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MAR
8
2 YEARS

Stan Lee to Be Deposed in Billion-Dollar Lawsuit Against Disney

The 90-year-old comic book legend, who's reportedly experiencing health issues, will address his working relationship with Marvel over the years.

FINANCE: Stan Lee
Frazer Harrison/Getty Images

Stan Lee, the comic book genius who co-created such legendary characters as Spider-Man, Iron Man and X-Men, will be deposed next week in a billion-dollar lawsuit against Disney.

He will be questioned by lawyers representing Stan Lee Media, the company bearing his name that he abandoned a decade ago. The lawsuit aims to prove that Disney has committed copyright infringement on valuable characters since 2009 that allegedly were raided when SLM filed for bankruptcy.

Discovery in the case was put on hold this week because a Colorado federal judge said that the lawsuit potentially could be ended upon pending Disney motions, but the judge has carved out room for the plaintiffs to potentially question Lee about whether he ever owned copyrights to his valuable characters or whether his work was done as a "work for hire." The deposition is happening upon word given to the judge that the 90-year-old Lee is experiencing health problems.

SLM has brought many challenges over what happened after 2001, when it filed for Chapter 11 three years after the company was founded.

Judges in New York and California have been less than tolerant about allowing claims to be heard. SLM's shareholders first had their standing challenged, and after getting their post-bankruptcy house in order, whether their claims had already been adjudicated. In July, for instance, a lawsuit was dismissed that alleged that Lee colluded to divert SLM's assets to his other companies, QED Prods and Pow! Entertainment, before he made peace with Marvel.

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In October, SLM came up with a new legal strategy to sue Disney, which acquired Marvel in 2009.

Lawyers for SLM insist that their claims are novel and will not fall short on res judicata grounds, meaning the matter had already been judged. For example, they believe they can prove that Disney infringed rights to create last year's blockbuster film The Avengers.

Disney has a host of arguments as to why it believes that SLM will fall short once again.

Before even getting to the merits of the claims, Disney is challenging the Colorado court's jurisdiction to hear the matter. The Walt Disney Co. is a "holding company and as such does not conduct business in Colorado or anywhere else," it says.

A federal judge will soon will rule on Disney's jurisdictional challenge and also might address res judicata, the statute of limitations and various other defenses.

"It is not clear whether the pending Motion to Dismiss will dispose of the entire action," U.S. Magistrate Judge Kathleen Tafoya wrote. "However, personal jurisdiction is necessary for the Court to entertain claims against a party ... It is clear that should the pending motion be granted, this Court will have expended resources managing a complex suit unnecessarily in the absence of a stay."

Thus, Tafoya granted Disney's motion to stay discovery, but only in part.

What won't be delayed is the deposition of Lee.

SLM has reported that there are "health concerns" for Lee, who the company calls a "central witness." The plaintiff cites his age and a news release in which Lee acknowledged having a pacemaker implanted in September.

Although SLM still has long odds in making its billion-dollar case, the company's followers might gain some satisfaction from the questioning of Lee about the SLM chapter of his storied life.

The questions likely will explore his long and sometimes turbulent relationship with Marvel and the collaborative process that's been dubbed the "Marvel Method."

Under U.S. Copyright law, when artists and writers work for studios under "work for hire" agreements, the studio is deemed to be the "author" with control over the copyright.

In a filing in January, Disney indicated that it doesn't believe that SLM ever had rights to Iron Man, X-Men, The Avengers and Spider-Man.

"If this case proceeds on the merits, [Disney] will establish that the 1998 Agreement did not convey the supposed rights Plaintiff assert -- most prominently because, even if the 1998 Agreement could be construed as implicating the rights to any Marvel character (and it did not), all of them were owned by Marvel, not Lee, as works made for hire under the governing provisions of copyright law."

The plaintiffs indicate that will be the topic of discussion at a deposition March 13. Lee will give his opinion and likely be pushed to explain why he started SLM in the first place.

Corrections: The post originally stated that the bankruptcy happened in 2000. It happened in 2001. The post originally misidentified the judge as a federal judge instead of a magistrate judge. The post has been amended accordingly.

E-mail: eriq.gardner@thr.com; Twitter: @eriqgardner