They are an iconic image from childhood for anyone who ever has as much as leafed through a DC or Marvel comic book. Sea Monkeys. Always on the back page, right next to the ad for X-Ray Spex glasses.
How iconic? Both The Simpsons and South Park had entire episodes that revolved around Sea Monkeys. Sea Monkeys are brine shrimp in a package that magically comes to life when dropped in water. Then, using magnifying glasses built into the plastic containers, you could, theoretically, watch them do brine shrimp things for hours.
You had to be eight or nine to buy into it but generations of kids did. And do; in 2020 Sea Monkeys were still a $3.5 million a year business.
The ‘Invention’ of Sea Monkeys
The story behind the ‘invention’ of Sea Monkeys is bizarre, flamboyant, and fascinating – a kind of early ‘50s film noir meets The Addams Family kitsch. They were developed by Harold von Braunhut, a motorcycle racer/TV producer/magician/carnival act agent/inventor/salesman/Jewish Neo-Nazi/ordained minister. If that package doesn’t make much sense to you, congratulations, you have discovered the essence of the man.
Novelty items were apparently a big business in the early ‘60s. It was dominated by Wham-O – the people who sold the Hula Hoop, Frisbee, Slip n’ Slide, and a lot more.
In 1960, Wham-O sold something called ‘Instant Fish’ – a package of freeze-dried African killifish that were supposed to come to life when water was added. Sales dried up like the fish when buyers found out that no power on earth could revive ‘Instant Fish’.
Von Braunhut, however, took the idea and worked with a marine biologist in Montauk, N.Y. to selectively breed a species of brine shrimp that could lie dormant for long periods. It was, actually, something of a scientific breakthrough. The biologist created a hybrid form of brine shrimp, von Braunhut named them Amazing Live Sea Monkeys and they took off. Comic books discovered a consistent source of ad revenue and the rest is history.
A Multi-Million Dollar Company and No Succession Plan – No Plans at All, In Fact
Von Braunhut died in 2003. His widow, Yolanda – whose background could fill a long Netflix series – inherited the company, the secret formula, and the immense estate on the Maryland side of the Potomac River that the Sea Monkeys built.
Von Braunhut, however, had been a strictly hands-on manager and his loss was keenly felt. Yolanda needed help and wasn’t all that interested in continuing the Amazing Live Sea Monkey business. She turned to Big Time Toys out of Lexington, Kentucky, name-wise a fitting successor to Wham-O.
She gave Big Time Toys the license to package and sell Sea Monkeys while her company supplied the packets with desiccated shrimp. The actual shrimp and the nutrient packet, which are considered trade secrets with the nutrient formula locked in a vault, would be supplied by Yolanda. Big Time had the option to pay $10 million for the company and the secret recipe to own them outright. Yolanda was looking at a Sea Monkey free future.
By the way, that’s $10 million for genetically-altered brine shrimp.
A Defaulted Sales Agreement and Intellectual Property Infringement
It’s probably not much of a surprise that a company with such a fictional sounding name defaulted on the agreement(s), but default Big Time Toys did. They stopped paying royalties to Yolanda. Then they went to China, got their own source of brine shrimp, and announced they now owned the Sea Monkey kingdom.
In what Mental Floss calls “a crustacean controversy,” Yolanda sued for breach of contract and trademark infringement, alleging Big Time had big-time stiffed her on her contractually obligated royalty checks. Big Time insisted they now had exclusive rights to the Sea Monkeys after making enough payments to cover the purchase price.
Lawsuits went back and forth in federal court for years. All the cases revolved around some fairly knotty contract law issues, trademark infringement, as well as the catchall issue of – ‘if Sea Monkeys aren’t really real, then how real is the company that sells them?’
The case[s] settled about eight years into the process. By the time of settlement, Yolanda had the mansion and little else – she could no longer afford the heat and electricity costs of such a mammoth home and lived in two rooms closed off from the rest. All while Sea Monkeys still sold. Big Time Toys had expanded sales into Walmart.
Business Planning Lessons
This is just another example – albeit a most entertaining one – of the a poorly thought out and even more poorly executed succession plan. The company was entrusted to someone with no experience and no interest in running it. A sale was Yolanda’s only option and that was botched. The contract was vague and an open invitation for Big Time to run rings around the intellectual property restrictions.
An operating, profitable company, the death of the owner, a ‘quick’ sale by the heir, then years of litigation. All of it was avoidable with proper planning.
Hopkins Centrich Can Help
Hopkins Centrich’s attorneys and staff have decades of experience designing succession plans, drafting sales contracts, and protecting intellectual property for our clients. We work as a team employing an interdisciplinary approach to issues whenever called for. We will make use of every cutting edge legal and business technologies and methodologies to assure that we will continue to deliver the highest quality legal services to our clients while allowing us to respond promptly and efficiently to client needs, exceed project requirements, operate effortlessly with narrow timeframes, and develop innovative and flexible legal solutions at competitive fees. We are creative. We are agile. We quickly adapt to rapidly changing circumstances, including changes in the law.
We would have helped Yolanda.