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Mickey vs. Kermit: Disney and Henson Resolve Bitter Muppet Dispute

May 1, 1991

NEW YORK (AP) _ Miss Piggy, Kermit the Frog and other Muppets can look forward to a possible five-year run at Disney World with the resolution of a bitter dispute between Henson Associates Inc. and the Walt Disney Co.

The bickering over whether Disney had an unwritten contract to use the characters was settled Tuesday with Henson granting Disney a license for two Muppet shows at its Orlando, Fla., theme park.

The first exhibit, ″Kermit the Frog Presents: MuppetVision 3-D,″ was delayed by lawsuits filed in the dispute, but is now due to open by Memorial Day, Disney said.

Disney and Henson also agreed Tuesday to drop federal lawsuits they had filed against each other in the past two weeks. The case was due to go to court in Manhattan on May 13.

″Our copyright and trademark rights have now been acknowledged,″ said Brian Henson, son of the late puppeteer visionary Jim Henson and president of Henson Associates.

Disney, in a statement, apologized ″with deep regret for ... a serious misunderstanding″ that led to the dispute.

In the end, Disney abandoned the argument that it already had permission to use Kermit, Miss Piggy and other characters Jim Henson created.

The deal lets Disney use the Muppet characters in the shows at the Orlando, Fla., park until November 1992. Disney has the option of renewing the agreement for another 3 1/2 years, which would give it rights as the only theme park east of the Mississippi River allowed to use the characters.

Neither side would disclose how much Disney paid for the rights.

Disney’s stock rose 25 cents to finish at $115.12 1/2 on the New York Stock Exchange, but analysts said the market was concerned with broader economic conditions and not reacting to the Henson announcement. Henson Associates is privately held.

Last week, Disney agreed to postpone the scheduled opening of ″Kermit the Frog Presents: MuppetVision 3-D″ film at Disney World. Henson Associates has said the film was Jim Henson’s last major work.

With the new agreement, Disney said it hopes to debut the exhibit by Memorial Day. The license also allows Disney to put on a stage show, ″Here Come the Muppets.″

After Henson Associates filed its copyright-infringement suit, Disney said it had paid Jim Henson and his company for an implied license and had an unwritten contract to use the Muppet characters since the summer of 1989.

The confusion erupted when Henson died suddenly of pneumonia last May without finalizing the licensing arrangement.

Disney continued to use the Muppet characters in advertisements, merchandise and its 1990 annual report. Talks over finalizing the agreement broke down two weeks ago and Henson Associates filed a copyright-infringement suit.

Disney quickly reacted with a counterclaim that said Henson Associates was more interested in making money than protecting Jim Henson’s legacy.

There was no indication Tuesday whether the renewed relationship between Disney and Henson Associates would lead to new merger talks.

During the earlier merger talks, supporters pitched the arrangement as a way to keep the puppeteer’s creations alive around the world with the help of Disney’s marketing savvy.

The licensing deal will enable Henson Associates to do that for possibly the next five years.

″This licensing agreement protects the integrity of the Muppet characters and assures that Jim Henson’s last work will be enjoyed by millions of people,″ Brian Henson said.

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