April 10th, 2021

Peter G

IP Tales — Who Owns He-Man?

The year was 1976. Ray Wagner was the CEO of Mattel toys, and made probably the biggest mistake of his life. He was asked if his company would be interested in producing a line of toys based on a movie that got greenlit as a tax dodge. He declined, and the toy rights went to competitor Kenner Toys, instead.

That movie? Star Wars. And we all know how that turned out.

Wagner spent the next several years with the market reminding him he’d blown it. As Kenner soared to new heights with action figures and play sets set a long time ago in a galaxy far far away, Mattel attempted to launch several new toy lines to claw back lost marketshare. And they all bombed. Wagner needed something that would go over big.

The answer came from two people working at Mattel, Roger Sweet, a lead in the Preliminary Design Department, and Mark Taylor, a packaging designer. Taylor had done some drawings of a barbarian character in the mould of Conan that he called Torak. This got Sweet to thinking. In late 1980, Mattel had the Mattel Product Conference, where people could pitch new toy lines to Wagner. Sweet went all in — he took figures from another Mattel toy line called Big Jim and started covering them with clay and sculpting them into new characters. He had plaster casts made, and three new characters existed to show off. One was an axe-wielding barbarian, another a tank-headed soldier, and the third was a space soldier. Big manly men, although intended to be the same character. The idea was that this one character could be dropped into any environment and Big Manly Adventures could be had. The proposed line was called Lords Of Power, and the character was named He-Man.

Wagner decided the barbarian was the best character. He was worried how the Bible Belt would react to a name like Lords Of Power, and the name eventually became Masters Of The Universe. Sweet and Taylor became the touchstones of the project. Toy distributors were unsure of the concept — who is He-Man, and why would anyone care? Mattel marketing director Mark Ellis came up with an idea. Each toy would include a mini-comic laying out the lore and characters of the series. Mattel contacted DC Comics for the job, with Donald F. Glut writing the first ones. According to David Wharton’s article “15 Things You Didn’t Know About He-Man And The Masters Of The Universe,” Toys R Us wasn’t sold on this, saying “five-year-olds don’t read” (which, I have to say, is bullshit. I was reading at a fifth-grade level at that age). Ellis proposed an animated series, leading to a meeting with Lou Scheimer, the head of Filmation. And in 1982, He-Man And The Masters Of The Universe was unleashed on the world, and became a pop culture phenomenon.

Now, you look at this and you think to yourself, “Wow, Mattel sure hit it out of the park! They own MOTU! They can really leverage that!”

And then, one of the guys I talk with online casually dropped a bomb on me — Universal owns the rights to MOTU, not Mattel. And Mattel loses the rights to make toys in 2023.

This blew my mind. The path of He-Man is pretty well documented, especially in Sweet’s book Mastering The Universe: He-Man And The Rise And Fall Of A Billion-Dollar Idea. Mattel has been adamant about ownership of anything MOTU related, including winning a court case against Glut back in 2011 over the mini-comics he wrote. If you search the US Patent and Trademark Office, it shows Mattel as “Owner” on the copyrights and most of the trademarks. But in 2017, a former brand manager at Mattel named Scott Neitlich flat out stated in an online forum, “And for the record, Mattel does not own MOTU. Universal does.” Among the shocked reactions was one from Emiliano Santalucia, who, based on his responses, works in Mattel’s packaging department, saying that Mattel still owned everything, citing the package indicia that says, “…owned and used under license from Mattel, Inc, (C) 2016 Mattel Inc. All Rights Reserved. Under license to Classic Media.” And yet, not only is it claimed that Universal is the actual rights holder, not only does Mattel lose what it has in 2023, but Mattel is gearing up new product lines that look like they are intended to replace MOTU.

So what the hell happened?

Neitlich has his own YouTube channel, Spector Creative. And he laid out a road map. And if any of this information is wrong, no one is saying. Especially Mattel, which has been oddly quiet about the whole thing. According to him, here’s how this played out:

Mattel was anxious to expand He-Man’s presence, giving rise to She-Ra and the MOTU movie from Cannon Films. They could do this because of Filmation’s animated series. When it comes to IP, there are different categories for what is being claimed. Because they were toys, Mattel had Physical Property IP rights. When Filmation created the series, this created a new category in the IP, Entertainment rights. Filmation didn’t get a lot of oversight from Mattel over what to do with the series, and a lot of the lore and ideas that were created were the results of Filmation’s work, not editorial edicts from Mattel. So Filmation had the Entertainment rights while Mattel still held the Physical Property rights. This also resulted in Filmation’s creation of She-Ra, Princess Of Power. So Filmation was basically treating the property as their own and doing what they thought they should do with it, basically getting themselves mixed up in the ownership of the Entertainment rights, and Mattel was happy to make toys based on it all. During this time, Mattel also granted live action movie rights to Cannon Films (I’m guessing Mattel wasn’t familiar with Cannon’s reputation. They should have talked to Marvel and the proposed Spider-Man movie Cannon was trying to make). That was the one that starred Dolph Lundgren and was directed by Gary Goddard from 1989 (with a pre-fame Courtney Cox in the cast). Fun fact — Cannon had a sequel ready, but they were in financial trouble and couldn’t afford the license fee to Mattel. They wound up reworking the movie into Cyborg with Jean Claude Van Damme and directed by Albert Pyun. Now, obviously, that license has now expired. I believe the rights to the film are held by Warner Bros. now, as they bought out Cannon when they went under. But that’s just the film itself. The live-action rights were available, and were picked up by Sony along with the rights to make a Barbie movie. As we know from the Sony e-mail hack, Sony spent a lot of money and had nothing to show for it, and Mattel eventually got those rights back. Sony did get He-Man back (last I heard, it was being written by the people who wrote Iron Man) while Barbie went elsewhere (I think Warner Bros, IIRC). And there is the Netflix series coming out.

Everybody still with me so far? That’s good!

So, that was the nice, steady, peaceful climb up the roller coaster. Now, here’s were we drop and go through twists and turns that make some people nauseous. Mattel eventually sold the Entertainment rights to Hallmark, the card company. Hallmark then sold the Entertainment rights to a company called Entertainment Rights. Entertainment Rights then sold the rights to Classic Media. According to Neitlich, at this point, Mattel was paying a royalty on each toy sold to Classic Media. He says he’s figuring the royalty is still being paid to whoever currently owns the rights. Then, Classic Media got acquired by DreamWorks, giving them the Entertainment rights to MOTU (DreamWorks made a deal with Netflix for new series, so now we know how Netflix got a She-Ra cartoon — it was part of the deal they made with DreamWorks, who held the rights to MOTU characters. It also explains the two upcoming Netflix series based on MOTU). And then DreamWorks famously went up for sale, and in the resulting bidding war (which is a story in itself), Universal Studios bought them. Which means Universal now owns MOTU.

So what about Mattel? Well, supposedly, the deal was that Mattel got Right Of First Refusal for MOTU toys. This meant that anyone who owned the property that wanted toys had to stop at Mattel first. If Mattel passed, they were free to shop around elsewhere. I would like to say that, if anyone tells you they want First Refusal, break off negotiations right away and never deal with them again. First Refusal does not guarantee it will get to the market. If they want to hold you hostage, all they have to do is say, “Yes, we want it,” but never release it. You now cannot shop whatever it is around because they already said they’d do it, even if they don’t actually do it. Unless you have clauses to have such things expire for non-use, you are putting your entire future in the hands of someone who can simply say, “Hey, I’m honoring the terms of the contract.” Walk away FAST. (I have already done this, in fact. A publisher that wanted to publish a book of mine. Things were all set and they sent me the contract. I don’t know if they just figured I’d be thrilled to be published and wouldn’t ask questions or if they just figured I wouldn’t go over the contract, but buried in there on page 37 was a First Refusal clause, which had never been mentioned at any point previously. I threw it out and cut all contact with them. I just didn’t trust that wording.)

However, the contract states that this is only until 2023. After that, ALL rights revert back to the IP holder. Which, according to Neitlich’s scenario, is Universal. There have been a lot of rumors of a partnership existing between Universal and Mattel’s chief rival, Hasbro. It is possible MOTU toys may soon be made by Hasbro before long. And won’t that make Mattel feel really sick. The only thing Universal does NOT have is the live action rights, which are currently held by Sony. Neitlich says that his information could be wrong, but he doubts it. As the theme from Monk goes, “I could be wrong now, but I don’t think so.”

One thing is for sure — if Neitlich is right, things are going to get real interesting for Mattel in 2023. And I’m very curious to see what happens next.