Marvel Suit Update

Court Dismisses Suit By Shareholders of Stan Lee Media

By Alison Frankel

If the litigation over rights to the superheroes Stan Lee created at Marvel Entertainment were a comic book, Marvel counsel David Fleischer ' of Paul, Hastings, Janofsky & Walker until moving to the New York office of Haynes and Boone in April 2010 ' would be wearing tights and a cape. Fleischer recently swatted away a derivative suit that claimed the legendary artist signed over rights to his Marvel characters to a company called Stan Lee Media Inc. In an emphatic 13-page ruling, Manhattan federal district court judge Paul Crotty found that the plaintiffs lacked standing, filed claims that fell outside of the statute of limitations and failed adequately to plead other allegations. Abadin v. Marvel Entertainment, 09 Civ. 0715.

Fleischer tells us that the case has been a wild ride. Stan Lee Media was founded in the late 1990s by Lee and a high-flying (and since-convicted) operator named Peter Paul. The company briefly traded publicly, then fell into bankruptcy. By 2005, Lee had disassociated from Stan Lee Media and started his own company. But in 2007, Stan Lee Media (represented first by the law firm Goodwin Procter and then by King & Spalding) filed a suit against Marvel, claiming that Stan Lee had transferred to it his rights to such characters as Spiderman, Ironman, and the Hulk.

“First of all, Stan doesn't have rights in the Marvel characters,” Fleischer says, explaining that Lee created the superheroes while he was under contract at Marvel. [Editor's note: See the accompanying article on this page regarding the dispute over ownership rights to the Marvel characters.] “And Stan never asserted any rights.”

Judge Crotty dismissed Stan Lee Media's first suit, finding that the corporation, such as it was, had not authorized counsel to appear on its behalf. After contested proceedings in Colorado to elect a board of directors, Stan Lee Media ' represented by veteran copyright lawyer Martin Garbus of Eaton & Van Winkle ' resurfaced with claims against Marvel, but this time in the form of a derivative suit.

Fleischer and Lee's lawyers at New York's Ganfer & Shore informed Judge Crotty of their plans to file a motion to dismiss, with Marvel pointing out that the purported derivative plaintiffs weren't even shareholders at the time of the transactions at issue in the case. Garbus told the judge he'd file an amended complaint, but when the deadline came and went, he told Judge Crotty that Eaton & Van Winkle was out of the case because of irreconcilable differences with the plaintiffs.

New plaintiffs counsel from Chadbourne & Parke served Marvel with an amended complaint, but Judge Crotty refused to grant leave to file it. “The transaction at issue is now more than a decade old. Plaintiffs have been attempting to initiate the proceeding in this court now for more than three years; in Colorado Supreme Court for more than half a decade; for three years in U.S. District Court for the Central District of California; and in a bankruptcy proceeding,” he wrote. “Moreover, [Peter Paul], one of the principal instigators of litigation involving SLMI is a convicted felon who manipulated SLMI's stock. ' It is now time to call a halt.”

We left messages with both Garbus and Oliver Armas of Chadbourne to get Stan Lee Media's side of the story, but they didn't call back. Fleischer, meanwhile, says he now knows a lot more about superheroes than he did when he started representing Marvel a decade ago.

' Alison Frankel is a Senior Reporter for The American Lawyer, an ALM affiliate publication of Entertainment Law & Finance.

Suit over Copyrights to Marvel Characters Can Proceed in NY

From The American Lawyer

A little over a week after Marvel Entertainment outside counsel David Fleischer fought off a $2 billion derivative suit involving an erstwhile partner of legendary Marvel artist Stan Lee, Fleischer and co-counsel James Quinn of Weil, Gotshal & Manges won again for Marvel, this time in a case against the children of another famed Marvel artist, Jack Kirby.

Marvel and Kirby's four children are in a heated dispute over copyright ownership of the superhero characters Kirby drew for Marvel, including Iron Man, the Fantastic Four and the Incredible Hulk. In 2009, as Marvel was being acquired by Walt Disney Co., the Kirby children sent termination notices to Marvel, claiming the comics company did not have the right to transfer copyrights to Kirby's work.

Marvel then sued in U.S. District Court for the Southern District of New York, seeking a declaration that it owns the characters, which it says Kirby created as works for hire for Marvel. The Kirby children, represented by attorney Marc Toberoff, moved to dismiss the Marvel suit ' and, on the same day, filed a mirror case in Los Angeles U.S. District Court, claiming Kirby owned the rights to his work.

In New York City, U.S. District Judge Colleen McMahon has denied the Kirbys' motion to dismiss Marvel's New York suit. Marvel Worldwide Inc. v. Kirby, 1:2010cv00141. Two of the Kirby children live in Los Angeles and asserted that a New York court doesn't have personal jurisdiction over them. Judge McMahon, however, said she has transaction personal jurisdiction because, among other factors, the Kirby children sent termination notices to parties in New York.

“Because they chose to purposefully avail themselves into New York for the purpose of advancing their business interests,” McMahon wrote, “the court concludes that it has jurisdiction over Lisa and Neal Kirby in connection with this dispute.”

So what happens with the California suit? The Kirbys' lawyer, Toberoff, didn't return a call for comment. Both Quinn and Fleischer (who recently moved from Paul, Hastings, Janofsky & Walker to the New York office of Haynes and Boone) say the ownership case will proceed in New York, where it was first filed. If the Kirbys do not drop the California case, Marvel will move to stay it.

' Reported by The American Lawyer, an ALM affiliate publication of Entertainment Law & Finance.

Court Dismisses Suit By Shareholders of Stan Lee Media

By Alison Frankel

If the litigation over rights to the superheroes Stan Lee created at Marvel Entertainment were a comic book, Marvel counsel David Fleischer ' of Paul, Hastings, Janofsky & Walker until moving to the New York office of Haynes and Boone in April 2010 ' would be wearing tights and a cape. Fleischer recently swatted away a derivative suit that claimed the legendary artist signed over rights to his Marvel characters to a company called Stan Lee Media Inc. In an emphatic 13-page ruling, Manhattan federal district court judge Paul Crotty found that the plaintiffs lacked standing, filed claims that fell outside of the statute of limitations and failed adequately to plead other allegations. Abadin v. Marvel Entertainment, 09 Civ. 0715.

Fleischer tells us that the case has been a wild ride. Stan Lee Media was founded in the late 1990s by Lee and a high-flying (and since-convicted) operator named Peter Paul. The company briefly traded publicly, then fell into bankruptcy. By 2005, Lee had disassociated from Stan Lee Media and started his own company. But in 2007, Stan Lee Media (represented first by the law firm Goodwin Procter and then by King & Spalding) filed a suit against Marvel, claiming that Stan Lee had transferred to it his rights to such characters as Spiderman, Ironman, and the Hulk.

“First of all, Stan doesn't have rights in the Marvel characters,” Fleischer says, explaining that Lee created the superheroes while he was under contract at Marvel. [Editor's note: See the accompanying article on this page regarding the dispute over ownership rights to the Marvel characters.] “And Stan never asserted any rights.”

Judge Crotty dismissed Stan Lee Media's first suit, finding that the corporation, such as it was, had not authorized counsel to appear on its behalf. After contested proceedings in Colorado to elect a board of directors, Stan Lee Media ' represented by veteran copyright lawyer Martin Garbus of Eaton & Van Winkle ' resurfaced with claims against Marvel, but this time in the form of a derivative suit.

Fleischer and Lee's lawyers at New York's Ganfer & Shore informed Judge Crotty of their plans to file a motion to dismiss, with Marvel pointing out that the purported derivative plaintiffs weren't even shareholders at the time of the transactions at issue in the case. Garbus told the judge he'd file an amended complaint, but when the deadline came and went, he told Judge Crotty that Eaton & Van Winkle was out of the case because of irreconcilable differences with the plaintiffs.

New plaintiffs counsel from Chadbourne & Parke served Marvel with an amended complaint, but Judge Crotty refused to grant leave to file it. “The transaction at issue is now more than a decade old. Plaintiffs have been attempting to initiate the proceeding in this court now for more than three years; in Colorado Supreme Court for more than half a decade; for three years in U.S. District Court for the Central District of California; and in a bankruptcy proceeding,” he wrote. “Moreover, [Peter Paul], one of the principal instigators of litigation involving SLMI is a convicted felon who manipulated SLMI's stock. ' It is now time to call a halt.”

We left messages with both Garbus and Oliver Armas of Chadbourne to get Stan Lee Media's side of the story, but they didn't call back. Fleischer, meanwhile, says he now knows a lot more about superheroes than he did when he started representing Marvel a decade ago.

' Alison Frankel is a Senior Reporter for The American Lawyer, an ALM affiliate publication of Entertainment Law & Finance.

Suit over Copyrights to Marvel Characters Can Proceed in NY

From The American Lawyer

A little over a week after Marvel Entertainment outside counsel David Fleischer fought off a $2 billion derivative suit involving an erstwhile partner of legendary Marvel artist Stan Lee, Fleischer and co-counsel James Quinn of Weil, Gotshal & Manges won again for Marvel, this time in a case against the children of another famed Marvel artist, Jack Kirby.

Marvel and Kirby's four children are in a heated dispute over copyright ownership of the superhero characters Kirby drew for Marvel, including Iron Man, the Fantastic Four and the Incredible Hulk. In 2009, as Marvel was being acquired by Walt Disney Co., the Kirby children sent termination notices to Marvel, claiming the comics company did not have the right to transfer copyrights to Kirby's work.

Marvel then sued in U.S. District Court for the Southern District of New York, seeking a declaration that it owns the characters, which it says Kirby created as works for hire for Marvel. The Kirby children, represented by attorney Marc Toberoff, moved to dismiss the Marvel suit ' and, on the same day, filed a mirror case in Los Angeles U.S. District Court, claiming Kirby owned the rights to his work.

In New York City, U.S. District Judge Colleen McMahon has denied the Kirbys' motion to dismiss Marvel's New York suit. Marvel Worldwide Inc. v. Kirby, 1:2010cv00141. Two of the Kirby children live in Los Angeles and asserted that a New York court doesn't have personal jurisdiction over them. Judge McMahon, however, said she has transaction personal jurisdiction because, among other factors, the Kirby children sent termination notices to parties in New York.

“Because they chose to purposefully avail themselves into New York for the purpose of advancing their business interests,” McMahon wrote, “the court concludes that it has jurisdiction over Lisa and Neal Kirby in connection with this dispute.”

So what happens with the California suit? The Kirbys' lawyer, Toberoff, didn't return a call for comment. Both Quinn and Fleischer (who recently moved from Paul, Hastings, Janofsky & Walker to the New York office of Haynes and Boone) say the ownership case will proceed in New York, where it was first filed. If the Kirbys do not drop the California case, Marvel will move to stay it.

' Reported by The American Lawyer, an ALM affiliate publication of Entertainment Law & Finance.