV Tokyo and NAS had notified 4Kids that the cure period was in effect, their notices to 4Kids were not delivered by express mail, as required by the License. Additionally, the court noted that by continuing their negotiations with 4Kids as they had been doing for several months, the licensors would have been behaving “inequitabl[y] and improper[ly]” if they had then terminated the License without providing 4Kids one final cure period.

In any case, the court found that the complaints brought against 4Kids — that it owed the licensors $4.8 million from a variety of underpayments and improper deductions of fees — were virtually all unjustified or have been withdrawn and did not approach the $4.8 million total that the licensors were seeking. And because the licensors used this incorrect amount as the basis of their claim that 4Kids violated the agreement, their termination of the License was rendered ineffective. In fact, the court indicated that if even one of the licensors’ complaints was baseless, that would have been enough for the termination of the License to be ineffective. The court sought precision from the licensors’ claims, emphasizing that merely being “[c]lose enough” to the actual supposed dollar amounts was “decidedly not good enough under the facts and circumstances.”

4Kids and Funimation

Of particular interest to many fans are the details of the contracts between 4Kids and Funimation. The court disagreed with the licensors’ claim that 4Kids had sublicensed the Yu-Gi-Oh! home video rights to Funimation, which, per the Yu-Gi-Oh! License, would have entitled the licensors to claim a portion of the fees Funimation paid 4Kids.

On the contrary, the court concluded that 4Kids maintained full control of the video rights and provided services — like designing DVD packages, preparing trailers and advertisements, and producing DVD extras — that it would not otherwise have handled had it sublicensed the rights. The fees Funimation paid 4Kids for these services need not be included in the royalty payments to the licensors, said the court, as they were not considered part of the income that 4Kids earned from video sales as defined by the License. Funimation, with its know-how in video production and connections in the home video supply chain, served as an independent service contractor, not as a sublicensee. Its role is analogous to that which Upper Deck once played for Konami with regard to the Yu-Gi-Oh! Trading Card Game.

The court also concluded that the nature of the widely maligned “secret” agreement between 4Kids and Funimation is of no relevance. So long as 4Kids paid the licensors the royalties they were owed, the requirements of the Yu-Gi-Oh! License were fulfilled. The licensors did not provide evidence sufficiently demonstrating that the secret agreement between 4Kids and Funimation was used as an avenue to hide money or commit fraud. The Yu-Gi-Oh! License does not require that 4Kids disclose the details of its relationships with third parties.

(On a more humorous note, Judge Chapman scoffed at the licensors’ concerns about secret agreements after a confidential internal email circulating at ADK, the parent company of NAS, was uncovered during the trial. The email revealed that ADK intended to establish its own U.S.-based company to replace 4Kids as the Yu-Gi-Oh! merchandise licensing agent and licensee of the anime.)

What’s Next for 4Kids?

4Kids has indicated that it will seek monetary damages resulting from the events brought about by the licensors. The exact nature of these damages is yet to be seen. In the meantime, 4Kids remains in Chapter 11 bankruptcy protection. With the trial now behind it, the company will undoubtedly look to quickly piece itself back together. 4Kids has been hemorrhaging money from all of its legal fees since the onset of the lawsuit and bankruptcy proceedings.

Perhaps it would be more poignant to ask what the licensors’ next steps will be, now that they remain locked in a contract with a party who they insisted incurably breached their trust.

Well, it’s been a crazy ride. I’ve enjoyed following the events of the lawsuit, though I regret never having the time to provide a breakdown of all of its intricacies, like the contents of the contracts, the licensors’ complaints, and the arguments presented by the two parties. (It took me around eight hours over two days to digest this ruling alone, haha.) Oh well, maybe I’ll put something fun together when the one-year anniversary of this case’s conclusion comes around. We’ll see.

In light of the types of questions and comments I’ve received since I first wrote about this lawsuit nine months ago, and in anticipation of any forthcoming comments, I think it’s important to again emphasize that this lawsuit was a contract dispute that sought to answer one question: Did TV Tokyo and NAS effectively terminate their agreement with 4Kids? That’s all. This case is not about copyright infringement, the merits of 4Kids’ editing practices, the attitudes of network censors, or anything else.

Catch up on the Yu-Gi-Oh! lawsuit from the beginning! Check my “lawsuit” tag to follow all of my previous coverage of this tale.

Yu-Gi-Oh! Lawsuit Finally Draws Out Incoherent, Maniacal Fan Response

It has finally happened. Even though the Yu-Gi-Oh! lawsuit and 4Kids’ bankruptcy case have been underway for about half a year now, Yu-Gi-Oh! fans haven’t left any official marks on the proceedings… until now. The following is a letter that was sent to Shelley C. Chapman, the presiding judge of the proceedings, at the U.S. Bankruptcy Court for the Southern District of New York:

The letter was filed on September 29 and added to the court records earlier today.

Despite its apparent ridiculousness, I believe the letter is written by a well-meaning author and meant to be completely serious, though I’m not quite sure what it is that Mr. Smith wants from the court. I think there are some lessons that we can easily take away from this: (1) Before writing a letter, know what your objectives are. Every line and every paragraph you write should bring you closer to these objectives. (2) Explain yourself in clear, complete sentences. Don’t assume the recipient is familiar with what you are talking about. (3) Always proofread your letter. Have a friend or family member help you if necessary.

Now then, how many of you keeled over after reading the letter?

An Update on the Yu-Gi-Oh! Lawsuit… Sort Of…

Despite the closing arguments for the first phase of the trial being presented two weeks ago, the court has yet to issue any ruling. This is not the fault of either TV Tokyo, NAS, or 4Kids. Rather, it is a testament to the sluggishness of the legal system — a point that I have emphasized repeatedly since the beginning of these proceedings to all of the fans who are anxiously waiting for the results.

A post-trial briefing from both sides is scheduled for October 12, but it is still currently unclear when the court may issue a ruling.

TV Tokyo & NAS v. 4Kids: Yu-Gi-Oh! Trial Commences

Farewell, Hurricane Irene. After an unprecedented mandatory evacuation of several areas of New York City and a complete shutdown of its mass transit system over the weekend, residents and businesses slowly head back to work today. Fair weather returns to the Big Apple not a day too soon, as the trial between TV Tokyo, NAS, and 4Kids is set to begin today at noon at the U.S. Bankruptcy Court for the Southern District of New York.

The trial, whose scheduling has been accelerated at the request of both parties involved, will take part in two phases. The first, which starts today, will be used to determine whether the TV Tokyo and NAS effectively terminated 4Kids’ rights under the Yu-Gi-Oh! license and whether the licensors are owed any payments per the findings of their audit of 4Kids.

The results can’t come quickly enough.

Previously:
- Motion Passes: Court Blocks TV Tokyo, NAS from Marketing Yu-Gi-Oh! ZEXAL and Establishes Trial Dates