Stan Lee Media, Inc. v. Walt Disney Co.
| Decision Date | 23 December 2014 |
| Docket Number | No. 13–1407.,13–1407. |
| Citation | 113 U.S.P.Q.2d 1392,774 F.3d 1292 |
| Parties | STAN LEE MEDIA, INC., Plaintiff–Appellant, v. The WALT DISNEY COMPANY, Defendant–Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Robert S. Chapman, Eisner, Kahan, Gorry, Chapman, Ross & Jaffe (Jon–Jamison Hill, Eisner, Kahan, Gorry, Chapman, Ross & Jaffe, and John V. McDermott and Mark T. Barnes, Brownstein Hyatt Farber Schreck, LLP, Denver, CO, with him on the briefs), Beverly Hills, CA, for Appellant.
James W. Quinn, Weil, Gotshal & Manges LLP (R. Bruce Rich, Gregory Silbert, Randi W. Singer, and Sabrina A. Perelman, Weil, Gotshal & Manges LLP, and Frederick J. Baumann and Holly C. Ludwig, Lewis Roca Rothgerger LLP, Denver, CO, with him on the briefs), New York, NY, for Appellee.
Before TYMKOVICH, EBEL, and PHILLIPS, Circuit Judges.
Over the course of the last three-quarters of a century, Marvel Enterprises created a comic universe of unparalleled proportions. With comic-book legend Stan Lee at the helm as editor-in-chief of its comic-book division, Marvel constructed a fictional landscape of imaginative superheroes, elaborate narratives, and overlapping storylines. During this time period, the commercial popularity of these comic-book characters, including iconic figures like Spider–Man and the Avengers, intensified, steadily gaining devoted followers eager to consume the product. Eventually, Marvel, which is now indirectly owned by the Walt Disney Company, parlayed the success of this comic universe into a multi-platform, billion-dollar empire with blockbuster motion pictures, merchandising, and live productions.
Not surprisingly, such success breeds litigation, sometimes a lot of it. And rivaling the size and scope of Marvel's make-believe universe is a burgeoning mass of very real litigation over the ownership of the intellectual properties in the many characters comprising the Marvel portfolio. A repeat participant in these ownership disputes is Stan Lee Media, Inc.
Stan Lee Media claims to own intellectual-property rights in a number of popular Marvel characters. Its claims derive from a 1998 contractual agreement with Stan Lee, in which he transferred all of his ownership rights in characters he created while working at Marvel to Stan Lee Media in exchange for salary and other benefits. That ownership interest is the predicate for the claim of copyright infringement that Stan Lee Media brings here against Disney. Disney ended up with the Marvel characters when it acquired Marvel's parent company in 2009. Disney disputes whether Stan Lee Media has any interest whatever in the Marvel characters.
Although the ownership question might be complex, we need not consider it here because the Ninth Circuit recently provided an answer in Stan Lee Media, Inc. v. Lee, No. 12–56733, 585 Fed.Appx. 597, 2014 WL 5462400 (9th Cir. Oct. 29, 2014) (Stan Lee Media v. Lee ), finding that Stan Lee Media's statement of ownership of the copyrights to the pre–1998 characters failed to plausibly allege a claim for relief. In other words, Stan Lee Media could not even allege any right to ownership of the disputed properties. And under well-settled legal principles, the Ninth Circuit's decision on the ownership issue is entitled to collateral-estoppel effect in subsequent cases involving claims for relief premised on that issue.
Thus, because Stan Lee Media is precluded from alleging ownership of the at-issue intellectual properties, Stan Lee Media's copyright-infringement claim fails as a matter of law. We therefore AFFIRM the district court's decision granting Disney's motion to dismiss.
In October 1998, Stan Lee entered into a written employment agreement (the 1998 Agreement) with a Colorado company he formed, Stan Lee Entertainment, Inc., to create new comic-book characters. Stan Lee Entertainment is the predecessor to plaintiff, Stan Lee Media. The contract explained that Lee assigned, conveyed, and granted “all right, title and interest [Lee] may have or control” in his creations and intellectual properties. Aplt.App. at 31. At the time, Marvel had employed Lee for approximately sixty years, and the 1998 Agreement expressly recognized that Lee would continue to work part-time for Marvel.
For reasons that are not apparent in the record, Lee entered into an agreement with Marvel in November 1998. This time he assigned Marvel essentially the same rights to the comic book characters Stan Lee Media claims he granted to Stan Lee Entertainment through the 1998 Agreement.
In 2001, Stan Lee repudiated the 1998 Agreement, contending that Stan Lee Media committed material breach. In the letter communicating as much, Lee's attorney indicated that “such material breaches expressly permit Stan to claim rights and ownership in the properties such as defined in the agreement, which I hereby do on his behalf, including the trademarks, copyrights, and ... intellectual Property of the company.” Aple.App. at 29. Over five years later, on November 28, 2006, Stan Lee Media recorded the 1998 Agreement with the United States Copyright Office in Vol. 3544, Doc. No. 426. In a cover letter for this recordation, Stan Lee Media asserted that the 1998 Agreement transferred ownership rights from Lee to Stan Lee Media in many famous characters, including Spider–Man and Iron Man.
Throughout this time period, and carrying through to the present, Marvel exploited its comic universe by, among other things, selling and licensing the film rights to several characters and franchises to major production companies to create, sell, and distribute motion pictures. These efforts have been enormously profitable. Since its release in 2002, for example, the movie Spider–Man has grossed over $800 million worldwide.
Despite the value of the Marvel franchises, it was not until 2007 that Stan Lee Media started to assert ownership rights in the Marvel characters through litigation, filing lawsuits across the country in an effort to cash in on this financial success. To date, Stan Lee Media and related entities have filed numerous lawsuits, and courts from coast to coast have weighed in on the propriety of Stan Lee Media's assertion of rights in the Marvel characters. See Stan Lee Media Inc. v. Lee, No. 2:07–CV–00225, 2012 WL 4048871 (C.D.Cal. Aug. 23, 2012) (Abadin II ); Lee v. Marvel Enters., Inc., 765 F.Supp.2d 440, 456 (S.D.N.Y.2011)aff'd, 471 Fed.Appx. 14 (2d Cir.2012) ; Abadin v. Marvel Entm't, Inc., No. 09 Civ. 0715(PAC), 2010 WL 1257519 (S.D.N.Y. Mar. 31, 2010) (Abadin I ); Stan Lee Media, Inc. v. Marvel Entm't, Inc., No. 07 Civ. 2238(PAC) (S.D.N.Y. Mar. 15, 2007); QED Prods., LLC v. Nesfeiled, No. 07–CV–00225 (SVW)(SSX) (C.D.Cal. Jan. 8, 2007). And where there are numerous related lawsuits, the spotlight often shines on which lawsuits take precedence over others. Such is the case here, as many courts have singled out the Southern District of New York's decision in Abadin I as a bar to relitigation of certain claims and issues. See, e.g., Abadin II, 2012 WL 4048871, at *7 ; Lee v. Marvel Enters., Inc., 765 F.Supp.2d at 456.
In this respect, the district court's decision is typical. Stan Lee Media filed a complaint against Disney in the District of Colorado, alleging a single cause of action for federal copyright infringement. It claimed that Disney's production and distribution of several movies, including X–Men: First Class and Marvel's the Avengers, as well as other revenue-generating projects, intentionally violated Stan Lee Media's exclusive rights to use and exploit the characters it purportedly owns under the 1998 Agreement. The district court granted Disney's motion to dismiss in reliance on its view that Abadin I precluded the Colorado litigation. According to the district court, Abadin I definitively decided that Stan Lee Media could not assert ownership rights in the Marvel characters.
Since the district court's decision in this case, the Ninth Circuit has weighed in with yet another decision involving the usual players in a case called Stan Lee Media v. Lee . In that case, the court decided an appeal from the Central District of California in which Stan Lee Media had sued Stan Lee, among others, for a declaration regarding the intellectual-property rights subsumed in the 1998 Agreement. The district court dismissed the claims on res judicata grounds, citing Abadin I 's preclusive barrier. On appeal, however, the Ninth Circuit affirmed on an alternative basis, concluding that Stan Lee Media could not assert ownership in the disputed characters:
This appeal challenges the dismissal of Stan Lee Media, Inc.'s (SLMI) claims that its intellectual property rights in comic book characters were violated by the legendary comic book creator Stan Lee. We affirm because SLMI failed to satisfy pleading requirements. To survive a motion to dismiss, a party must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; see also Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Accepting as true the allegations made by SLMI in its complaint ... the claims to the vast majority of properties fall short of the pleading requirement established in Iqbal—Twombly.
Stan Lee Media v. Lee, 585 Fed.Appx. at 597–98, 2014 WL 5462400, at *1.
The Ninth Circuit rejected Stan Lee Media's “central contention ... that, in October 1998, Stan Lee assigned [Stan Lee Media] rights to valuable comic book characters, including Spider–Man, The X–Men, The Incredible Hulk, The Fantastic Four, Iron Man, Thor, Daredevil, and others.” Id. According to the Ninth Circuit, this proposition was “simply implausible” because Stan Lee Media “never announced that it owned rights to these characters ..., licensed the characters, produced content related to the characters, or asserted or attempted to enforce its ownership rights.” Id. Particularly because others continually generated...
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