An appeals court has reversed a lower court decision that ruled Big Idea, the company behind VeggieTales, had broken an agreement with Lyrick Studios to distribute its videos and products. The Fifth Circuit Court of Appeals ruled earlier this month that there was no written agreement between Big Idea and Lyrick Studios, which gave Big Idea the freedom to find a new distributor.

Lyrick claimed that two faxes and one internal memo referencing an agreement were enough to satisfy the law. But the court ruled that while the two companies were working to reach an agreement, and had been working as if an agreement were in place, there was never a final contract.

"We conclude that the faxes themselves do not set out a final signed contract. By their own language, they are part of negotiations," wrote Judge Edward Prado in the August 5 ruling. The internal memo, though it referenced "an agreement in force," was also not enough to satisfy the law, the court ruled.

"We were disappointed in the court of appeals verdict," said Tom Williams, an attorney who represents Lyrick. "We felt there was more than enough in the writings evidencing the agreement to satisfy a section 204(a) of the Copyright Act." Williams said Lyrick had not decided whether to appeal the verdict. "We're looking at our options."

"If the first judge had only seen the issues as clearly as the appeals judge, we might not have been forced to sell everything we had built," says Phil Vischer, founder of Big Idea. "VeggieTales would still be ours."

Although the earlier $11.5 million verdict forced Big Idea into bankruptcy, Vischer says, it was only the straw that broke the camel's back. "Our fundamental mistakes were, first, that we thought VeggieTales could continue growing indefinitely, and second, that we needed to significantly expand the company to keep up with that growth," he told Christianity Today.

"I wanted Big Idea to grow as big as possible, as fast as possible, and we all thought VeggieTales would support it," Vischer says. "We were wrong."

The reversal means the $11.5 million that was awarded to Lyrick will now go to Big Idea's creditors. Vischer says the creditors will get nearly all of the money they were owed. Classic Media, which bought the assets of Big Idea, will continue to own and distribute VeggieTales as well as produce new VeggieTales products.

Vischer calls verdict a vindication. "What really hurt about the bankruptcy was that the guilty verdict reached by the lower court made it appear that we had done something wrong, that Big Idea's collapse was a moral or ethical failing," he says. "The fact that a higher court threw out that conclusion took a big weight off our shoulders."

Last month, Vischer announced the creation of a new company, called Jellyfish. He says he has no intention of growing as big as Big Idea. "We're just looking for the ideas that God wants us to pursue next and then working with partners to bring them to life."

Related elsewhere:

Previous CT coverage of VeggieTales and Big Idea includes:

Running Out of Miracles | Big Idea creator Phil Vischer had his dream crumble, but he's no longer s-scared. (May 14, 2004)
VeggieTales Born Again | Big Idea primes itself for recovery with a new owner. (Jan. 21, 2004)
Big Idea Loses Suit | Jury says creator of VeggieTales owes $11 million to ex-distributor. (June 20, 2003)
VeggieTales Creators File for Bankruptcy | Bob the Tomato and friends sold to company that already has Lassie, Lone Ranger, and Rudolph. (Aug. 04, 2003)
Weblog: Veggies for Sale | Big Idea Productions says it's looking for a buyer (Jul. 16, 2003)
Big Idea Responds to CT Article | Phil Vischer, CEO and founder, issues a statement regarding company's financial status. (Oct. 4, 2003)
Big Trouble at Big Idea | Former workers worry that Jonah could sink the company. (Oct. 4, 2003)
The Top Tomato | Phil Vischer's tenacious campaign to dominate family entertainment. (Oct. 4, 2003)
Runaway Asparagus | Big Idea's Jonah is both wholesome and hip. (Oct. 4, 2003)
(The Voice of) Larry the Cucumber Speaks | "Nobody thinks growing up that they're going to be a cucumber." (Oct. 4, 2003)
The Serious Business of Silly Songs | The director of music for the VeggieTales talks about bringing musical depth to the score. (Oct. 4, 2003)
Jonah Bags Boffo Box Office | But Big Idea lays off 30 in 'heartbreaking' cuts. (Nov. 01, 2002)