Case against Osbournes can proceed.

An appellate court has reinstated a lawsuit claiming that rock icon Ozzy Osbourne and his wile Sharon breached a contract with a Santa Monica firm when they struck a deal with MTV for a program documenting their home life.

Threshold.tv Inc., a brand management and digital production company, claimed in a suit brought in Los Angeles Superior Court that it had discussed the idea for "The Osbournes" with the Osbournes prior to signing a contract in 2000. A Los Angeles Superior Court judge threw out the case, but in an Oct. 20 ruling, a three-judge panel in 2nd Appellate District said the lower court's decision ignored Threshold's efforts to develop a show under a clause in the contract. At stake could be millions of dollars in rights and merchandising fees.

"The Osbournes" featured the atypical life of Ozzy, Sharon and two of their three children. When it first aired in 2002, it pulled the highest ratings in MTV's history. The Threshold suit initially' was filed in August 2002.

Threshold.tv claims one of its executives suggested the idea of placing cameras in the Osbourne house when the company met with Sharon Osbourne in January 2000. After signing the contract, a Threshold executive suggested the idea for a "live action family based TV show," according to court papers. But Sharon Osbourne said she was "not interested in having TV cameras in the Osbourne house," the ruling says.

The suit is but one of many embroiling Osbourne, who is facing a similar suit filed by producer Gary Binkow and had to defend allegations levied in 2002 by former bandmates that they were due a share of the royalties on certain hit albums.

Under the Threshold contract, signed in 2000, the company was to sell "Ozzy Osbourne's name, likeness, image, identity, persona, trademarks and rights of publicity, and all intellectual property connected with the concert known as 'Ozzfest'" through artwork, trademarks, performances and promotional materials on the Internet.

Threshold acknowledged that the contract does not give it the exclusive right to develop a television show, but argued that a section of the contract outlining "additional exploitations" included the right to develop "live action and animated programs ... or other off-line works."

The Osbournes argued that the contract pertained only to "Ozzfest."

The appellate court said that "argument ignores the allegation that plaintiff created and sought to develop the idea for a television show that MTV ultimately aired."

Specifically, Threshold "proposed the creation of a television show featuring the Osbournes' home life; Ms. Osbourne rejected the idea stating she did not want television cameras in her home; and the Osbournes then negotiated and concluded a contractual arrangement with MTV to produce precisely the type of show" Threshold had proposed, the ruling says.

Orin Snyder, a partner at Manatt Phelps & Phillips LLP representing the Osbournes' London music company, Monowise Ltd., called the ruling "technical."

Threshold also named MTV Networks Enterprises Inc., as well as its parent company, Viacom Inc. Ozzy Osbourne's music label, Sony Music Entertainment Inc., Sony Pictures Entertainment Inc., and Signatures Network Inc., which owns merchandising licenses for Osbourne, were also named.