The argument between KT and CTW is a dispute among two parties whom should have never contracted with one another. While on markets children under the age of 10, the other is devoted to a market which is technologically savvy. The parties are disputing over four general areas of loop holes within their contract. One being the fact that CTW demands royalties for each tangible item sold with any Sesame Street character on it; disregarding bundled goods.
Two, CTW and KT have two very different concepts of “damaging the image of Sesame Street’s character;” three, discrepancies regarding the venue and retail price of contracted jackets; and four, the rights of ownership concerning KT. After hearing the arguments made by both parties, I have decided to award KT and CTW the following damages. While CTW claims that it is entitled to an additional $120,000. 00 in royalties concerning the Sesame bed sets, I award them $0. CTW should not receive any additional funds concerning the belt and Big Bird pants sold by KT.
CTW should also receive damages in the amount of $225,000. 00 concerning the breach of jacket agreements. One the other hand, KT should receive damages in the amount of $47, 000. 00 for the prohibited sell of the Big Bird and Ernie shirt, and $20,000. 00 for damages incurred during the creation of the Elmo upside down shirt, allowing them to recreate the image right side up and benefit by their projected profit of $30,000. 00 CTW shall be rewarded no damages for the four piece Sesame bed set as a result of their failure to acknowledge the value of the good if divided and sold individually.
While CTW believes the bed set containing four items: two pillow cases, one sheet, and comforter entitles the company to individual royalties, the value of the bed set if each item were sold individually would have resulted in less profits and fewer items sold. The factor of bundled goods was not thoroughly considered by the CTW defense. They argued that each item had its own use; therefore, enabling KT to see it individually. The societal benefit of selling the bed set within one unit is far greater than if separated.
The function of each individual item sold within that set is inefficient alone, but acts as an effective unit together. Considering the set’s function, to cover the bed, if only one item were sold, it would be useless. Disregarding this fact, the defense for CTW continually argued that they should receive royalties for each item because each item can be used individually and the bundle is in necessary. I believe the lawyers she review the laws of efficiency before arguing their next case.
If I ruled in their favor, it would discourage parties from making similar contracts because inexpensive items such as one pillow case would not generate profits stabilizing the cost and benefits of selling the item. Clearly an item of this caliber would become to expensive resulting in low sells if KT were required to pay $2 in royalties and drastically increase the retail price of the item in order to produce a profit. A similar argument was made regarding the Big Bird pants and belt. CTW’s lawyers claimed that the belt should be considered as an individual item and an additional payment of $10,000.
00 in royalties should be paid to their company. Selling these items as a group attracts customers to the product. The function of a Sesame Street belt and pants works as one unit. Although it is argued that the belt can be used with other pants not representing Sesame Street we have to once again address the fact that this would be inefficient and result in either negative profits or an end to comparable contracts between parties. If companies were forced to pay royalties for each individual item created to be a bundle, companies would end the production of such items to avoid costly trails such as this.
Anyone, after reading the case can see that the contract agreed upon was not greatly beneficial for both parties. There are several areas of the contract where essential clauses and questions were not addressed which caused inevitable breaches. While both parties agreed that CTW held the right to veto the distribution of any item created by KT that harmed the image of Sesame Street or damaged the image of any of its characters, the next logical question, what happens is CTW veto’s an item, was not addressed.
