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Disney is no longer at risk of surrendering profits on two of its blockbusters — Guardians of the Galaxy and Deadpool — for using allegedly stolen VFX technology to animate CG characters. Conceding that he erred in a previous ruling clearing the way for trial over these films and exposing the company to massive damages, a federal judge on Wednesday found that earnings from the movies cannot be tied back to use of the technology.
Disney still faces the prospect of losing proceeds from Beauty and the Beast, which has grossed $1.26 billion.
The long-running case has a complicated history, featuring a personal feud between two Silicon Valley figures that threatened to delay multiple movies at Disney. At the core of the dispute, software company Rearden asserted ownership of lauded VFX technology called MOVA Contour that had improperly been licensed by an outfit founded by a former employee.
In a prequel to the legal showdown between Rearden and Disney, a judge found in a bench trial that Rearden owns MOVA. The order left Disney massively vulnerable since it had extensively used the technology.
In August, U.S. District Judge Jon Tigar agreed with Rearden that Disney’s use of pilfered special effects software could be tied to viewers buying tickets for Deadpool, Guardians of the Galaxy and Beauty and the Beast. He found that there was a “causal nexus” between Disney’s intellectual property infringement and its profits from the movies, pointing to promotional materials featuring the use of MOVA and the fact that the technology contributed to creating more realistic characters.
“As to these films, it would be reasonable for the jury to infer from Rearden’s evidence that Defendants advertised their use of MOVA and used MOVA-based clips in the film trailer in order to drive interest in the films and thereby increase film profits,” reads the order on motion for summary judgment.
Disney subsequently moved for the judge to reconsider his ruling as to Guardians of the Galaxy and Deadpool, arguing there’s no connection between its infringement and the movies’ success.
As to Guardians of the Galaxy, Rearden’s evidence of causal nexus relied on a press release for the movie and an online interview of Marvel Studios president Kevin Feige playing up the use of MOVA. While the release did refer to MOVA, the judge notes that it was never released to the public and that he can “only speculate that it had any effect on viewership or Defendant’s gross revenues.” He similarly finds that there’s no direct evidence showing that ticket sales for the movie resulted from Feige’s reference to the technology in his interview.
Rearden’s arguments supporting its pursuit of a cut of profits from Deadpool centered around a 19-second excerpt in bonus material that viewers got when they rented or bought a DVD of the movie describing how MOVA works.
“There is no evidence that the featurette was used to promote the movie; instead, it could be seen only by someone who had already purchased or rented the film,” Tigar writes.
Disney went to far greater lengths promoting the use of MOVA in Beauty and the Beast. The trailer included at least nine clips using the technology, which set a new record for views in the first 24 hours after release.
In the order, Tigar also rejects arguments from Rearden that it proved that Disney paid less to make the movies because of MOVA.
“The declarations Rearden cites merely establish that technology such as MOVA inherently provides a better-quality facial performance than traditional techniques,” the order reads. “But they say nothing about the actual costs of using MOVA versus another technology, much less show that Defendants saved costs by using MOVA in either Guardians of the Galaxy or Deadpool.”
Rearden was not allowed to seek a cut of profits from Terminator: Genisys, Avengers: Age of Ultron, Night at the Museum: Secret of the Tomb and Fantastic Four.
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