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JAKKS Beats Back Competitor Claims Over Cabbage Patch Kids

  • JAKKS sued Wicked Cool Toys in New York state court last year
  • Wicked Cool countersued, saying JAKKS interfered with contract

JAKKS Pacific Inc. was free to toy with the price of the Cabbage Patch Kids after it lost the license to make the dolls, a judge said.

On Wednesday, a judge ruled in JAKKS’s favor, dismissing a rival’s claim that the toymaker interfered with its contract to make Cabbage Patch Kids-branded toys. The judge said JAKKS had the right to slash prices, reduce advertising and flood the market with the dolls.

JAKKS accused Wicked Cool Toys and former JAKKS executive Jeremy Padawer last year of colluding to convince the brand’s owner, Original Appalachian Artworks, to give JAKKS’s license for the toys to Wicked Cool. They denied the allegations and countersued, saying JAKKS used illegal tactics to tarnish the Cabbage Patch Kids brand, costing at least $4 million in sales.

The fight in a New York court shows how valuable brands are in the $19 billion U.S. toy industry, even for older lines like Cabbage Patch Kids, which still produces revenue of about $50 million a year after falling from its 1985 peak of $600 million.

Claims Tossed

State judge Anil Singh threw out the counterclaims, saying the move to cut prices and flood the market may have been financially harmful to Wicked Cool but didn’t rise to the level of illegal conduct, “especially in light of the economic motivations.”

JAKKS was motivated to sell its large inventory at low prices partly to reduce costs and maximize revenue, and Wicked Cool didn’t show that the actions were “entirely motivated by malice,” the judge said.

Wicked Cool said it was disappointed with the ruling.

"JAKKS’ suit is a simple attempt to move its competition with us out of the marketplace and into the courtroom," Wicked Cool said after the ruling. "We very much look forward to having the remaining meritless claims put to rest as soon as possible."

The case is JAKKS Pacific Inc. v. Wicked Cool Toys, 159812/2015, New York State Supreme Court, New York County (Manhattan).

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