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IP/Entertainment Case Law Updates

Stan Lee Media, Inc. v. The Walt Disney Company

Tenth Circuit dismisses Stan Lee Media’s copyright infringement claim against Disney, finding that plaintiff was collaterally estopped from asserting copyright infringement claim by Ninth Circuit decision in Stan Lee Media, Inc. v. Lee, which found that Stan Lee Media failed to plausibly allege that it acquired ownership of copyrights to certain popular Marvel characters from comic book creator Stan Lee.

In October 1998, plaintiff Stan Lee Media, Inc.’s predecessor, Stan Lee Entertainment, Inc., entered into an employment agreement with its founder, Stan Lee, a longtime employee of Marvel Enterprises and the creator of certain iconic comic book characters, such as Spiderman and Iron Man. The employment agreement provided that Lee assigned, conveyed and granted “all right title and interest [Lee] may have or control” in his creations and intellectual properties, but provided that Lee would continue to work part time for Marvel.

Stan Lee entered into an agreement with Marvel shortly thereafter, assigning essentially the same rights to the comic book characters to Marvel. Marvel has since sold and licensed rights to the characters for, among other things, the production and distribution of several major motion pictures. In 2009, Marvel’s parent company was acquired by defendant The Walt Disney Company.

Stan Lee repudiated his 1998 contract with plaintiff in 2001, claiming that plaintiff had breached the agreement. In 2006, however, plaintiff recorded the 1998 agreement with the U.S. Copyright Office, and in 2007 began filing a series of lawsuits in an effort to enforce its purported ownership of the copyrights to Lee’s comic book characters. In a 2009 decision, Abadin v. Marvel Entertainment, Inc., the Southern District of New York held that plaintiff could not assert ownership rights in the Marvel characters. The Abadin decision was then cited in subsequent lawsuits as a procedural bar to plaintiff’s claim. In a separate action, the Ninth Circuit rendered a decision in Stan Lee Media, Inc. v. Lee, holding that because plaintiff never announced that it owned the copyrights to the comic book characters, licensed the characters, produced content, or attempted to enforce its ownership rights between 1998 and 2007, while Marvel and others were generating revenue from the comic book characters, plaintiff’s claim of copyright ownership was not plausible.

In 2013, plaintiff brought this action in Colorado against Disney for copyright infringement, again asserting ownership of the copyrights to the Marvel characters. The trial court dismissed the claim, citing Abadin, and plaintiff appealed. The Tenth Circuit affirmed the dismissal of plaintiff’s claim, but on alternative grounds, finding that the Ninth Circuit’s decision collaterally estopped plaintiff from asserting copyright ownership here. In doing so, the court rejected plaintiff’s argument that plaintiff did not have a full and fair opportunity to litigate ownership in the Ninth Circuit case, finding that plaintiff had fully litigated the plausibility of its ownership claim before the Ninth Circuit. Because plaintiff was precluded from asserting copyright ownership, its copyright infringement claim necessarily failed and was appropriately dismissed.

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