Hollywood's Use of "Stolen" Computer Technology Tests Ownership Theories

In a bid to dismiss a lawsuit, Disney, Fox, and Paramount distinguish between human and technological output.
Courtesy of Digital Domain

This story was first composed as a Word document. You might naturally assume that rights to this article are owned by The Hollywood Reporter, but is there any case to be made for Microsoft? What if the writer had used a black market version of Word (he didn't) and touted in the opening of his story the technology used to create his work?

On Friday, Disney, Fox, and Paramount argued against such a Microsoft-friendly ownership theory in fighting a bold lawsuit from Rearden LLC. The dispute, which covers such films as Guardians of the Galaxy, Avengers: Age of UltronDeadpool, and Night at the Museum: Secret of the Tomb, could make its mark on several fronts of intellectual property law.

Rearden was founded around the turn of the century by Silicon Valley entrepreneur Steve Perlman. The company claims to have perfected a technology called MOVA, which captures facial expressions to create photorealistic computer graphic effects. The technology was perhaps most famously used to show Brad Pitt getting younger and younger in the Paramount film The Curious Case of Benjamin Button. Since then, the technology has been used in many other blockbuster movies (Transformers, Snow White and the Huntsman, Harry Potter, etc.)

According to Rearden, a former employee named Greg LaSalle, who was once close to Perlman before a falling out (more on their relationship here), allegedly transferred the MOVA tech to various non-Rearden entities including Digital Domain 3.0, the Hollywood FX company.  Later, Digital Domain 3.0 would be acquired by Shenzhenshi Haitiecheng Science and Technology Co., Ltd., a company with ties to the People's Republic of China.

This set off an FBI investigation into economic espionage and then a court fight where Rearden has scored wins against Digital Domain 3.0 and Shenzhenshi. In fact, Rearden has obtained an injunction, and with final judgment in the case pending, an appeal is coming.

In the meantime, Disney, Fox, Paramount, and a fourth company — Crystal Dynamics, which produces the Tomb Raider video games have been dragged into this mess because they've contracted use of MOVA from those who may be illegitimately providing it. The question in these follow-up lawsuits is whether Rearden can do anything to punish the studios for using "stolen" technology. Rearden is asserting copyright, trademark and patent claims — which the studios are now attacking in a motion to dismiss (read in full here).

Let's take the claims one by one.

First, there's copyright. The software at issue is protected by copyright, but what makes Rearden's claim in this regard one to watch is how Rearden is telling a court that the author of the software gets to control output files.

States Rearden's complaint, "It follows that at all material times Plaintiff Rearden Mova owned the exclusive right to reproduce, distribute copies of, perform, and display the Contour Program output files including Skin Texture, Makeup Pattern, Captured Surface, and Tracking Mesh output files; to make derivative works based upon Contour Program Skin Texture, Makeup Pattern, Captured Surface and Tracking Mesh output files; and to reproduce, distribute, perform, and display the derivative works."

The studios, which have now ganged up to fight the lawsuit, object to this theory of ownership.

"Indeed, if Rearden’s authorship-ownership theory were law, then Adobe or Microsoft would be deemed to be the author-owner of whatever expressive works the users of Photoshop or Word generate by using those programs," writes Kelly Klaus, attorney for the defendants. "Even if the MOVA Contour copyright did extend to the output files, however, Rearden has not alleged that the output files themselves are substantially incorporated into the computer-generated (“CG”) characters or the movies in issue, none of which could possibly be derivative works of the MOVA Contour software program."

Disney, Fox, and Paramount say that humans' input — meaning, film direction and an actor's performance — are "critical and indispensable creative elements" to whatever expression is embodied in those output files. Turning to an 1884 Supreme Court opinion, Burrow-Giles Lithographic Co. v. Sarony (which may be the one unconsiously invoked when people start talking about such things as who owns photographic selfies), the studios say that whomever is superintending the arrangement is really the author. More recently was the decision in Garcia v. Google, a dispute over whether an actress could lay claim to her performance.

"Rearden’s theory is contrary to Burrow-Giles and Garcia, which make clear that a person who arranges the picture, not the creator of the recording equipment, is the author of the resulting fixed images," states the dismissal brief. "Here, that person would be the human being who directed the actor’s facial performance, almost certainly as a work made for hire for the movie’s producer. Rearden is not the copyright owner of whatever expressive content may be embodied in the output files."

Next, let's tackle Rearden's trademark claims. Copyright protects original expression while trademark covers anything that denotes the source or sponsorship of goods or services.

Here, Rearden says MOVA is registered for trademark, and that in credits on films like Guardians of the Galaxy, the movie studios tell audiences that the facial motion capture services are provided by a division of Digital Domain. What's more, during promotion of these films, some of the actors and directors involved have touted use of the technology. For example, Beauty and the Beast actor Dan Stevens once said, "The facial capture [for the Beast] was done separately using a technology called 'MOVA.' So, every ten days, two weeks, I'd go into a booth and spray my face with UV paint and 27 little cameras would capture the facial expressions of all the scenes we had done on previous days. … They would take that information and morph it onto the Beast, his face."

The studios are defending what's above by saying that it is "much ado about nothing," and even if statements about "MOVA" could be attributable to any studio, it's plainly nominative fair use. Basically, they say they are entitled to accurately convey the technology being used for the films.

Finally, there's the patent claims, which could become the closest call and may have a whiff of irony given how much Hollywood pursues technology companies for secondary liability on the piracy front.

In Rearden's suit, it's alleged that the studios "had actual knowledge of, or [were] willfully blind to" the patents at issue because the studios "had performed an intellectual property due diligence with Rearden" and worked with the company on prior films. Those range from the aforementioned Curious Case of Benjamin Button to Pirates of the Caribbean and The Avengers.

As the complaint against Disney then goes on to allege, "Consequently, Disney MPG actively induced each instance of DD3’s use of the MOVA Contour facial motion capture system for facial motion capture in the Guardians of the Galaxy, Avengers: Age of Ultron, and Beauty and the Beast motion pictures without authorization in the performance of its contract with Disney MPG, or with entities subject to Disney MPG’s supervision and control. Disney MPG’s active inducement of direct infringement by DD3 constitutes acts of infringement."

In this instance, Disney, Fox, and Paramount don't appear to be attacking this legal theory, but rather objecting to what they view as "conclusory" assertions.

"The complaint sets forth no facts whatsoever regarding what constitutes such diligence," writes Klaus as one example. "It does not even allege that Disney actually learned of the five patents-in-suit (or any others) through either alleged diligence effort. With respect to the alleged IP diligence of Rearden, the omission speaks volumes: Rearden, of course, has full knowledge of whatever diligence it claims to have provided Disney. … Even if Rearden could allege that Disney learned of the five patents-in-suit in the course of IP diligence, that would not be enough. A claim of induced infringement requires that the defendant appreciated the specific importance of the specific patents to the infringement at issue."

As to the willful blindness theory, Klaus adds that there is no affirmative duty to sniff out a potential patent.

After hearing from Rearden in opposition, a federal judge will soon decide whether the plaintiff has alleged at least enough to move forward to the discovery phase. That is, if the case isn't paused to allow the appeal on the ownership of the MOVA technology to happen first. The studios suggest it makes sense to resolve that situation first. 

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