Taco Bell to Pay $42M to Creators of the Taco Bell Mascot

01/25/2009 | Business Litigation

"A federal appeals court Friday ruled that Taco Bell is solely liable for $42 million in breach-of-contract awards to two Michigan men who created the diminutive mascot that starred in the Irvine fast-food giant's hit $500-million advertising campaign in the 1990s." Find the LA Times article here. 



The business litigation dispute began in 1998 when Joseph Shields and Thomas Rinks of Grand Rapids, Mich., filed suit against Taco Bell, which is owned by Louisville based Yum! brands, alleging breach of contract. 

Shields and Rink were in talks with Taco Bell advertising agents to adapt a Chihuahua for TV spots when, the men claimed in their lawsuit, Taco Bell took the idea to another ad agency, TBWA\Chiat\Day.

In 2003 a Michigan federal jury ordered Taco bell to pay $30 million for breach of contract and the federal judge tacked on nearly $12 million in interest.  This prompted Taco Bell to turn around and sue TBWA claiming the ad company was responsible for using the disputed content.

On Friday, the 9th Circuit Court of Appeals ruled in favor of TBWA by ruling that Taco Bell, and not TBWA, was responsible for the wrongful use of the Chihuahua.

It is unclear at this point whether Taco Bell/Yum! brands will appeal. Warner Norcross & Judd, LLP, a large Michigan law firm, represented Rinks and Shields.  

Hans

PS. Gidget was the name of the Taco Bell Chihuahua.  The popular ads stopped running in 2000 freeing Gidget for further big- and small-screen fame, with roles in "Legally Blonde 2: Red, White & Blonde" and Geico insurance ads. She also appeared on "The Tonight Show With Jay Leno," during which she was given a choice between a Taco Bell chalupa and Kentucky Fried Chicken.