Marvel Sued For Fraud Over ‘Iron Man’ Merchandise Deal

One day before The Avengers opens big in North America, Marvel has been hit with a merchandise lawsuit. The lawsuit is over the “Iron Man’s Lair Play Box” – or rather, the lack of it. Box-A-Mania are claiming that Marvel Entertainment knowingly misrepresented licensing rights that it held and its ability to execute the deal when it made an agreement with the toy company. Box-O-Mania, in a 23-page civil suit plus exhibits, goes after Marvel on nine counts, ranging from fraud, concealment, misrepresentation and negligence. (Read the suit here.)

The defendants are Marvel Entertainment LLC, Marvel Characters Inc, Marvel International Character Holdings, LLC and Marvel Characters B.V., Inc, which is a Netherlands corporation. Of course, this could all be over as soon as it began if the court doesn’t agree with Box-A-Mania and their lawyers that a “pre-dispute agreement that any lawsuit between the parties will be adjudicated in a court trial, and not by jury trial is unenforceable.” The California-based plaintiff’s assertion is based on the Netherlands address of Marvel Characters B.V., Inc and the filing of this lawsuit outside New York state, where the agreement in question would be enforceable.

On September 14, 2010, according the suit filed in LA in Superior Court today, Box-O-Mania and Marvel signed a deal for the toy company to make an Iron Man’s Lair Play Box. Box-O-Mania, which has been around since 2009, specializes in life-sized playhouses that children can decorate. The plan, claims Box-O-Mania, was to “manufacture and market” the Iron Man’s Lair Play Box in time for the DVD release of Iron Man II on November 16, 2010. Utilizing Marvel’s deep merchandising relationships with retailers such as Wal-Mart, Box-O-Mania, who say they donate a portion of their profits to a homeless child’s charity, anticipated a big sales and big success with the Iron Man’s Lair Box. That, as today’s dense lawsuit makes abundantly clear, never happened.  The Lair Box itself never happened, says the toy company, because Marvel Entities “failed to secure the ownership and/or right to license the Iron Man artwork to be created fro the Iron Man’s Lair Play Box” and that “ME failed to provide timely responses to plaintiff’s submissions” in time to coincide with the Iron Man II DVD release.

The Walt Disney Company formally completed its more than $4 billion acquisition of Marvel Entertainment on December 31, 2009. Disney is not named as a defendant in the lawsuit.

“As a further result of the executor fraud,” the suit says, “Box-O-Mania has been damaged in lost business, business opportunities, and reputation and otherwise in an amount to be proved.” The company is seeking $33,000 that it says it paid Marvel in licensing rights under the September 2010 agreement. Where it could get pricey is that Box-O-Mania is also seeking compensatory and punitive damages, attorney’s fees and “such other and further relief as the court deems just and proper.”

Box-O-Mania, who are represented by attorney Mark B. Scott, have requested a 10-day jury trial.

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