CHICAGO (AdAge.com) -- A federal jury yesterday ordered Taco Bell to pay $30.2 million to two men who accused the restaurant company of
|'Doggie Door' was one of the Taco Bell Chihuahua spots produced by TBWA/Chiat/Day for the campaign that became a focus of the lawsuit.|
|'Bobbing Head,' by TBWA/Chiat/Day, is another of the Chihuahua spots from the campaign.|
Joseph Shields and Thomas Rinks alleged that the Yum Brands' chain took the "Psycho Chihuahua" character they created in 1995 without paying any licensing fees.
Taco Bell to appeal
Taco Bell immediately announced that it will appeal the decision -- the latest move in a five-year court battle over the dog image.
"Taco Bell continues to strongly believe that the chihuahua character was created by the Chiat Day Advertising Agency, not the plaintiffs, and we intend to appeal the jury's verdict," said a Taco Bell spokesperson.
Five year battle
In June 1997 the Taco Bell dog first appeared in a marketing campaign created by Omnicom Group's TBWA/Chiat/Day of Playa del Ray, Calif. Several months later, Mr. Shields and Mr. Rinks, both of Grand Rapids, Mich., filed suit in federal court. The case was dismissed on a technicality. A year after Taco Bell ended the dog campaign, and the two men appealed the case. In July 2001, the Sixth Circuit Court of Appeals in Cincinnati unanimously reversed the ruling. Taco Bell then lost a Supreme Court appeal that led to the jury trial that began last month in the U.S. District Court in Grand Rapids, Mich.
The TBWA/Chiat/Day creative team that developed the dog campaign -- Chuck Bennett and Clay Williams -- said a Chihuahua that passed them during a lunch break inspired the character. That duo later left the agency to set up their own shop called Black Box and have since gone their own ways as directors, Mr. Bennett, at Crossroads Films, and Mr. Williams at Morton Jankel Zander.
Licensing show meeting
Mr. Shields and Mr. Rinks claim that they met Taco Bell executives at a licensing show, and that the chain subsequently requested ideas for a live-action dog but talks fell apart after several rounds of creative development.
Yum Brands said it expects the plaintiffs to file for an estimated $5 million to $10 million in pre-judgement interest and will take a special charge of 6 cents per share in the second quarter ending June 16. While the company doesn't expect a material impact to its earnings, if it loses its appeal, it said it intends to seek reimbursement from its insurance companies and TBWA/Chiat/Day.