MGA Sues Marvel for $100 Million, |Alleging ‘Campaign of Harassment’

MANHATTAN (CN) - MGA Entertainment demands $100 million from Marvel Entertainment and its CEO, claiming they launched a "campaign of harassment" against MGA in an effort to extort millions of dollars from the company. Marvel falsely accused MGA of owing more than $1 million in licensing royalties, and then filed a malicious lawsuit in an effort to tarnish MGA's reputation, the entertainment company claims in New York County Court.

MGA says it struck a licensing agreement in January 2006 for rights to Marvel characters and intellectual property, including Spider-Man. MGA used the rights to make and sell licensed toys, such as racing track sets and die-cast vehicles.

In 2008, Marvel CEO Isaac Perlmutter allegedly hired Gingold & Co. to audit MGA's royalty payments. The firm found that MGA owed $1,129,796 in royalties, interest and audit fees, according to the lawsuit.

Marvel allegedly demanded full payment and threatened to sue if MGA didn't comply within 10 days. MGA claims it "vehemently denied" the audit findings.

MGA says Perlmutter strategically threatened legal action, knowing full well that it could be used against MGA in its highly publicized lawsuit with Mattel over the copyrights to the Bratz line of dolls.

Perlmutter allegedly told MGA to pay up, "or else Perlmutter would bring a lawsuit that would seek to embarrass MGA with retailers and the public and, to Perlmutter's belief, harm MGA's legal position vis-à-vis the Mattel lawsuit."

MGA adds that the defendant's actions "were driven by a personal animosity" for MGA and CEO Isaac Larian.

Ten days after the audit report, the suit claims, Marvel terminated its licensing agreement with MGA, thereby harming MGA's reputation with retailers and customers.

"[T]he harm threatened by Perlmutter has unfortunately come to pass," MGA claims, as Mattel used Marvel's lawsuit as evidence against MGA in the Bratz case.

MGA claims breach of licensing contract, malicious prosecution, abuse of process and intentional infliction of economic harm. It is represented by Gregory Battersby with Grimes & Battersby.

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