Under some theological doctrines, a marriage, if initially valid, constitutes a union for life regardless of what may happen later. In other words, some people believe that a divorce does not affect the status or operation of a valid marriage. Stan Lee Media, Inc. (SLMI) appears to take an analogous view of the 1998 employment agreement in which Stan Lee, the creator of such iconic comic book superheroes as Spider-Man, the Incredible Hulk, the Fantastic Four and Ironman, assigned his copyrights to SLMI, even though Stan Lee terminated the agreement in 2001 due to SLMI’s failure to pay him. If those copyrighted properties, created decades ago for dime-store comic books, had not become so astonishingly lucrative when their storyboarded images teleported from pulp magazines into live-action film and they began roaring and ripping and shooting and shimmering across the silver screen, and never more splendidly than during the last decade of digitally enhanced cinematic special effects, SLMI probably would not cling to such a view. However, because Spider-Man alone can generate revenue in the hundreds of millions, if not billions, SLMI is as aggressively faithful as they come and wants its 1998 agreement with Stan Lee to be a contract for life.
Stan Lee signed the employment agreement with SLMI’s predecessor-in-interest, Stan Lee Entertainment, in October of 1998, a few weeks after Marvel released Lee from its employment while Marvel went through bankruptcy reorganization. A month later, in November of 1998, Lee signed a new deal with Marvel which, in the words of Federal District Judge Paul Crotty, “conveyed to Marvel the very ‘property’ and ‘right’ that Stan Lee…had previously transferred” to SLMI in the previous month, but Marvel and Lee himself “have continuously ignored that assignment and instead chose to exploit Lee’s creation for themselves” (Abadin v. Marvel Entm’t, Inc. 2010 WL 1257519 (SDNY 2010)). “Stan Lee does not deny” having made the two assignments, said Federal District Judge Stephen Wilson, “but contends that, inter alia, the copyrights that he assigned to Marvel were not those that he assigned to SLMI” (Stan Lee Media, Inc. v. Lee, 2012 WL 4048871 (C.D. Cal. 2012). So, from the activities of a few weeks in 1998 have arisen 15 years of litigation and four judicial decisions on the disputed issues between these parties, which now include Disney, due to its acquisition of Marvel in 2009. All of the court decisions so far have gone against SLMI, but, with so much potential revenue at stake, SLMI has been undeterred by judicial dismissals of its claims for, mainly, its failure to bring such claims prior to the expiration of the copyright statute of limitations.
Thus SLMI, like the intrepid web-slinger himself, has now swung crashing feet first through the window of the Federal District Courthouse in Philadelphia, its hands grasping the webby text of Section 501(b) of the Copyright Act, to intervene in Disney’s copyright infringement suit against the American Music Theater (AMT). Disney sued AMT for its allegedly unauthorized use of the Disney’s musical “Spider-Man Turn Off the Dark,” and so SLMI has invoked Section 501(b), which requires the court to permit the intervention, of any person having or claiming an interest in the copyright, to challenge Disney’s claim to the copyright ownership rights to the Spider-Man character on which Disney is basing its claims against AMT. The case is Disney Enterprises, Inc. v. Entertainment Theatre Group, d/b/a American Music Theatre, Civil Action No. 13-cv-5570, currently pending in the U.S. District Court for the Eastern District of Pennsylvania.
In February, Disney filed a motion to dismiss the intervenor complaint filed by SLMI and, because there have been four previous judicial decisions, asked the court to “definitively foreclose SLMI and AMT from using this Court as a fifth forum for re-litigating SLMI’s failed ownership claims.” On March 11, 2014, SLMI filed its brief in opposition to Disney’s motion to dismiss and SLMI’s first sentence asks the question “Who owns the copyrights to Spider-Man?”
SMLI’s basic argument tracks the first element of a copyright infringement claim: a plaintiff needs to prove that it is the owner of a valid copyright. Disney must make this showing to succeed against AMT: “It is Disney’s burden to prove Disney’s ownership of the copyrights to Spider-Man.” Because Disney must establish that element, “AMT unquestionably has a right to defend on the grounds that Disney does not own the copyrights allegedly infringed.” In other words, AMT can raise, as an affirmative defense to the charge of infringement, that Disney cannot establish the first element of an infringement claim: ownership. Further, SLMI argues, Section 501(b) of the Copyright Act gives SLMI the right to intervene in the action to litigate its interest in those copyrights alongside AMT.
Whether SLMI will defeat Disney’s motion to dismiss the intervenor complaint and get the chance to take its arguments further in this case does not depend on copyright law, but, instead, depends on the law of federal civil procedure. The court must determine whether SLMI’s attempt to intervene in this current lawsuit is precluded by any of the four prior decisions that other courts have made on these matters. The civil procedure doctrines at the heart of the arguments in the motion are res judicata (claim preclusion) and collateral estoppel (issue preclusion). Both doctrines stem from judicial policy goals to protect the public interest by keeping a respectful balance between state and federal courts and also by keeping the courts from being clogged with litigants who, after a defeat, attempt to get another bite at the apple with a new lawsuit on the same claims. Both doctrines have similar elements and generally apply if (1) the claims or issues being brought in the new case are identical to claims or issues already litigated in a prior case, (2) there was a final judgment on the merits for the identical claims or issues in the prior case, (3) the parties are either identical to or were in privity with the parties of the earlier case, and (4) the party against whom the issue or claim is asserted had a full and fair opportunity to be represented in the earlier case.
As you can imagine, Disney has argued vigorously that SLMI should be precluded by both doctrines from being allowed to intervene in the current suit, and SLMI has argued just as vigorously that it has a right to bring the copyright ownership question squarely before this Court. It is an understatement to say that the battle will be an uphill one for SLMI. As recently as September 2013, a federal court in Colorado found that collateral estoppel applied to SLMI’s copyright ownership claim, and in so doing echoed the decisions of the earlier courts, which found SLMI’s claim barred by the copyright statute of limitations: “Taking its cue from the Southern District of New York and the Central District of California, this Court holds that [SLMI] is precluded from re-litigating the issue of its ownership of copyrights based on the 1998 Agreement, which issue was decided against it inAbadin,” the SDNY case cited above and decided in 2010 by Judge Crotty. However, SLMI maintains that “one time-barred copyright claim does not extinguish a party’s underlying ownership right in the copyright.” Further, SLMI asserts that because “Disney has put ownership of the Spider-Man copyrights at issue,” and because AMT has responded by asserting that Disney is not the copyright owner, SLMI argues that neither res judicata nor collateral estoppel is applicable to its intervention in this new case.
The hearing on Disney’s motion will be occurring in the near future, so stay tuned, Spidey fans, stay tuned.