Rearden LLC v. Walt Disney Company

In infringement suit over film studios’ use of motion capture technology in blockbuster films, district court reconsiders prior order and grants summary judgment for defendants on two additional films—Guardians of the Galaxy and Deadpool—due to lack of causal nexus between use of plaintiffs’ technology and profits derived from those films. 

Rearden LLC and Rearden Mova LLC sued a number of film studios for copyright, trademark and patent infringement based on their alleged use of plaintiffs’ MOVA Contour Reality Capture Program in the production of a variety of motion pictures. Defendants moved for summary judgment on the copyright claims, arguing that Rearden could not show the required causal nexus between the alleged infringement and the profits from defendants’ films. The court granted summary judgment to the studios on five films, including Avengers: Age of Ultron and Night at the Museum: Secret of the Tomb, but denied the motion as to the films Beauty and the Beast, Guardians of the Galaxy and Deadpool. Defendants subsequently moved for reconsideration as to Guardians of the Galaxy and Deadpool, which the court ultimately granted. 

The studios’ summary judgment motion centered on Rearden’s claims to recover defendants’ profits from the films. The court identified these as “indirect profits” because the studios profited from the sale of their films, not from the sale of Rearden’s technology itself. Ninth Circuit precedent requires that the copyright holder offer non-speculative evidence to support a causal relationship between the infringement and indirect profits. The court concluded that Rearden had failed to establish the requisite causal nexus as to Guardians of the Galaxy and Deadpool.

For Guardians of the Galaxy, Rearden’s evidence of causal connection consisted of a draft press release for the movie and an online interview with the president of Marvel Studios, both of which referenced the MOVA technology. The court found this to be insufficient, as there was no evidence that the draft press release was ever disseminated to the public, and nothing connected the interview to film sales. For Deadpool, Rearden relied on a 19-second clip from an 80-minute promotional featurette that was included as bonus material on Blu-ray, DVD and streaming versions of the film. Although the excerpt highlighted the use of MOVA technology in the film, the court noted that the featurette could be seen only by someone who had already purchased or rented the film and that there was no evidence it was used to promote sales in the first instance. The court ruled that summary judgment should have been granted on Deadpool because Rearden’s causal connection was purely speculative. 

The court also noted that Rearden’s evidence with respect to Guardians of the Galaxy and Deadpool contrasted starkly with the evidence concerning Beauty and the Beast, for which defendants did not challenge the court’s denial of summary judgment. Not only had Rearden shown that the trailer for Beauty and the Beast included at least nine clips created using MOVA technology and that the trailer set a new record for views in the first 24 hours after its release, but Rearden also presented evidence substantiating the correlation between trailer views and box office revenue. Without any similar evidence for Guardians of the Galaxy and Deadpool, the court concluded that it had erred in denying summary judgment for the studios as to these films. 

Summary prepared by Tal Dickstein and Jordan Meddy