9:00am PT by Eriq Gardner
Hollywood Hologram Wars: Vicious Legal Feud Behind Virtual Mariah, Marilyn and Mick
Every day, a small Beverly Hills showroom plays host to a who's who of global celebrities. Michael Jackson and Ray Charles sing and dance. Jimmy Kimmel cracks jokes. WikiLeaks' Julian Assange might be holed up in London, but he's also here brooding alongside Edward Snowden. They're all hyper-realistic holograms, part of a showcase for a tantalizing technology that has the potential to dramatically alter the entertainment business by reviving dead stars and allowing living ones to be in multiple places at any given moment.
"I had Al Pacino knocking on the door twice in one week to see it," says Alki David, the Greek billionaire who owns the showroom and, he says, the technology behind the holograms. "Every time a celebrity or someone from the industry comes, they're sold."
The potential for holograms in Hollywood is nearly limitless. "Live" shows of Elvis Presley and Frank Sinatra are in early development. Kimmel beamed in via hologram CMA Award winner Kacey Musgraves from Nashville for an interview in his Los Angeles studio, suggesting a future in which actors can promote their films everywhere at once. Universal is using the technology in a new Fast & Furious theme park attraction. A comedy club in upstate New York is planning hologram shows of stand-ups from various eras. "The potential is enormous," says Jonathan Faber, a licensing expert at the Luminary Group. "Can it exceed tens of millions? Oh yeah, for sure. Can it reach a billion? Maybe."
But for all its promise, hologram technology has been slow to achieve mass adoption. The main reason? An explosive legal fight of international scope between two rival hologram companies using a similar illusion. A review of thousands of court documents and interviews with those involved, many speaking publicly for the first time, reveals allegations of corporate backstabbing, theft, sabotage and even cyberstalking. Front and center is David, 47, who has poured $15 million into holograms and has teamed with Uwe Maass, a German inventor living in Dubai, and Giovanni Palma, an Italian businessman who in 2013 emerged as the winner of a strange auction after "Tupac" performed onstage during the Coachella music festival. The surprise appearance by the deceased rapper captured global headlines. Soon, a power struggle erupted at Maass' company Musion, which had licensed the technology for the Coachella event. As a consequence of the struggle, Musion was put into a form of bankruptcy in the U.K. and its patents were auctioned, which is how the technology landed in Palma's hands and then David's.
Enter John Textor, 48, a controversial figure who worked on the Tupac spectacle but lost the bidding at the Musion auction. Now he's heading another company, Pulse Evolution Corp., which made a splash with a Michael Jackson hologram at the 2014 Billboard Music Awards. With bragging rights over Hollywood's brave new world hanging in the balance, David and Textor have been engaged in a vicious legal spat, referring to each other as "sociopaths" (David recently posted a picture of Adolf Hitler on Instagram and tagged Textor), with litigation in three states.
In Nevada, David's Hologram USA is suing Textor's Pulse for patent infringement. A few days before the 2014 Billboard Music Awards, Hologram USA filed an emergency motion asking a judge to stop the Jackson performance. The judge wouldn't allow that, but he did permit David's company to inspect the apparatus behind the hologram to check whether his technology was being stolen. The evidence gathered could be key to litigation that will determine who profits from next-generation holograms and how widespread they become. Upon finding out that David was suing him, Textor wrote in an email message to others, "He started World War III."
The hologram technology at the center of all this fighting and curiosity is a derivation of an 1862 illusion from scientists John Henry Pepper and Henry Dircks called "Pepper's Ghost." In its most basic form, there are two rooms — one seen by viewers, the other hidden in the background. The object is placed in the hidden room, and the magic comes by reflecting this object off of a carefully hidden glass surface at a precise 45-degree angle. Pepper's Ghost has been used everywhere from Disneyland's Haunted Mansion to a scene in the James Bond film Diamonds Are Forever.
In the mid-1990s, Maass, then an electrical engineer in his native Germany with an interest in optics, was staring at the reflection of a pack of cigarettes hiding behind the dashboard of his car when he had a bright idea for a new way to execute Pepper's Ghost. He began experimenting with special foil instead of glass, and high-definition cameras to project two-dimensional images into a three-dimensional stage set. Technically speaking, it's not really a hologram. It's just a reflection with a holographic feel.
After registering patents, Maass struggled to figure out a way to commercialize his invention. The first customers were magicians. "David Copperfield, Siegfried & Roy, they all came in the first year," says Maass. "They saw the beauty. They wanted to buy the patents."
Maass declined then eked out a living helping to produce small shows and selling foil, until 2001, when he moved from Germany to Dubai to be with his wife. There, he met James Rock, a British businessman operating a small audiovisual events company. Rock brought along a drinking buddy named Ian O'Connell, who had developed a specialty in licensing worldwide publishing rights to magazines. The three agreed to work together.
Musion's initial break was working with the band Gorillaz, which had created cartoon personas for its members. The "virtual band" needed a way to perform live at the 2005 MTV European Music Awards in Portugal and found its vehicle in Musion's holograms. Sitting in the audience was Madonna, who, according to O'Connell, ran back to her management and demanded to use the technology for her performance at the 2006 Grammy Awards (she appeared alongside the Gorillaz).
Musion decided to reorganize itself and hired a consulting firm to come up with a plan. The result was a complicated arrangement that divided rights and revenue for Maass, Rock and O'Connell in geographic regions and set up multiple derivations of the London-based company. The arrangement was a recipe for trouble. Shortly after the Tupac performance, Indian prime minister candidate Narendra Modi wanted to present a hologram of himself at some 4,000 events around the country. The project was worth upward of $10 million for Musion, and one of Modi's speeches on Dec. 10, 2012, is now in the Guinness Book of World Records for most simultaneous broadcasts of the Pepper's Ghost illusion. But dissension among the partners erupted.
David, photographed for THR by Christopher Patey, at his home in Beverly Hills.
O'Connell thought he had these rights and demanded that Maass cease any interference. Maass has a different take. "They asked me to do the big election," says the inventor. "I spent three months in India training 2,000 technicians."
Then, the situation got really ugly. "James and Ian were beating each other up in the office — physically," says Maass. "James said, 'I can't take it anymore. We have to kick Ian out.' I was ready to move to London to take over."
Says O'Connell: "It was like a tiger smelling meat outside of his cage. Uwe was the tiger, and the cage was Dubai. He picked his moment to move and convinced James to remove me from the board."
Maass alleged he hadn't been properly paid under the agreement that carved up worldwide rights and attempted to terminate the contract. In turn, O'Connell alleged breaches and unpaid sums on Maass' part and presented a petition to wind up part of the company. The company was put into administration, which O'Connell says was an attempt by his business partners "to strip assets" and get him out of the picture. "Uwe's plan was something out of a Hollywood movie — getting James on board, remove me and bleed out the company," says O'Connell.
Though Maass and Rock initially were together, it didn't last. "James was jilted at the altar," says O'Connell. Administrators decided to explore a sale in light of a lack of available funds and disputes among the partners. Both Maass and O'Connell made bids, as did Palma, who, according to Maass, discovered Musion on the Internet, became an Italian licensee then saw an opportunity to strike.
The administrators were set to accept Palma's offer for £300,000 when a new bidder suddenly emerged. Textor, whose own company was an American licensee and who knew Rock, offered $1 million. Textor had made his own fortune in the 1990s investing in tech companies alongside director Michael Bay, who was his fraternity brother at Wesleyan University. After the dot-com crash, Textor began scouting for something new to do, and in 2006, his Wyndcrest Holdings company bought James Cameron's onetime visual effects company Digital Domain, which did postproduction on many hit films including Pirates of the Caribbean, The Curious Case of Benjamin Button and his investment partner Bay's Transformers series. For a while, things were looking up for Digital Domain, with an IPO in 2011, a huge campus in Port St. Lucie, Fla., and a burgeoning new business opportunity as evidenced by the Tupac hologram. But Textor got involved with aggressive lenders and was unable to stave off bankruptcy for Digital Domain. He's now facing a lawsuit from the state of Florida that calls Digital Domain a "ponzi scheme" that cheated taxpayers out of more than $80 million in grants. Textor says the suit is politically motivated.
As for why he decided to bid on Musion assets, Textor says he was merely interested in "patents that had more optic value than actual value" and found the whole process weird. "Imagine you take a company into bankruptcy and then you buy it back in bankruptcy," says Textor. "That's not even legal in Delaware."
Though Textor was offering more money, the administrators saw Palma as a safer bet. In September 2013, the administrators announced a "contract race," with a deal going to whoever provided the essential elements for the sale first. Palma was quicker on the bank wire than Textor — getting $439,000 in funds ready and immediately traveling from Italy to London — so he was declared the winner.
That victory soon would belong to Hologram USA — a partnership among Palma, David and Maass — though the latter says he's now happy to take a backseat as David fights with Textor. "I've been fighting for 19 years," says the inventor. "I'm tired."
Now with a splashy showroom, Hologram USA is busy cutting deals with the likes of Fox, ABC and Viacom, it says, and with estates such as Liberace's for an upcoming tour. "Nothing is the same as being live," says Journey Gunderson, executive director of the National Comedy Center that will run the Hologram Comedy Club in Jamestown, N.Y. "There's so much to comedy to appreciate besides the mechanics of a joke. There's the delivery and tone and inflection and the facial expressions, and I think holograms have the potential to instill that appreciation."
Producers of hologram shows are not constrained by old footage. For example, the performances of Tupac Shakur and Michael Jackson really were actors hired to perform as them. Producers then used image capture and CGI technology to re-create the likenesses of the deceased stars then projected the digitally enhanced images in 3D using the derivation of the Pepper's Ghost illusion.
The problem for Hologram USA is that while it boasts to potential business partners of owning the next big thing in holograms, so does Textor's Pulse. "They have Liberace, great," says Textor, referring to deals made with celebrity estates. "We have Elvis and Marilyn and Michael."
Days before the 2014 Billboard awards, David learned through the media that a Jackson hologram would be performed. He, along with Maass, filed a patent infringement suit against Pulse, Textor, Rock, O'Connell and the administrators of the King of Pop's estate, asserting the exclusive rights to the projection system being used. (He also sued the owner of Billboard and THR, before voluntarily dismissing it.)
For David, this has become personal. He doesn't bring a geek's edge to the entertainment business as Textor does. He's more P.T. Barnum than George Lucas. For years, David has taken the fortune he made as an owner of one of the world's biggest Coca-Cola bottling companies and has been wholly investing in his id. He's done stunts like filming a fake assisted suicide, but also is visionary enough to see what the younger generation has been doing on YouTube. Before Aereo even came along, David founded a TV-streaming company called FilmOn and got sued for violating the copyrights of the major TV broadcasters. David doesn't like to back down from a fight, and he has won many fans and a few highly placed enemies (particularly at CBS) for calling out hypocrisy in the industry when he sees it. (He once called Leslie Moonves and Sumner Redstone "thieving liars" for owing a subsidiary that distributed file-sharing software.) As for holograms, which David discovered from a friend who works on Howard Stern's show, he's become very protective. "I did my research and got a lot of information before going in on this," says David. "I realized it would be quite an uphill struggle to defend the patents."
Around the time that the lawsuit was brought, the parties involved in the fracas began exchanging texts and emails from each other. Textor wrote about being "within an inch of a friendly deal" and reminded David that he was "licensed to use the patents for a few more months" through his old arrangement with Musion. As Maass attempted to calm everyone down, David repudiated any license. "You have continually attempted to usurp me and the company by trying to deal with Musion," wrote David. "Personally, I do not trust you."
David claimed in emails to others that Textor defamed him to the estates of various artists, who don't control the hologram technology but do own the rights of publicity of deceased stars (rights typically are acquired for "significant six-figure sums," according to Faber, with contingent profits boosting upside for celebrity estates into the millions). So if Hologram USA wants to create a Bob Marley hologram, it needs to ask the late reggae star's heirs, which becomes difficult if they are told about David's past pranks, litigation and more. That said, just after the filing of the patent lawsuit, David sent a text to Textor that proposed, "Leak to the press that you have reached a last-minute agreement with Alki David and Hologram USA to let the show go on without acrimony. … Do this and I'll drop the lawsuit."
No such announcement came, and David has gone public with the feud — specifically to social media, where, nearly every chance he gets, he tweets out news of Textor's troubles, such as Florida's battle over Digital Domain. David also has posted an image on Facebook where he brandishes two guns with the caption, "Come at me, bro," which Textor has interpreted as being a threat to him. Lawyers for David also have begun sending letters to companies seeking to do business with Pulse or Musion, informing them that Hologram USA owns the hologram technology. Disney has been exploring using a Star Wars hologram in connection with the release of The Force Awakens in December and may have received one of those letters. Hologram USA also brought a patent infringement lawsuit against Fox over a Homer Simpson hologram at last year's Comic-Con. In April, Fox settled the case.
Textor in 2011, when he was running Digital Domain, before it was forced into bankruptcy.
In response, Textor has gone to a Florida court and obtained a protection order against David over alleged harassment and cyberstalking. After Textor complained of the "continuous reposting and sharing of old stories" as well as an interview that David gave in which he said he would "have killed" Textor if he could, a judge granted Textor's motion.
David now is appealing the ruling, arguing that Textor has abused Florida's cyberstalking statute to gain leverage in the business dispute over holograms. The ACLU has submitted a friend-of-the-court brief that argues of the bad free speech precedent of a "sweeping temporary injunction that makes it illegal for [David] to say virtually anything online about [Textor]."
Textor also filed then withdrew a second lawsuit alleging that David defamed Pulse by claiming credit for the Michael Jackson hologram on CNN. From time to time, both sides express optimism of a settlement, but brief moments of positivity haven't been able to trump a highly personal feud. Textor says David doesn't really understand the technology, while David says his archenemy is an "absolute sociopath" whom he is "going to torture" as long as possible.
In Nevada, the scene of the highest-stakes patent case, Textor's Pulse is defending itself three ways. First, Pulse is arguing that its Michael Jackson hologram setup actually was different from the technology that Hologram USA claims to own. Textor stresses the key isn't the Pepper's Ghost illusion but rather improved ways to present digital likenesses, which Textor has been working to perfect since Digital Domain did postproduction work on The Curious Case of Benjamin Button (the film won an Oscar for makeup even though the central character wore very little makeup). Pulse also argues a 19th century Pepper's Ghost illusion is in the public domain. A third argument claims that even if the Jackson hologram stepped on Maass' invention, Textor's licensing deals survived the bankruptcy proceedings in England. A decision by an arbitrator in September endorsed the view that Musion's licenses remain in effect, though Hologram's attorney says Pulse can't identify licenses issued to it.
On the other side, David argues that "the life-sized projection of a 3D image" is the crucial feature. His lawyers point to an article in USA Today and an accompanying diagram, which Textor allegedly contributed, indicating that the Jackson spectacle was refined from Pepper's Ghost. There's also the involvement of Rock, Maass' ex-partner captured on video working on the Jackson hologram, who allegedly admitted during the inspection of the 2014 Billboard Music Awards that the setup was based on the patented technology. (Rock didn't respond to a request for comment.)
With Hollywood waiting to pounce on holograms, O'Connell believes that David's aggressive (and still unresolved) litigation might be stymieing the development of a lucrative new business, one that could have billion-dollar implications for entertainment. His licensees have been getting Hologram USA's cease-and-desist letters, and he adds, "We've lost over 1,000 contracts."
The Michael Jackson hologram stunned audiences (and David, who sued to stop it) at the 2014 Billboard Music Awards.
'Personally, I Do Not Trust You'
Text and email messages revealed in court show how a potential business relationship can go sour in a hurry.
Textor: "We seem to be within an inch of a friendly deal that would allow us to have a lot of fun together … then this. You are aware that I am licensed to use the patents for a few more months."
David: "There is NO deal between Pulse and Hologram USA. You have continually attempted to usurp me and the company by trying to deal with Musion. … Personally, I do not trust you."
Maass: "I think we all have to sit on one table. [sic] No one should do anything without asking the other side."
Textor: "I assume you are aware that Alki did not follow your advice. He started World War III."
Palma: "I strongly believe an agreement can be reached without involving lawyers."
David: "FYI … Hologram USA, Inc. et al v. Pulse Entertainment, Inc. et al."
Textor: "You should just try to be nice for a change. Life is better that way."
David: "I am not interested in doing business with you on the United States or Canada. You attempted to ruin my deals with the Marleys and others."