If License Is Ambiguous, Licensee Should Keep Paying To Sell Cabbage Patch Kids Dolls

Richard Raysman is a Partner and Elliot Magruder is an Attorney in the New York office

On Nov. 17, 2017, the United States Court of Appeals issued its decision in Original Appalachian Artworks, Inc. v. JAKKS Pac., Inc., --- F'Appx. ----, 2017 WL 5508498 (11th Cir. Nov. 17, 2017). This case concerned the right of a licensor to execute a successor licensee while the relevant license remained in force. The terms of the license were ambiguous, so the decision turned on the commercial realities underlying the right to manufacture and distribute Cabbage Patch Kids dolls. As discussed in detail below, the Eleventh Circuit held that the term "negotiation" as applied to a licensor and successor licensee was ambiguous, meaning that the commercial realities of this type of license – that the licensor needed a portion of the time remaining on the license to negotiate with the successor licensee to ensure commercial continuity – precluded licensor's argument that the licensed