Unpaid royalties violated agreement to license patented toy technology
Amount: $73,015,915
Type: Arbitration
Court: American Arbitration Association
Case type: Contracts – breach of contract, intellectual property – breach of licensing agreement
Case Name: Johnson Research & Development v. Hasbro and Hasbro International No. 30-133-Y-0006413
Date: Nov. 19, 2013

Johnson Research & Development
Attorneys: Benjamin F. Easterlin IV, Jonathan D. Letzring and Jessica E. Sabbath, all of King & Spalding, Atlanta.
Expert: Jeanne Manos, CPA, Los Angeles.

Hasbro and Hasbro International
Attorneys: Darin W. Snyder of O’Melveny & Myers, San Francisco, and Jennifer Glad of O’Melveny & Myers, Los Angeles
Expert: Ben Sheppard, accounting, Los Angeles

On April 17, 1998, Lonnie Johnson, a man in his 50s and the owner of Johnson Research & Development, entered into an agreement with Hasbro to license his patented technology for what became the Nerf dart gun. In the agreement, Johnson Research gave Hasbro the rights to use his technology in its toys, in exchange for royalty payments on each Nerf gun sold. According to the plaintiff, the agreement also included a provision that required Hasbro to pay royalties on items from the toy line that were sold under the same or similar name, even if Hasbro did not actually utilize Johnson Research’s patented technology. According to Johnson Research, in approximately 2005, Hasbro introduced toys in the N-Strike line that did not use its patented technology. Johnson alleged that it did not receive royalties from these products.
Johnson Research & Development filed a claim against Hasbro, as well as Hasbro International, alleging that it was owed for royalties related to the sales of toys under the N-Strike line pursuant to the contract between the parties.
According to Johnson, the contract he signed entitled him to royalties for the toy lines in question, even if none of the technology that Johnson licensed to Hasbro was used. According to plaintiff’s counsel, the rationale for this agreement was that the first toys produced by Hasbro used the technology and, in the course of doing so, created and built up a demand for the later toys in the line, some of which did not include any of Johnson’s patented technology. Johnson contended that he chose to make this a part of the contract, an unorthodox move in negotiations of the sort, due to previous experience licensing the technology for the popular Super Soaker line. In that case, Johnson claimed that he stopped receiving royalties after the company chose to make toys in the line without using his technology.
Defense counsel disputed Johnson’s allegations, contending that the contract agreed to by Johnson did not call for royalties on the N-Strike line. They also alleged that Johnson had waived his right to recover any royalties to which he believed he was entitled, due to his not being timely in acting to attempt the recovery of these royalties.

The parties initially disputed the amount in compensatory damages to which Johnson would be entitled, if he were in fact owed any at all. Johnson Research & Development retained the testimony of an accounting expert, who testified to the amount to which the plaintiff would be entitled. This amount was disputed by Hasbro, which retained the testimony of its own accounting expert, who opined to a lower amount in royalties to which Johnson would be entitled, if any. Before the conclusion of the litigation, the parties agreed that Johnson would be owed $51,663,853 in back payments, if anything at all.

On Feb. 1, 2013, the parties filed for binding arbitration. A four-day hearing in August 2013 was led by Richard Mainland of AAA. The arbitration resulted in an award of $73,015,915, which was later reduced to $70,046,428.79 after a correction in prejudgment interest was calculated into the award.
Johnson Research & Development:
$51,663,853 Commercial: back royalty payments
$21,220,117 Commercial: interest
$131,945 Commercial: fees
Actual award: $70,046,428.79

Arbitrator: Richard Mainland
Trial length: Four days
Post trial: Defense counsel was considering a possible appeal of the arbitration award.

This report is based on information that was provided by plaintiff’s counsel. Defense counsel did not respond to the reporter’s phone calls.

Jury: Six Flags primarily liable for beating of park attendee
Amount: $35 million
Type: Verdict-plaintiff
Court: Cobb County State Court
Injury type: Coma, traumatic brain injury
Case type: Intentional torts – assault and battery; worker/workplace negligence – negligent security; premises liability – inadequate or negligent security, amusement park/place of entertainment
Case name: Jo-Ann Taylor as Conservator for Joshua R. Martin v. Six Flags Over Georgia II LP; Six Flags Over Georgia, Willie Gray Franklin Jr.; Brad McGail Johnson, DeAndre Evans and Claude Morey III, No. 09-A-04531-3
Date: Nov. 20, 2013

Joshua R. Martin (male, 19)
Attorneys: Andrew T. Rogers and Gilbert H. Deitch of Deitch & Rogers, Atlanta; and Michael L. Neff, Susan M. Cremer, T. Shane Peagler and D. Dwayne Adams, Law Offices of Michael Lawson Neff, Atlanta.

DeAndre Evans, Claude Morey III, Brad McGail Johnson, Willie Gray Franklin Jr., Six Flags Over Georgia, Six Flags Over Georgia II LP
Attorneys: Wayne D. McGrew III, Charles M. McDaniel Jr. and Kim M. Ruder, all of Carlock Copeland & Stair, Atlanta, for Six Flags Over Georgia and Six Flags Over Georgia II LP. None for DeAndre Evans, Claude Morey III, Brad McGail Johnson and Willie Gray Franklin Jr.
Insurers: ACE USA, AIG, Great American and XL Insurance America for Six Flags

On July 3, 2007, plaintiff Joshua R. Martin, 19, a student, went to Six Flags Over Georgia in Austell. Martin went to the park with two friends to celebrate one of them getting into college. Martin claimed that, after spending a day at the park, he and his friends missed a bus and waited by a guardrail where customers and employees often sat to be picked up.
At approximately 9 p.m., after returning to the bus stop, Martin and his friends were attacked by a group of Six Flags employees, who beat Martin into a coma using their feet, with at least one using brass knuckles. The employees were allegedly involved in a prior altercation in the park involving a family, which was reported to park security. Martin suffered a traumatic brain injury.
Martin, through his conservator Jo-Ann Taylor, sued Six Flags Over Georgia II LP and Six Flags Over Georgia, as well as Willie Gray Franklin Jr., Brad McGail Johnson, DeAndre Evans and Claude Morey III, four employees alleged to have been involved in the beating. Plaintiff sued for negligence, assault and battery.
Franklin and Johnson pleaded guilty to aggravated assault and for violating Georgia’s Gang Act, while Evans and Morey were tried before a Cobb County jury and found guilty of aggravated assault and violation of Georgia’s Gang Act in criminal court. The four individuals were not represented at the civil trial.
Martin claimed he did not know of a prior altercation inside the park, in which the four defendant employees, who were allegedly wearing “Young Gangster Living” (YGL) gang colors and shirts, threatened a family near one of the rides. Martin claimed that, while the incident involving the family was reported to security, Six Flags Over Georgia did not have the recommended off-duty police that night, performed minimal investigation and did not follow its policy manual in expelling the large group of gang members after the initial altercation.
Martin argued that Six Flags tolerated its employees being in gangs and ignored the culture of violence on its property. Plaintiff claimed Six Flags had knowledge of numerous instances of employees attacking each other, park security and customers, as well as evidence of gang activity in the employee locker room. Plaintiff claimed that his beating would not have happened had Six Flags addressed these issues and provided reasonable security.
Plaintiff’s counsel reported that Eddie Herman, a local police officer, testified to numerous “hot spots” for crime and violent activity, including a bus stop on park property where a drive-by shooting occurred in 2006. Plaintiff’s counsel claimed Herman also recommended that Six Flags Over Georgia have 24/7 police on duty due to the prior incidents at the park.
Six Flags disputed liability, contending that the particular area where the incident occurred was several hundred feet beyond the park’s property line. Six Flags further argued that the four employees named were off-duty and not in the scope of their employment at the time of the incident. Furthermore, Six Flags claimed there was no proof that the four employees were involved in the prior incident inside the park, which Six Flags disputed and claimed the facts were quite different in the evidence.
Six Flags further contended that there was no proof the attackers were wearing YGL clothing. Six Flags noted that Franklin testified that his actions were random, he did not know why he did it, he was very sorry and regretted it, and the amount of security did not make a difference. Six Flags further claimed the plaintiff’s account of Herman’s testimony is misleading and not entirely accurate.
Martin argued that Six Flags had control over the property around the subject bus stop where the beating occurred, including having placed uniformed officers there to direct traffic, having security patrol the area, and placing barricades and signs just feet from where the incident occurred.

Martin was taken from the scene of the incident by ambulance to the emergency room. He spent one week in a coma and was diagnosed with a traumatic brain injury. After being released from the hospital, Martin was treated by several doctors at the Roosevelt Warm Springs Institute.
Martin’s treating doctors claimed his injury is permanent and will impact every facet of his life for the remainder of his life. Plaintiff sought $7 million in future life care planning, which will include a structured living environment. He sought additional compensation for lost wages and pain and suffering.
Defendants did not dispute the severity of plaintiff’s claimed injuries.

The jury found Six Flags 92 percent at fault and each individual defendant 2 percent at fault. Plaintiff was awarded $35 million in total damages.

Judge: Kathryn J. Tanksley
Demand: $10 million (during jury deliberations)
Offer: $750,000
Trial length: Seven days
Trial deliberations: 11 hours
Jury vote: Unanimous

This report is based on information that was provided by plaintiff’s and defense counsel.