In a lawsuit filed in Los Angeles Superior Court, Troll Company said that DIC fraudulently obtained licensing rights to the Troll line by hiding its true financial condition and then conducted such a disastrously underfunded roll-out that the range was transformed from a "multi-billion dollar renowned property" into one that was unmarketable.
“This case is really very simple,” said Troll Company attorney Patricia Glaser, “It alleges a deliberate fraud, perpetrated by a company that was in dire financial straits and desperate to find a source of fast cash, to deceive Troll Company into licensing away the precious rights to one of the most famous toys in the world.”
According to the complaint, when it began its “urgent pursuit” of the licensing rights to the Troll character in 2003, “DIC held itself out as one of the largest and most successful animation companies in the world… Asked by Troll Company if it had the financial wherewithal to support a successful and global re-launch of the Good Luck Troll character, DIC proclaimed that it had sufficient financial resources and that money would
be no problem.”
In fact, the complaint states, DIC chairman and CEO Andy Heyward personally assured Troll Company president and CEO Calle Østergaard that DIC had all the money it needed to restore the Troll to its former glory.
Billions of dollars of Good Luck Trolls had been sold in decades past, but because of copyright difficulties, most of the profits went to others, the complaint alleges. When DIC made its approach, Troll Company was just completing its long legal battle to regain sole ownership of the Troll in the US Finally poised to reap the benefits from its famous character, Troll Company was approached by several companies keen on re-launching the
Troll. Heyward and others convinced Troll Company that DIC was the best choice – but their concealment of DIC's money problems led to Troll Company once again being denied its long-overdue rewards.
The complaint states that the truth about DIC’s financial condition was far different than portrayed by Heyward. Instead of being the successful enterprise it held itself out to be, DIC in fact was losing millions of dollars a year and teetering on the brink of financial collapse, facts which DIC “cynically concealed” from Troll Company.
“But DIC's fraud went even further,” the complaint states. While continuing to pursue the original Good Luck Troll, DIC convinced Troll Company to give it the rights to create a derivative property called Trollz, which DIC said would involve a cutting-edge web site, television series and merchandizing that would maximize the eventual commercial exploitation of the Good Luck Troll. But, says the complaint, DIC’s real intention was “to devote its limited resources to the marketing of the derivative Trollz property, which DIC owned. As for the Good Luck Troll, DIC's main interest was not for a source of revenue for either itself or Troll Company, but rather to eliminate a potentially competing ‘troll’
property from the marketplace and thus give DIC's Trollz a clear field.”
The eventual release of Trollz in 2005 was accompanied by a great deal of media interest. However, because of DIC’s limited resources, it was “an enormous flop,” according to the complaint. The promised TV series was instead released straight to DVD, a promised wireless component never materialized, and the promised “cutting-edge” interactive web site debuted many months too late to be an effective marketing tool and turned out to be
“unsophisticated and mundane.”
According to the complaint, “The consequences for the Good Luck Troll were devastating. The bad feelings generated among sub-licensees and retailers because of Trollz left the Good Luck Troll facing a hostile commercial environment. Indeed, several DIC executives confirmed to Troll Company that the Good Luck Troll had been so badly harmed by the failure of Trollz that they recommended keeping the Good Luck Troll out of the market for a substantial period to give sublicensees and retailers a chance to forget their negative experience with Trollz.”
The complaint continues: “In short, Troll Company has been severely damaged by DIC's fraud. Not only did Troll Company fail to receive the huge rewards that it had labored for years to achieve and that DIC had predicted would occur; far worse, DIC took Troll Company's Good Luck Troll – one of the most famous toy characters in the world, which DIC itself described as a ‘multi-billion dollar renowned property’ – and rendered it, by DIC's own admission, unmarketable.”
The lawsuit seeks damages of $20 million in addition to disgorgement of “all amounts by which DIC has been unjustly enriched.” The lawsuit also seeks punitive damages, as well as a permanent injunction to prohibit DIC from any further exploitation of both the Trollz derivative work and the Good Luck Troll character.