Marvel Characters Suit: Walt Disney Company Faces Colorado Firm Asking for Billions

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As any comic-book fan knows, superheroes that seem dead can later come back to life -- and something similar has happened with a superhero-centric lawsuit filed by Colorado-based Stan Lee Media, Incorporated (SLMI). The complaint seemingly died last year, but an appeal revived it, leading to a hearing held in Denver yesterday. Continue for background, details and the original suit below.

See also: Spider-Man, X-Men Property of Colorado Company? Inside Stan Lee Media Lawsuit, published October 2012

As we noted in a 2012 post, Stan Lee Media, Incorporated claims the Walt Disney Company -- current owner of Marvel, known worldwide for characters such as Spider-Man and the X-Men -- is violating its copyrights based on an old agreement with Lee, who, to make things a little more confusing, has had no connection with SLMI for many years. For that reason, the suit argues that SLMI is entitled to "billions of dollars of profits" from movies and more.

According to comic-book-related website Robot 6, Stan Lee Media emerged from Marvel's 1998 bankruptcy. However, SLMI itself filed for bankruptcy in February 2001.

Five years later, after finally emerging from bankruptcy protection, SLMI filed a $5 billion lawsuit against Marvel, beginning a string of legal actions. Indeed, Robot 6 notes that Stan Lee Media and Lee himself "have sued each other on a few occasions."

Nonetheless, the folks at SLMI continue to believe they maintain the rights to some of Lee's creations. The suit, filed by Denver's Brownstein Hyatt Farber Schreck, LLP, maintains that "In October 1998, Stan Lee assigned in writing the copyrights and all other rights in the comic book characters...that he had previously created or would create in the future to Stan Lee Entertainment, Inc.," the predecessor to Stan Lee Media. Then, in July 1999, Stan Lee Entertainment transferred all of its rights and interests "to a publicly owned Colorado corporation called Boulder Capital Opportunities," which was then renamed SLMI.

"Oddly," the lawsuit continues, "in November 1998, Stan Lee signed a written agreement with Marvel Enterprises Inc. in which he purportedly assigned to Marvel the rights to the Characters. However, Lee no longer owned those rights, since they had been assigned to SLEI previously. Accordingly, the Marvel agreement actually assigned nothing" -- and therefore, Disney, which subsequently acquired Marvel, doesn't own the characters, either.

Continue for more about the lawsuit pitting Stan Lee Media, Incorporated versus the Walt Disney Company, including the original complaint. The suit refers to a "somewhat tortured history" of litigation in Colorado, New York and California. But the document contends that "none of these rulings limit in any sense Plaintiff's claims herein." And those claims are doozies. The suit asks that Disney "account to Plaintiff for all gains, profits and advantages derived by Defendant by their infringement of Plaintiff's copyrights" -- a figure estimated to be in the billions. Plus, SLMI wants the maximum allowable statutory damages because Disney "intentionally infringed Plaintiff's copyrights."

Disney responded by shrugging off the suit as being without merit, and the Hollywood Reporter agreed based on an August 2012 decision by California federal Judge Stephen Wilson in regard to a 2007 SLMI lawsuit. Here's how the Reporter explained the very technical reasons for this conclusion:

In the ruling, Wilson addressed why he wouldn't allow SLMI to go forward with a lawsuit against Stan Lee -- res judicata, which the judge defined as barring lawsuits based on "any claims that were raised or could have been raised in a prior action."

Wilson found that the lawsuit against Lee entailed an issue -- whether Lee transferred to Marvel the same IP rights previously assigned to SLMI -- that was previously addressed in a prior case. So the judge dismissed it.

The Colorado-based suit didn't fare any better; the Denver Post notes that U.S. District Judge William Martinez dismissed it in September 2013. However, SLMI filed an appeal that brought the assorted parties to a 10th U.S. Circuit Court of Appeals hearing yesterday.

The Post quotes Disney attorney Jim Quinn as calling the complaint "their seventh bite of a rotten apple" -- a reference to all the previous suits, each of which went south. But Robert Chapman, representing SLMI, insisted that these failures have nothing to do with the merits of the current complaint.

That's his hope, anyhow. A three-judge panel will ultimately decide, but no ruling has been issued thus far.

Here's the original 2012 lawsuit.

Stan Lee Media v. The Walt Disney Company

Send your story tips to the author, Michael Roberts.

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