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Disney, Jim Henson Sued Over 'Muppet Workshop' Royalties

Muppets Cast

Ever wonder how muppets procreate? Um, they don't. Children build muppets at FAO Schwarz stores and Disney theme parks and eventually, these muppets go on to tweet themselves silly and star in viral Internet sensations like this Kanye West parody. But back up for a moment. Muppets are born where and how?

The former executive producer of Married ... With Children details muppet genesis in a new lawsuit against the Walt Disney Co., the Jim Henson Co. and The Muppets Studio. The plaintiff claims it was his idea to create a Muppet Workshop, allowing people to design their own Muppets. Disney ran with that idea, he says, and he was stiffed out of his royalty percentage.

Debutts Marcus Prods., founded by Russell Marcus (Married with Children, Parker Lewis), filed the lawsuit on Tuesday in Los Angeles Superior Court.

Marcus says he entered into an agreement in 1998 with Tadpole Prods., the development division of Jim Henson, who created the famous puppet creatures in the mid-1950s. The deal was to create potential TV shows, and over the next two years, Marcus says he became more involved in the "Muppet" brand.

In 2000, he wrote a treatment for "Muppet Workshop," an idea whereby customers would come to a store and build their own Muppets, choosing their own accessories including facial features, hands, clothes and other items. The following year, Henson and DMP entered into a written agreement allowing Henson to use this idea in exchange for 2.5% of the royalties.

Disney bought the Muppets franchise from Henson in 2004, and that year, Marcus says he met with various Disney executives. The company's vice president David Spingarn is said to have been interested in hearing Marcus' ideas to "re-build the [Muppets] brand."

A few years later, Disney licensed FAO Schwarz to feature a "Muppet Whatnot Workshop," and when Marcus contacted Disney about this, he allegedly heard back that Disney hadn't made a profit on the venture.

But now, Marcus says the workshop has expanded to various Disney theme parks and he believes the company is hiding money from him. He's suing for breach of contract, fraud and deceit, and unjust enrichment, and demanding compensatory damages.

Eriq Gardner can be reached at eriqgardner@yahoo.com