Hersch and Co. v. Mattel, Inc. CA2/2

FACTS

The License Agreement Hersch and Mattel executed the License Agreement in April 2004. Hersch granted Mattel the right to manufacture and sell Outburst for an initial term from 2004 through 2008. Mattel agreed to pay royalties, and guaranteed that Hersch would receive at least $400,000 in the first year, $600,000 in the second year and then $400,000 for every subsequent year. Paragraph 8 provided: ―[D]uring the first two (2) years of the Initial Term, [Mattel] shall spend a minimum of Two Million Dollars . . . for ‗Advertising‘ . . . [Outburst]. Thereafter, [Mattel] shall spend for Advertising . . . no . . . less than Two Million Dollars . . . in years three through five[.]‖ Advertising means ―the actual, direct, out-of-pocket sums actually paid by [Mattel] to unrelated third parties . . . for media buys,

2 commercial production expenses and retail and promotional activities, including but not limited to ‗feature space,‘ ‗white space,‘ ‗end-cap space,‘ signage and/or retailer merchandising programs (e.g.[,] ‗pallets‘ and ‗pre-packs‘) and retailer promotional discounts (MDF).[1] . . . In the event [Mattel] fails to meet any minimum Advertising expenditure requirement set…