Film Esq.

No "Free Speech" in Sony's Playstation Network

noreply@blogger.com (Rodney Perkins) — Sat, 24 Oct 2009 16:12:00 +0000

The right to free speech under the First Amendment of the United States Constitution is a legal limitation on the federal or state government's ability to prevent citizens from speaking. It does not apply to private actors who attempt to prevent others from speaking. There are, however, interesting and narrow exceptions that may cause the First Amendment to apply to a private actors. One of those exceptions is where a private company behaves or operates in a manner similar to a municipality ("company town" doctrine). Another exception occurs where a private company has a structural or functional relationship to the government.

In the case of Estavillo v. Sony Computer Entertainment America, these two First Amendment exceptions came up within a unique context: an online gaming network. Plaintiff was allegedly banned from Sony's Playstation 3 network for violating network use terms. In response, he sued Sony, claiming that the company violated his First Amendment rights. In a September 22, 2009 opinion by the U.S. District Court for the Northern District of California, Sony's motion to dismiss for failure to state a claim was granted. The court found that the neither of the exceptions mentioned above applied to the facts of the case.

Estavillo v. Sony Opinion

First Amendment Protects Use of Jim Brown's Likeness in Madden NFL Video Game

noreply@blogger.com (Rodney Perkins) — Thu, 22 Oct 2009 11:58:00 +0000

Madden NFL is an extremely popular video game produced by Electronic Arts (EA) that comes out in an updated edition every year. NFL legend Jim Brown has a problem with the game, though. A player in the Madden NFL game, which is not specifically identified as Brown, wears jersey number 37 (Brown wore 32), but the virtual player plays the same position as Brown (running back) and has almost identical statistics.

Based on these similarities, Brown sued EA in the U.S. District Court for the Central District of California for various claims, including unfair competition based on false endorsement under Section 43(a) of the Lanham Act, and California state law claims for invasion of privacy and unlawful business practices.

In a October 16, 2009 opinion, the court dismissed Brown's false endorsement claim, and in doing so, concluded that the First Amendment provided a complete defense to false endorsement.

Jim Brown v. Electronic Arts Opinion

FTC Disclosure Rules for Bloggers Part 1: What is an Endorsement?

noreply@blogger.com (Rodney Perkins) — Wed, 21 Oct 2009 17:14:00 +0000

The Federal Trade Commission published controversial new guidelines for endorsements and testimonial advertisements posted on blogs on October 5, 2009. These standards, which are contained in Part 16, Section 255 of the Code of Federal Regulations (16 CFR § 255), go into effect on December 1, 2009. In a nutshell, the new guidelines require any blogger who reviews products to disclose any connection between them and the source of the product under certain circumstances. This is a rather interesting topic, with broad implications for people who write online. Thus, it seems appropriate to dig into the mechanics of the rules.

This first post develops a basic analysis for figuring out how the law works, and examines what constitutes an "endorsement" under the new guidelines. The best way to understand the guidelines is to use a step-by-step analysis. First, does the blog post qualify as an "endorsement?" If the post is not an "endorsement," the FTC rules do not come into play. However, if the post is an "endorsement," the blogger (an "endorser") must disclosure of the connection to the advertiser (a "sponsor"). If a review on a blog is an endorsement, but the the author chooses not to disclose, there are consequences (maybe) as the rules are enforceable under Section 5 of the FTC Act (5 U.S.C. §45).

What is an endorsement?

The first step is to identify whether a post is an endorsing a product. A product is "any product, service, company or industry." 16 CFR § 255.0(c). An endorsement is:

"any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) which message consumers are likely to believe reflects the opinions, beliefs, findings, or experience of a party other than the sponsoring advertiser. The party whose opinions, beliefs, findings, or experience the message appears to reflect will be called the endorser and may be an individual, group or institution." 16 CFR § 255.0(b).

The highlighted section identifies intent of the guidelines: to ensure sure consumers know when there is a underlying relationship between the blogger that reviews a product and advertiser. The FTC has added hypotheticals to 16 CFR § 255.0 to show how the standard applies to bloggers. The following hypo is not an endorsement:

A consumer who regularly purchases a particular brand of dog food decides one day to purchase a new, more expensive brand made by the same manufacturer. She writes in her personal blog that the change in diet has made her dog’s fur noticeably softer and shinier, and that in her opinion, the new food definitely is worth the extra money.

This hypo is also not an endorsement:

Assume that rather than purchase the dog food with her own money, the consumer gets it for free because the store routinely tracks her purchases and its computer has generated a coupon for a free trial bag of this new brand.

This hypo is an endorsement:

Assume now that the consumer joins a network marketing program under which she periodically receives various products about which she can write reviews if she wants to do so. The consumer receives a free bag of the new dog food through this program, and writes a positive review.

In hypos 1 and 2, the blogger either bought the product or acquired it from a source besides the advertiser. Hypo 3 shows an ongoing relationship between the endorser (blogger) and the sponsor (advertiser), and an economic gain by the blogger based on the continued receipt of products. This combination is an example of an endorsement. In the Guides Concerning the Use of Endorsements and Testimonials in Advertising, the FTC drives home the importance of the relationship between advertiser and blogger is in defining an endorsement:

The Commission does not believe that all uses of new consumer-generated media to discuss product attributes or consumer experiences should be deemed “endorsements” within the meaning of the Guides. Rather, in analyzing statements made via these new media, the fundamental question is whether, viewed objectively, the relationship between the advertiser and the speaker is such that the speaker’s statement can be considered “sponsored” by the advertiser and therefore an “advertising message.”

As mentioned earlier, if a review qualifies as an endorsement, the blogger must disclose his or her connection to the advertiser. If the review is not an endorsement, the FTC rules do not apply. Disclosure will be discussed in Part 2.

There Was a Wolverine Leak?

noreply@blogger.com (Rodney Perkins) — Sun, 18 Oct 2009 19:46:00 +0000

Does remember when a supposedly unfinished version of Fox's Wolverine film leaked onto the Internet? Does anyone remember the threats that the studio made regarding the prosecution of the leak? Well, its been almost 7 months since the event, and there has been no publicized progress in the matter. Let's just call this one "dead."

Winnie the Pooh Copyrights Remain With Disney

noreply@blogger.com (Rodney Perkins) — Sun, 18 Oct 2009 16:17:00 +0000

Disney was recently successful in fending off litigation surrounding rights in one of its most popular characters: Winnie the Pooh. Stephen Slesinger, Inc. (SSI) acquired copyrights in the Winnie the Pooh in 1930. In 1961 and 1983, SSI licensed its exclusive rights in the character to the Walt Disney Company. Later, Disney was named a counter-defendant in a thirteen-year rights dispute involving SSI and the estate of Winnie the Pooh creator A. A. Milne. After unsuccessfully suing Disney for royalties in California state court, SSI brought a federal action for various claims, including copyright and trademark infringement. In a September 25, 2009 opinion by the U.S. District Court for the Central District of California, it washeld that SSI assigned all of its rights in Winnie the Pooh to Disney and, as a result, there as no basis for any of its intellectual property claims.

Milne v. Slesinger Opinion

(Some of) Superman Returns

noreply@blogger.com (Rodney Perkins) — Thu, 20 Aug 2009 17:40:00 +0000

There was a real drought in the Siegel v. Warner Brothers Entertainment (aka the Superman case), which was previously covered in posts about the general Superman copyright issues and the Superman alter-ego theory. Now, a recent ruling held in the case that the Siegel family recaptured certain rights to the Superman character. Specifically, although ownership in Superman material published from 1938 to 1943 remains with Warner Brothers, the Siegels have retained copyrights to the following material:

Action Comics No. 1;
Action Comics No. 4;
Superman No. 1, pages three through six, and
the initial two weeks' worth of Superman daily newspaper strips.

The four sets of material mentioned above includes Superman's origin story, his parents Jor-El and Lora, infant Superman, and other story elements. The materials from 1938 to 1943 includes "kryptonite," Lex Luthor, Jimmy Olsen, and Superman's ability to fly.
Note that this dispute originated when the Siegels sought to terminate a grant to Warner of Superman copyrights. What this decision ultimately means is that the termination requests are valid, and all interests that Warner (and by default, DC) has in these materials will expired at the end of the original grant (i.e., 2013). Thus, Warner will have to negotiate and pay to use any of the copyrighted material after that.

Siegel v. Warner Bros Entertainment 8/12/09 Opinion

Famous Monsters of Fair Use

noreply@blogger.com (Rodney Perkins) — Wed, 19 Aug 2009 11:43:00 +0000

Warren Publishing is the company behind such classic horror magazines like Creepy, Eerie, and Famous Monsters of Filmland. In the recent case of Warren Publishing Co. v. Spurlock, Warren Publishing was on the losing end of a copyright dispute involving covers from some of its magazines.

The artwork of Basil Gogos appeared on the cover of at least 50 issues of Famous Monsters of Filmland as well as covers of a few issues of Eerie and Creepy. David Spurlock and Vanguard Productions published a book entitled Famous Monster Movie Art of Basil Gogos that reproduced 24 of these covers, 10 of which were portrayed as covers, and 14 of which appeared without any Warren magazine text.

In response to the book's publication, Warren brought an action for copyright and trademark infringement. Spurlock successfully presented a fair use defense to the Warren's copyright. Of great significance was the court's reasoning as to the first factor in the four-part fair use analysis under 17 U.S.C. § 107: the purpose and character of the work. Here, the judge found that Spurlock's uses of the covers was transformative since the the Gogos book presented the images for an entirely different purpose than the Warren magazines (i.e., using the covers to sell magazines versus using the illustrations for a biography or career retrospective).

Warren v. Spurlock opinion

Film Esq. Update

noreply@blogger.com (Rodney Perkins) — Wed, 01 Jul 2009 11:31:00 +0000

Things have been rather busy, hence updates have been infrequent. In the near future, the posting pace should pick up again so stay tuned because there are plenty of interesting topics on deck.

Why the FBI is Investigating the Wolverine Leak

noreply@blogger.com (Rodney Perkins) — Fri, 03 Apr 2009 17:49:00 +0000

Litigation copyright infringement is generally handled as a civil matter (e.g., RIAA music downloading cases) but occassionally, the Department of Justice (DOJ) pursues criminal charges against copyright infringers under 17 U.S.C. § 506 and 18 U.S.C. § 2319. Such prosecutions are rare. So, the announcement that the FBI is assisting Fox in tracking who leaked the X-Men Origins: Wolverine movie, is a big red flag that a criminal charges will be filed. In this regard, one suspects that the DOJ will attempt to make an example of out of the person(s) responsible for this leak by pursuing the heaviest possible penalties under the federal sentencing guidelines. This should be a very interesting case to watch.

Stan Lee East Coast Update: There Isn't One

noreply@blogger.com (Rodney Perkins) — Fri, 03 Apr 2009 06:46:00 +0000

The case of Abadin et al v. Marvel Characters, Inc. et al. was filed almost two months ago. After the initial flurry of filings and press releases, there have been very few developments in this case, which pits Marvel Comics creator Stan Lee against shareholders in Stan Lee Media, Inc. (SLMI). The last filing of any consequence was a consent order for substitution of counsel (Martin Garbus, who is the lawyer for the plaintiffs, joined the Eaton and Van Winkle as a partner) on March 31, 2009. At this pace, this litigation will drag on for a very long time.

A Note on Fair Use

noreply@blogger.com (Rodney Perkins) — Mon, 23 Mar 2009 18:17:00 +0000

"Fair use" is a phrase that often arises in conversations about copyright and the arts. Some of the mainstream use of the term, which leans towards a philosophical or political stance, indicates that there is a bit of confusion about what "fair use" means in practical terms. In the world of copyright law, "fair use" denotes a statutorily defined legal standard. See 17 U.S.C. § 107. "Fair use" is an affirmative defense. In other words, it is the defense an alleged copyright infringer presents after a lawsuit has been filed against them. A court decides whether a particular use is "fair" by weighing 4 factors, which are defined in the previously mentioned statute.

Thus, those integrating elements of copyrighted works into their own artwork, recordings or films should be aware that any reliance on "fair use" arguments does nothing to prevent them from having to spend money in order to defend a copyright infringement suit. As the saying goes, "tell it to the judge."

New Legal Strategies Raise the Stakes in Sacha Baron Cohen's Bruno

noreply@blogger.com (Rodney Perkins) — Sat, 21 Mar 2009 15:18:00 +0000

A special sneak preview of 3 scenes from Sacha Baron Cohen's latest film Bruno was held at the SXSW Film Festival and Conference in Austin, Texas last week. Fantastic Fest sponsored the screening. The film will not be released until July so this was a highly anticipated screening. Two of the scenes were better than anything in Borat; the remaining scene was quite good but not as powerful as the others.

One thing that is apparent from the footage is that Sacha Baron Cohen has "upped" his game by developing more elaborate setups than those featured in Borat. As reported by The Smoking Gun, these new pranks required a more evolved legal strategy. Some, but not all, of the pranks were setup by approaching interviewees to appear in a German television documentary. In order to bolster the legtimacy of the "documentary," the Bruno film production set up four "shell companies" called Amesbury Chase, Chromium Films, Cold Stream Productions, and Coral Blue Productions. Each company uses the same Los Angeles mailbox drop, phone number and similar web sites hosted by the same company.

The article from The Smoking Gun suggests that each company was not only setup as a website but as an actual legal entity. A search of filings with the California Secretary of State shows a filing for Cold Stream Productions, LLC on November 13, 2006. The business address is listed as 1800 Century Park East, 10th Floor in Los Angeles, California. This is an office park. The registered agent is Eisner, Frank and Kahan, which IMDB lists as the production legal team.

There are no Secretary of State filings for the other companies. However, a search of Los Angeles County records show the following fictious name filings:

Amesbury Chase Productions, filed on 10/29/2007
Chromium Films, filed on 6/12/2007
Coral Blue Productions, filed on 10/29/2007
Cold Stream Productions LLC, filed on 5/14/2007
Cold Stream Productions LLC, filed on 9/28/2007

It would be very useful to acquire the fictious name statements to see examine other elements of this puzzle. The Smoking Gun presumably has them but perhaps they do not. Look for a follow up post in the near future.

Heroes Versus Astropia: Copying, Infringement or None of the Above?

noreply@blogger.com (Rodney Perkins) — Fri, 20 Mar 2009 11:56:00 +0000

Gunnar B. Gudmundsson's Astropia has only screened twice in the United States but this Icelandic film set box office receipts in its home country. The film's plot revolves around a pampered young woman whose main source of money (her crooked boyfriend) dries up, thus forcing her to take a job in a comic book store. The only reason she gets the job is because of her looks; she knows nothing about comics or role-playing games. She slowly acclimates to the job and makes new, nerdy friends.

So, when a clip from the popular NBC television show Heroes appeared online that looked very similar to those featured in Astropia, the creators of the film were rather alarmed. This sense of dismay was heightened by the fact that the creative team is currently negotiating for a U.S. remake. This scenario provides a convenient excuse to examine the applicable doctrine for determining copyright infringement in film scripts, books or plays. A legal breakdown will occur in the next post but for now, compare the the clips from Heroes and Astropia shown below. Keep in mind that the analysis goes beyond surface comparisons.

1. Clip from Heroes

2. Scene from Astropia

2008 in Review: Documentary Lawsuit Provides Reminder That Historical Facts Cannot be Copyrighted

noreply@blogger.com (Rodney Perkins) — Mon, 16 Feb 2009 10:19:00 +0000

In Novak, et. al. v. Warner Bros. Pictures LLC, et. al., two documentarians who produced a film about the Marshall University football program claimed that Warner Brothers produced and released a motion picture, “We Are Marshall,” that infringed on their copyrights in the documentary.

On October 20, 2008, the court granted Warner Brother's Motion for Summary Judgment. According to the Hon. Gary Allen Feess, who also presided over the Watchmen copyright lawsuit, the plaintiffs (the documentarians) had the burden to prove that the two films were “substantially similar” under current US copyright doctrine. Warner Brothers successfully argued that that the works are similar only in that they both deal with events surrounding a November 14, 1970 airplane crash, and that those events are historical facts in which no one can claim a copyright interest.

The Asylum is Back with The Terminators

noreply@blogger.com (Rodney Perkins) — Sat, 14 Feb 2009 00:51:00 +0000

In December 2008, this blog featured a discussion of the legal ramifications of The Asylum's business model. For those who need a refresher, The Asylum releases low-budget films with titles, marketing materials and release dates designed to ride the promotional campaigns of bigger studio releases. Now, The Asylum is coming out with a new "mockbuster": The Terminators. The movie is being released on April 28, 2009; Terminator: Salvation hits theaters on May 21, 2009.

2008 in Review: Zombie Video Game Did Not Infringe on Dawn of the Dead Rights

noreply@blogger.com (Rodney Perkins) — Fri, 13 Feb 2009 12:14:00 +0000

In February 2008, Capcom, the creator of the video game Dead Rising filed a complaint against MKR Group, who own the copyrights in George Romero's film Dawn of the Dead. Capcom's complaint sought a declaratory judgment that it did not infringe any copyright, trademark, or other intellectual property rights of MKR in creating the video game. MKR later filed a third party complaint against Capcom, along with numerous counterclaims, including copyright infringement and violations of the Lanham Act. The case was docketed as Capcom Co., Ltd. v. MKR Group, Inc.

In an October 10, 2008 opinion, the court dismissed MKR Group's copyright counterclaim. Using the objective “extrinsic test," the court found that, as a matter of law, there was no substantial similarity between the Dead Rising video game and the Dawn of the Dead film. The court also dismissed MKR’s Lanham Act counterclaim. Although MKR sufficiently pled “source identifying elements,” the court found that a matter of law, those elements did not violate the Lanham Act. MKR’s remaining counterclaims were dismissed as preempted by the Copyright Act and the Lanham Act.

2008 in Review: Presence of Pinball Machine in Mel Gibson Movie Was Not Infringement

noreply@blogger.com (Rodney Perkins) — Thu, 12 Feb 2009 11:25:00 +0000

Gottlieb Development LLC distributes and sells the "Silver Slugger" pinball machine, which features copyrighted designs. The pinball machine appears in the background of a short scene in the 2000 Mel Gibson film What Women Want.

In response to portrayal of the machine in the film, Gottlieb filed various claims against the film's distributor (Paramount), including copyright infringement. On Dec. 29, 2008, an opinion was issued in the case, which was docketed as Gottlieb Development LLC v. Paramount Pictures Corp. The court found that Paramount’s use of Gottlieb’s "Silver Slugger" pinball machine in the background of the scene in What Women Want was de minimis and that Gottlieb's copyright claim was not actionable.

Stan Lee Lawsuits: Evil Clone Edition

noreply@blogger.com (Rodney Perkins) — Mon, 09 Feb 2009 23:35:00 +0000

Now that the east coast Stan Lee comic book lawsuit has been thoroughly described, it is time to focus on legal "evil clone" on the west coast: QED Productions, LLC, et al. v. Nesfield, et al. The facts are rather convoluted.

Stan Lee and his partner Peter Paul incorporated Stan Lee Entertainment (SLE) in 1998. Lee entered an employment agreement with SLE in which he assigned the rights to various copyrights and trademarks, which included materials like Stan's Evil Clone (Evil Clone), to the corporation in exchange for salary and stocks. Later in 1999, SLE merged with a Delaware corporation called Stan Lee Media, Inc. (SLMI-DE). In that same year, SLMI-DE became a subsidiary of a Colorado company called Stan Lee Media, INC. (SLMI-CO). The company was originally known as Boulder Capital Opportunities, LLC.

SLMI-DE and SLMI-CO filed for Ch. 11 bankruptcy in 2001. With the approval of the bankruptcy judge, all parties negotiated an agreement through which the assets of SLMI-DE would be sold to SLC, LLC, which was to be "creatively controlled" by Stan Lee. SLC was never formed. Instead, Lee transferred all of the rights to a company called QED, LLC. This transaction was was never approved by the bankruptcy judge.

QED, LLC then filed filed a complaint on January 9, 2007 against against the people behind SMLI-DE and SLMI-CO. Two amended complaints were ultimately filed. The second one, which contained claims including copyright infringement, trademark infringement and cybersquatting, was filed on August 25, 2008. QED, LLC eventually filed a Motion for Summary Judgment and the trial judge's ruling, which instigated the recent battle of the press releases, was issued on January 20, 2009. In this order, the trial court judge found that Lee's transfer of assets to QED, LLC was void inbecause it violated the automatic stay imposed when SLMI-DE and SLMI-CO filed bankruptcy. The case is now closed pending the outcome of related litigation in Colorado.

QED v. Nesfield Order Denying Plaintiff's Motion for Partial Summary Judgment As to Standing

Upcoming Topics

noreply@blogger.com (Rodney Perkins) — Mon, 09 Feb 2009 23:24:00 +0000

In addition to the usual posts about new and pending lawsuits, Film Esq. will soon begin a run down of some of the most interesting film and comic book related litigation from 2008. Topics include zombies, fast cars, pinball, video games and the usual legal conundrums surrounding copyright, trademark and contracts.

What Rights Did Stan Lee Actually Give Away?

noreply@blogger.com (Rodney Perkins) — Mon, 02 Feb 2009 13:28:00 +0000

On October 15, 1998, Stan Lee entered an employment agreement with Stan Lee Entertainment, Inc. (SLE). The extremely broad assignment clause in this agreement is crucial to the plaintiff's claims for co-ownership in key Marvel comic book copyrights that was filed on January 20, 2009. The clause, which was pulled directly from the complaint with all original emphases, is as follows:

I [Stan Lee] assign, convey and grant to [Stan Lee Entertainment, Inc.] forever, all right, title and interest I may have or control, now or in the future, in the following: Any and all ideas, names, titles, characters, symbols, logos, designs, likenesses, visual representations, artwork, stories, plots, scripts, episodes, literary property, and the conceptual universe thereto, including my name and likeness (the 'Property') which will or have been in whole or in part disclosed in writing to, published, merchandised, advertised, and/or licensed by [Stan Lee Entertainment, Inc.] its affiliates and successors in interest and licensees (which by agreement iures to [Stan Lee Entertainment, Inc.'s] benefit) or any of them and my copyrights, trademarks, statutory rights, common law, goodwill, moral rights and any other rights whatsoever in the Property in any and all media and/or fields, including all rights to renewal or extensions of copyright and make applications or institute suits therefore (the 'Rights').

Stan Lee Media, Inc. complaint

Stan Lee Media Versus Stan Lee and a Lot of Other People

noreply@blogger.com (Rodney Perkins) — Sat, 31 Jan 2009 15:04:00 +0000

As previously noted, Stan Lee is the target of a new comic book related lawsuit filed in New York on January 20, 2009. Stan Lee, however, is just one of many names in the lawsuit, which is docketed with the Southern District of New York as Abadin et al v. Marvel Characters, Inc. et al.

As this is a "derivative" suit, the plaintiffs are shareholders in Stan Lee Media, Inc. (SLMI), a Colorado corporation that ultimately went into bankruptcy. Besides Stan Lee, the parties on the defendant's side of the "v." are Marvel Entertainment, Inc., Marvel Enterprises, Inc., Marvel Characters, Joan Lee (Stan Lee's wife), Joan C. Lee (Stan Lee's daughter), Isaac Perlmutter (Marvel executive), Avi Arad (Marvel executive) and Arthur M. Lieberman (Marvel executive).

The complaint presents a mix of 13 federal and state claims ranging from copyright and trademark infringement to right of publicity violations. The plaintiffs are seeking $750 million dollars or more in damages (!), based on a supposed ownership interest in numerous comic book characters. The factual basis for the complaint is summarized below.

The suit arises from Lee's involvement in Stan Lee Entertainment (SLE). SLE was eventually dissolved in a convoluted series of transactions; and SLMI succeeded to all SLE interests. As part of an employment agreement with SLE, Lee transferred the rights to a number of characters, trademarks and domain names to the company. Numerous assets were explicitly transferred in the original assignment agreement, including rights to such undeveloped comic book characters as The Accuser, Stan’s Evil Clone (Evil Clone), and The Drifter. SLMI shareholders are claiming that by terms of an assignment clause in Lee's employment agreement, rights in prime Marvel comic book characters such Spiderman and The Incredible Hulk were also transferred to the company.

SLMI's argument is interesting because as readers of this site may know, these suits are all about contracts and copyrights. SLMI claims that Lee created characters such as Spiderman outside of his scope of employment with Marvel (i.e., not as a work for hire). It is claimed that Lee had an interest as co-creator in these comic book characters at the time of contract formation with SLME, which was subsequently transferred to SLMI.

Certainly, if Lee retained an interest in the Marvel comic book characters as claimed (plaintiffs have to prove it), the assignment clause in the employment agreement cited in their complaint could be interpreted as giving them some rights in those characters (plaintiffs have to prove it). It is also interesting to note that in the related California case of QED LLC v. Nesfield, et. al, which involves a similar fight over SLMI assets, plaintiffs made no claims to Marvel assets. They only claimed an interest in materials explicitly outlined in their asset purchase agreement with Stan Lee; no claim was made to rights obtained via the employment agreement.

Stan Lee Media, Inc. complaint

Stan Lee Ridiculed From the Sidelines

noreply@blogger.com (Rodney Perkins) — Fri, 30 Jan 2009 03:38:00 +0000

Rarely does a plaintiff issue a press release that comments on a defendant's lack of success in a case to which they are not a party. This is exactly what happened on January 27, 2009 when a press release noting an unfavorable ruling in a lawsuit involving Marvel Comics founder Stan Lee hit the wires. The ruling in question, which was actually filed on January 20, 2009, is from the case of QED Production, LLC v. Nesfield, et al. The order can be accessed at the link provided at the bottom of this post. The press release, however, was not sent out by anyone involved in that case; it was sent out on behalf of plaintiffs in an entirely different case that was filed this week. This is revealed in the following excerpt:

Stan Lee, Arthur Lieberman and Marvel enterprises are being sued for looting the Estate of Stan Lee Media, Inc. in Chapter 11 Bankruptcy protection from 2001-2006. Martin Garbus, Esq., on behalf of shareholders of SLMI filed a Shareholder Derivative action on January 26, 2009 in Manhattan federal court claiming 50% percent ownership in such mega-popular Super Hero entertainment franchises as Spider Man, Iron Man and the X-Men.

An upcoming post will dig deeper into the case of QED Production, LLC v. Nesfield. Readers can expect posts about this new shareholder derivative suit as well.

QED v. Nesfield Order Denying Plaintiff's Motion for Partial Summary Judgment As to Standing

Superman Copyright Trials Delayed

noreply@blogger.com (Rodney Perkins) — Fri, 30 Jan 2009 02:44:00 +0000

Hon. Stephen Larson, the presiding judge in the case of Siegel v. Time Warner, has moved the February 3, 2009 trial litigating "alter ego" issues related to the Superman copyrights to April 21, 2009. He has also moved the March 24, 2009 accounting trial to June 9, 2009. In the order resetting the dates, the judge indicated that the delays are due to "health issues related to one of plaintiff's [Joanne Siegel and Laura Siegel Larson], main expert witnesses." I want to thank Jeff Trexler at Newsarama for the tip.

Siegel v. Time Warner Continuance Order

Superman Copyright Trial Raises Corporate Alter-Ego Questions

noreply@blogger.com (Rodney Perkins) — Thu, 22 Jan 2009 05:31:00 +0000

As exemplified by movies like The Dark Knight and Iron Man, having a comic book publisher and a film distribution company under a single corporate umbrella creates some powerful synergies. Marvel Comics has film licensing deals with Fox (X-Men) and Sony (Spiderman) but they began producing movies in 2006. In the process, Marvel subsidiaries like Marvel Characters, Inc. became content farms for Marvel Studios by supplying film rights for various characters. A slightly different example is provided by Warner Brothers, who bought DC Comics in 1969. Since the original Superman films, DC Comics has almost exclusively sold film rights to its titles to Warner Brothers. In fact, the Watchmen movie represents one of the rare instances where DC sold film rights to a company besides Warner Brothers. As Warner Brothers is now learning in Siegel v. Time Warner, vertical integration may lead to some problems in copyright litigation.

Among the remaining claims to be resolved in Siegel v. Time Warner is an accounting for profits derived from Superman copyrights. Specifically, both sides are battling over whether profits obtained from a Superman license that DC Comics sold to Warner Bros. Entertainment Inc (WBEI). In 1992, DC Comics sold an exclusive license in the Superman copyright to WBEI to for the remainder of its extended renewal term in movies, television, and home video. One year later, DC entered a separate exclusive license with WBEI's television division.

Time Warner claims that the Siegels are entitled to an accounting of the profits made by DC Comics (in the form of the licensing fees it has collected), but are not entitled to an accounting of the profits WBEI made as a licensee. This is because licensees owe no duty of accounting to the non-licensor co-owner of a copyright.

The Siegels (through their lawyer Marc Toberoff), on the other hand, argue that WBEI took over DC Comics position as copyright holder when it bought the licenses. If this is the case, WBEI will be viewed as a co-owner of the Superman copyrights who owes an accounting to the Siegels. The argument does not work under general legal principles but it might apply in one situation: where the subsidiary is serving as "alter ego" of the parent corporation in order to avoid having to share fees with lawful co-owners. This issue will be addressed at the February 3, 2009 trial and the outcome might have interesting effects on the way some entertainment companies do business (with themselves).

Watchmen Lawsuit Pt. 29: One Dollar Buys the Right to Millions Worth of Litigation

noreply@blogger.com (Rodney Perkins) — Sat, 17 Jan 2009 21:03:00 +0000

Fox and Warner Brothers have settled the Watchmen legal case but Warner Brothers is probably examining their legal options against those who sold them the Watchmen film rights in the first place. Lawrence Gordon has been identified as one potential party but it looks like he will be joined by a less publicized defendant.

The 2006 Warner Brothers agreement to acquire the Watchmen film rights actually identifies two different parties as "seller": Golar Inc. (Gordon's company) and LEI Development Projects. Who in the world is LEI? Copyright records show that Largo Entertainment (Larry Gordon's company prior to Golar) assigned rights to dozens of screenplays, including one or more Watchmen scripts, to LEI in 2002. Warner Brothers acquired rights to Watchmen screenplays by Sam Hamm, Charles McKeown and Gary Goldman in the 2006 agreement. So all three scripts were probably part of the batch acquired (bought) by LEI in 2002. There is no indication of how much money, if any, was exchanged between LEI and Golar.

Confused yet? It gets even more confusing. Warner Brothers paid exactly $1 dollar in cash (read the agreement below) for the option to make a movie based on the Watchmen materials. In addition to that single dollar, Warner Brothers agreed to pay LEI, not Golar, an amount equal to 5% of 100% of the "defined proceeds" of any movies derived from the Watchmen materials. Apparently, a separate producer agreement with Warner Brothers gave Lawrence Gordon his own cut of the proceeds.

So, at least on paper, Golar received no money from the deal for the Watchmen materials but accepted liability under the agreement's indemnification clause. This clause states (in part) that:

Seller [Golar and LEI Development Projects] shall indemnify and otherwise hold WBP (its successors, assigns, licensees, agents and representatives) harmless from and against any and all claims, demands, liability or expense (including reasonable attorney's fees) arising out of or resulting from any breach of its representations, warranties and agreements hereunder.

Hopefully, LEI enjoyed spending their dollar.

Quitclaim Agreement between Warner Brothers, Golar, Inc. and LEI Development Projects