March 21, 2012 12:40pm PT by Eriq Gardner
Appeals Court Denies Stan Lee Media's Bid For Rights to Spider-Man
The 2nd Circuit Court of Appeals delivered a setback Wednesday to ongoing attempts by Stan Lee Media Inc. to regain intellectual property to founder Stan Lee's creations, including Spider-Man. However, SLMI is not finished in its long-running effort to reclaim property the company argues was stolen out of bankruptcy, hoping that the latest appellate decision opens the door for the company to pursue legal action in California against Lee himself.
In a decision handed down Wednesday, the 2nd Circuit affirmed a lower court's ruling in the decade-old case involving comic book genius Lee and Marvel.
Lee and Marvel once were at war with other. Lee sued Marvel in 2002, alleging that his former employer breached a conditional assignment of his copyright for the character Spider-Man by failing to pay him 10 percent of the profits from the blockbuster Spider-Man movie. Lee got a partial summary judgment before he entered into a confidential settlement with Marvel that is believed to have given Marvel rights to many of his creations, including Fantastic Four, X-Men and Spider-Man.
Later, Lee's former company SLMI attempted to intervene in the Lee v. Marvel dispute as the real party of interest. The judge in the case rejected that attempt on grounds that SLMI was in bankruptcy and that various shareholders couldn't show that they had standing and were authorized to represent SLMI.
SLMI eventually got its house in order by persuading a Colorado judge to approve the election of a new SLMI board of directors. The company then appealed to the 2nd Circuit the denial of the attempted intervention.
Now, the 2nd Circuit has denied that attempt.
According to a summary order, "that SLMI's management was in an extended period of disarray does not excuse its more than five-year delay in filing its Rule 60(b) motion," referring to the intervention attempt.
The complicated case isn't finished, though.
SLMI also has claims pending in California court against Lee personally for allegedly colluding to divert SLMI's assets to his other companies, QED Prods and Pow! Entertainment, before these assets eventually wound up in Marvel's hands as the result of a settlement.
In May, the California judge stayed the lawsuit pending the outcome of the 2nd Circuit decision. The stay order said that as long as the 2nd Circuit didn't specifically affirm that the matter had already been judged -- "res judicata" -- SLMI wouldn't be barred in the California case from relitigating the issue.
The 2nd Circuit today decided not to "reach the issue of res judicata," which the plaintiffs hope will be enough to prompt the California judge to lift the stay and go forward with the lawsuit against Lee, 89. If SLMI has any hope of getting back the rights on Spider-Man, we'll likely know soon.