David vs. Goliath, Dora the Explorer vs. Swiper the Fox, Caitlin Sanchez vs. Nickelodeon.
Since our passion is the drafting and negotiation of intellectual property-related contracts, when 14-year-old Caitlin Sanchez, the voice of the popular Dora the Explorer cartoon character, filed a lawsuit against the Nickelodeon cable network claiming that Nickelodeon and its affiliates have duped her out of millions of dollars in royalties and residuals by pressuring her to sign a “bizarre, impenetrable, unconscionable contract,” it tweaked our curiosity.
But was it really a bad contract, or rather bad negotiation that resulted in Caitlin getting a lot less money than she and her family expected?
To answer that question, we tracked down a copy of the agreement (“Agreement”) between Caitlin and Uptown Productions, Inc. (“Uptown”), the production company for the Dora program, and compared it to the allegations in the lawsuit complaint, filed by the law firm of Balestriere Fariello. (Agreement is here, complaint is here.)
And the comparison showed that the contract IS bad, but not confusingly bad, just transparently bad— extremely but obviously one-sided in Uptown’s favor. Despite that, Caitlin and her family signed the Agreement and several subsequent documents literally within minutes of receiving them, without negotiating or asking an attorney to assist them. That was akin to Dora the Explorer not chanting, “Swiper, no swiping!” when the larcenous fox was in plain sight.
In doing so, they made the same mistake that many artists, actors, musicians, designers, and other creative people make when they are approached by television, music, or theatrical producers—they silence their questions and sign, for fear of being ditched and missing their big break.
The framework for the Agreement between Uptown and Caitlin is that Uptown would pay for Caitlin’s exclusive services for seven episodes of the Fifth Cycle of the Dora series and would retain options for 10 episodes for each of the Sixth through Tenth Cycles of the show. Caitlin was to receive: a salary of $5,115 per episode (increasing 5% per cycle); plus residuals based on the number of re-broadcasts of the original episodes; plus merchandise license fees. She was also required to do a “reasonable” amount of promotional appearances and interviews.
(1) The complaint alleges: Nickelodeon “fail[ed] to fully compensate Caitlin for products she voiced, for which she is due a percentage of the products [sic].” Uptown has only paid Caitlin $9,636.39 in merchandising royalties to date, according to the complaint. Caitlin’s attorney claims that that is an absurdly low and definitely incorrect figure in light of the fact that Nickelodeon claims gross retail sales of $11 billion in Dora merchandise since 2002.
The contract states: Uptown “shall pay you 5% of 100% of the ‘net receipts’ actually received by [Uptown] from merchandising, should your name, voice or likeness be used alone in connection therewith, reducible to 2-1/2% of 100% if other artists are used…; ‘Net receipts’ shall mean the amount remaining after deduction of a distribution fee of 50% of the gross receipts actually received from agents and distributors; and all costs related to such merchandising use.”
Our take: Caitlin would get royalties based on only the subset of Dora merchandise that featured Caitlin’s voice or her actual (not Dora’s) image, and that the revenue stream on which the royalties would be calculated could be easily manipulated by Uptown’s “creative accounting.”
How do you say, “Swiper, no swiping!” in Swedish?