During the course of the legal fight between Jason Lust and Australian VFX house-turned-production company Animal Logic over Peter Rabbit, a sequel was greenlit — and that’s added a new layer to the dispute just as Peter Rabbit 2: The Runaway is hopping toward a summer release in the U.S.
Lust in October 2016 sued Animal Logic, claiming it got him to hand over his intellectual property rights in the project and then shut him out of working on it. Animal Logic countersued, arguing their relationship was “at will” and it was clear in their agreement that Lust would have to sign over any IP he owned in connection with projects he worked on for the company. All of this stems from a short-form agreement, as a longer contract was never finalized.
In September 2019, U.S. District Judge John Kronsdadt partially granted Animal Logic’s motion for summary judgment. Only Lust’s claim for breach of implied covenant of good faith and fair dealing survived. Kronstadt found that while the short-form agreement the parties were operating under didn’t explicitly say Lust would be actively involved in the film, there was no evidence that Lust was aware his role would be reduced at the time he signed over his rights.
A trial was set for February 2020, but two weeks before it was set to begin the parties informed the court they’d reached a settlement in principle and asked for a stay. The matter was paused, but in April they announced the discussions failed and requested a new trial date.
Then in May 2020, with trial rescheduled for November, Lust’s lawyer Neville Johnson filed a motion to withdraw. Details are scarce, but Lust’s pro se opposition argues failure to pay isn’t necessarily good cause for withdrawal, and Johnson’s firm filed a notice of lien on any monetary settlement or judgment awarded. Kronstadt, based partially on confidential information reviewed in camera, found there had been “a sufficient and material a breakdown in the attorney-client relationship,” granted the withdrawal and vacated the trial date.
Steven T. Lowe took over as Lust’s attorney in the fall and asked for a shot at amending or supplementing the complaint to seek payment for the sequel. Kronstadt in March denied leave to file a second amended complaint but granted leave to file a supplemental complaint regarding the sequel since it was greenlit after the summary judgment briefing concluded.
“Under the SFA, Plaintiff is ‘entitled to be attached’ to ‘[a]ll other projects agreed as commencing development after the Commencement, greenlit for production within a five (5) year period from the date of termination,'” writes Kronstadt. “The term ‘all other projects agreed’ does not clearly exclude sequels.”
The court reopened limited discovery for 60 days and directed the parties to file cross-motions for summary judgment as to whether the short-form agreement covers sequels.
In an answer to the supplemental complaint filed April 1, Animal Logic attorney John Shaeffer argues Lust has already received what the SFA guaranteed him. “Lust was to be ‘accorded a credit not less than “Executive Producer,”‘” he writes. “Since Lust has received executive producer credit on both Peter Rabbit and Peter Rabbit 2, as admitted by him in his Complaint, and had no right to receive a producer credit on either films because both were first Greenlit after the Term, Lust has no claim for damage arising from his failure to receive a producer credit on either project.”
On Monday, Lowe argued that it’s industry custom that a producer who returns for a sequel will receive the same or more favorable terms and argues that Animal Logic’s CFO admitted as much in his deposition.
“While the text of the SFA does not provide a definition of the term ‘project,’ it is abundantly clear that sequels and prequels (and other exploitations of the intellectual property which Lust has assigned) are works in which the plaintiff is entitled to be “attached” (read: compensated and credited), writes Lowe in the motion for summary adjudication, which is embedded below. “Lust is attached to the Peter Rabbit project from which Peter Rabbit 2 derives. There is no question that a sequel is a derivative work of the original film, and Peter Rabbit 2 will use the same characters, the same talent and the same director.”
A hearing is currently set for June 14.