4Kids Files Motion to Stop Japanese Licensors from Controlling Yu-Gi-Oh! Property

May 18, 2011 at 5:40 pm | Posted in 4Kids, Yu-Gi-Oh!, ZEXAL | 5 Comments
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Pegasus reacting after his Thousand-Eyes Restrict absorbs all of Yugi's Kuriboh in episode 39
Ugh! Bankruptcy court!

Oh, Yu-Gi-Oh! ZEXAL, please don’t be wrapped up in bankruptcy hell! The immediate future of the fourth Yu-Gi-Oh! series is now uncertain as 4Kids Entertainment has filed a motion to stop Japanese Yu-Gi-Oh! producers/licensors TV Tokyo Corporation and Nihon Ad Systems, Inc. (NAS) from taking control of the Yu-Gi-Oh! anime property. This latest development in 4Kids’ Chapter 11 bankruptcy proceedings comes via ANN, who released the details yesterday.

The motion, filed last Friday at the U.S. Bankruptcy Court for the Southern District of New York, would protect 4Kids’ rights as the licensee of the Yu-Gi-Oh! property and effectively stop TV Tokyo and NAS from “exercising control” over those rights as the licensors by marketing and distributing the property on their own. If granted, the Japanese licensors would need to wait until after the court rules on the validity of their termination of 4Kids’ Yu-Gi-Oh! license before they would be able to act on the property again.

In its filing, 4Kids explained that TV Tokyo and NAS are touting themselves as the owners of the rights that 4Kids itself holds under its contract with the licensors. 4Kids specifically noted that the licensors are set to attend the Licensing International Expo trade show in June to market the Yu-Gi-Oh! ZEXAL property (more about this matter further below). The licensors had previously been cautioned by the court not to try to rescind the Yu-Gi-Oh! license from 4Kids while the bankruptcy proceedings were in progress. 4Kids says the licensors are “flouting the court’s jurisdiction and attempting to sell 4Kids’ rights out from under it.”

4Kids also noted that both sides have agreed to transfer the lawsuit against 4Kids to the bankruptcy court so that they can receive a judgment on the case as soon as possible. The lawsuit had been halted due to the bankruptcy proceedings, and “nothing of substance” had come about from that case thus far.

Also on Friday, 4Kids filed a second motion to rush the hearing for its first. The court granted 4Kids a May 25 hearing (as opposed to June 3 without the rush). TV Tokyo and NAS filed a motion for reconsideration on Sunday, emphasizing that control of the entire Yu-Gi-Oh! property rests in the hands of multiple Japanese companies, many of whom have never experienced the American judicial system and need to speak amongst themselves before making any significant decisions. Additionally, the licensors noted that not all of the companies have had enough time to translate and examine the court documents that 4Kids filed on Friday. The court pushed the hearing to May 31 on Monday.

Needless to say, of all possible things that could have happened to Yu-Gi-Oh! ZEXAL, this outcome is probably the worst, as no one can do anything significant with the property without incurring the wrath of the other party and possibly the court. It is understandable, as neither 4Kids nor TV Tokyo and NAS believe they are in the wrong, but is nevertheless frustrating for Yu-Gi-Oh! fans. The only bright spot to all of this is that both parties are in agreement that the court needs to weigh in on the matter posthaste.

In more positive news, 4Kids is also reporting that it has had “productive” talks with The Pokemon Company International (TPC) over the last few months regarding payments that 4Kids allegedly owes TPC. About a year ago, TPC had audited 4Kids and discovered “deficiencies” of nearly $4.7 million, which 4Kids disputed. 4Kids then commenced its own audit of TPC’s books. Of course, these dollars are now also wrapped up in the bankruptcy proceedings, so it remains to be seen how much money, if any, will be changing hands.

Who controls Yu-Gi-Oh! ZEXAL?

Since news that TV Tokyo and NAS had yanked the Yu-Gi-Oh! distribution rights from 4Kids first emerged, fans have been wondering who has control of the Yu-Gi-Oh! ZEXAL anime. Is the show in stable hands? Though it is now clear that 4Kids would indeed be on its merry way producing and distributing the show had there not been a fiasco of a lawsuit, this was not always apparent, as all of the companies involved with the property were markedly secretive about its U.S. debut. Many hints have been dropped along the way, however.

Cover of Kazachok International Licensing Mag' #25 and Yu-Gi-Oh! article

Earlier this year, Kazachok, a European consulting agency for businesses in the licensing industry, released an article profiling the Yu-Gi-Oh! franchise and its 10th anniversary. In the past, Kazachok’s publications have regularly highlighted 4Kids’ properties and their presence in Europe, so it was not unexpected that the agency would run a report on the 10th anniversary movie, Yu-Gi-Oh! 3D: Bonds Beyond Time. What was surprising was a brief mention of the distribution of the fourth Yu-Gi-Oh! anime.

In the agency’s January-March 2011 issue of Kazachok International Licensing Mag’ (#25), the multilingual magazine nonchalantly revealed that a new Yu-Gi-Oh! series was “set to launch in Japan in the spring followed by the rest of the world from the autumn onwards.” No other details were provided, but this one line was enough for speculation to start building among fans that 4Kids had picked up Yu-Gi-Oh! ZEXAL.

Then, on March 4, Greg Abbey appeared on the Internet radio show All Taste Explosion, where he suggested the possibility that 4Kids may have already secured the show. Abbey, the voice actor for Yusei Fudo, described a discussion he had with Shane Guenego, the producer of the English version of the Yu-Gi-Oh! 3D movie. Guenego had recently visited Japan to screen the film for the Japanese producers and also happened to get a peek at Yu-Gi-Oh! ZEXAL.

“‘So what’s the deal man?'” Abbey recalled asking Guenego. “‘[Is 4Kids] gonna buy it?’ And he said, ‘I dunno, I think so.’ But then someone else — maybe the engineer — told me he’s pretty sure it’s coming down the pike.”

Abbey was ultimately unable to provide a definitive answer, instead reiterating just how secretive the entire process was.

Japanese Yu-Gi-Oh! Starter Deck 2011 and English placeholder image
(The English-version product on the right is just a placeholder image.)

A few days later, Konami put out a press release describing the Yu-Gi-Oh! TCG products that the company would be showcasing in mid-March at the Game Manufacturers Association trade show and releasing throughout the summer. Among Konami’s releases is the 2011 Starter Deck, which adds a new element to the game — a new category of monster, actually. Fans who had read up on Yu-Gi-Oh! ZEXAL knew instantly what the company was referring to. Konami slipped in the fact that “a new Yu-Gi-Oh! animated series [is] on the horizon which introduces an all-new kind of monster,” further whetting the appetites of the fans anticipating the anime’s release. The Starter Deck was originally set to debut at the end of this month, but has since been pushed back to July.

Still, some remained perplexed by the ambiguity from these hints. Why hadn’t the name of the show or the name of the licensee been publicly announced?

By the end of March, Yu-Gi-Oh! ZEXAL’s future in the U.S. remained hazy. When the bombshell dropped on March 29 that TV Tokyo and NAS had pulled the Yu-Gi-Oh! license from 4Kids and were filing a lawsuit against the company, uncertainty suddenly changed to apprehension. Around the same time, Crunchyroll disappointingly finalized its spring 2011 lineup without Yu-Gi-Oh! ZEXAL. Suddenly, the clues pointing to a U.S. release of the fourth Yu-Gi-Oh! series felt very empty. Anxious fans had little idea where the future would take the series and the franchise.

Representatives from NAS and Konami at MIPTV 2011 celebrating launch of Yu-Gi-Oh! ZEXAL

Then, between April 4 and 7, Yu-Gi-Oh! ZEXAL burst onto the international scene at MIPTV in Cannes, France. The anime was played at the entertainment trade show on April 6 at its Asian Animation Screening. Standing behind the product, however, wasn’t anyone from 4Kids. Rather, several representatives from Asatsu-DK, Inc. (ADK), its subsidiary NAS, and Konami were celebrating Yu-Gi-Oh! ZEXAL’s international launch. It’s currently not clear whether any licensees picked up the property at MIPTV, though if there were, it could spell trouble for both 4Kids and the licensors depending on how the court rules in their lawsuit.

4Kids was also in attendance at MIPTV, where they were selling Yu-Gi-Oh! 3D: Bonds Beyond Time, Yu-Gi-Oh! 5D’s: Road To Destiny, and Rocket Monkeys.

MIPTV would only be the first of the Japanese licensors’ endeavors to sell Yu-Gi-Oh! ZEXAL internationally. Most recently, ANN reported that ADK and NAS are set to hold an exhibit at the upcoming Licensing International Expo in Las Vegas, Nevada. The Japanese licensors are prepared to market the property at the massive trade show, which will take place from June 14 to 16. This, of course, brings us full circle back to the bankruptcy proceedings.

Every year, 4Kids attends Licensing International Expo to promote the Yu-Gi-Oh! franchise. 4Kids will again be attending the trade show this year… to promote Yu-Gi-Oh! ZEXAL.

What a mess.

What will tomorrow bring for fans following this Yu-Gi-Oh! licensing and distribution saga?

Representatives from NAS, ADK, and Konami at MIPTV 2011 celebrating launch of Yu-Gi-Oh! ZEXAL
Representatives from NAS, ADK, and Konami drinking to the death of 4Kids international launch of Yu-Gi-Oh! ZEXAL at MIPTV 2011.

5 Comments »

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  1. So…it’s an even match between TV Tokyo and 4Kids. We don’t know what’s going to be the outcome of this whole thing. And as for the future of Yu-Gi-Oh! Zexal goes…I honestly don’t know. If $kids wins the lawsuit, then Zexal should be in their hands.

    I just wish 4Kids and TV Tokyo could work something out and maybe they could drop the lawsuit. I don’t think that will happen, but still…a dream could still be a reality.

  2. As a fan who’s merely looking in at the action from the outside, I don’t know if it’s really an “even match” per se. All I know thus far is that everything in the courthouse has, not surprisingly, been moving at a snail’s pace and that the underlying Yu-Gi-Oh!-related mess hasn’t even been touched yet. And yes, if the court rules in 4Kids’ favor, then 4Kids will continue following whatever plans it already has or will develop for producing and distributing Yu-Gi-Oh! ZEXAL. I think that’s pretty clear.

  3. I thought that NAS and TVTokyo owned Yugioh outright besides the original owner because he works with them on the series. Where does 4Kids get that they own it?

  4. I didn’t say that 4Kids thinks it owns the Yu-Gi-Oh! property. Yu-Gi-Oh! didn’t originate with 4Kids so 4Kids doesn’t “own” it in that sense. The Japanese licensors sold 4Kids the rights to market, broadcast, distribute, and manage the property outside of Asia. It’s that ability, granted by the license, that is central to the dispute. The Japanese licensors believe 4Kids did wrong, so they yanked the license and filed a lawsuit to recoup their damages. 4Kids believes it did nothing wrong and contends that the licensors improperly took away the license, so it is still operating business as usual.

  5. i think TV TOKO SHOULD WIN CAUSE I LIKE THE JAPENSEE WON BETTER THEN THE USA WON BUT SINCE I LIVE AND BORN HERE IN THE STATES I STILL HOPE THE 4KDS NETWORK GET ADEAL !! I WATCH ZEXAL IT IS AWSOME!!!!!!!!!! IN THE JAPENSE!!!!!!!! I WANT IT HERE AND PLUS WE HAVENT HAD A FULL COMPLEATED SERRIES IN A LONG TIME!!!! AND I WANT A FULL COMPLEATED SERRRIES!!!!


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