The joke was always the dolls. Garbage Pail Kids started as a parody of the Cabbage Patch Kids, the soft-faced dolls Coleco had turned into a national craze from 1983, and the first series in June 1985 made no secret of it, down to a logo that echoed the dolls’ own. Original Appalachian Artworks, the Georgia company that owned the Cabbage Patch Kids, did not find it funny.
There is a story, told in a 2003 issue of Non-Sport Update, that OAA had offered Topps a licence to put the real dolls on cards or stickers in 1983, and Topps turned it down. Two years later Topps launched its own.
OAA sued in 1986, claiming copyright infringement, trademark infringement and unfair competition. The sources do not agree on the month: GPK World dates the filing to March 5, 1986, while GEEPEEKAY and others put it in May, after the third series was out. Mental Floss reported the claim at $30 million. The complaint went after the logo, the product name and the likeness of the kids to the dolls.
Topps argued parody. The court was not persuaded. In August 1986 Judge G. Ernest Tidwell granted OAA a preliminary injunction that stopped Topps selling the stickers. The court held that fair use did not cover them, and the ruling observed there was “a fine line between parody and piracy.”
The case settled on February 2, 1987. Neither side would talk about the money at the time, but a later appeals court case over how OAA shared the proceeds with one of its own licensees put it at $7 million. Topps kept the right to sell Garbage Pail Kids, and agreed to change the designs and the logo during 1987 so that nothing looked like a Cabbage Patch doll. According to GPK World, Topps could use the Garbage Pail Kids name abroad only through February 1988, and later foreign releases went out as The Garbage Gang.
You can see the result in the later Original Series. The kids’ bodies got blockier and more plastic, more like toys than soft dolls. Collectors at the time did not warm to it, sales were already falling as the fad faded, and Topps ended the original run after the fifteenth US series in 1988.
The case did not stay in the 1980s. When Topps sued a former GPK artist, Luis Diaz, over his “Garbage Parody Kids”, Diaz counterclaimed on the strength of the 1986 OAA lawsuit, alleging that Topps’s Garbage Pail Kids rights were not enforceable.
Every series from before and after the settlement is in the Card Index, so you can compare the 1985 kids with the redrawn ones side by side.