Stan Lee Beats Namesake Company in Fight Over 'Spider-Man' Rights

The Avengers Premiere Stan Lee - H 2012
Getty Images

The Avengers Premiere Stan Lee - H 2012

Stan Lee will forever be a comic book legend, but the company he left behind will also be a bit of an embarrassment to his legacy. The latest news about Stan Lee Media Inc. comes on Wednesday in the form of a short memorandum by the 9th Circuit Court of Appeals.

See more Hollywood's 100 Favorite Films

SLMI was founded in 1998 during the height of the dot-com boom, but when Lee later returned to Marvel and his namesake company declared bankruptcy in 2001, it triggered suspicion that SLMI's assets were improperly raided. For a time, SLMI shareholders had difficulty asserting standing, and when they finally got the house in order to properly sue, judges kept ruling that SLMI's claims over being denied the fruits of such characters as the X-Men, the Incredible Hulk and Iron Man had been previously adjudicated. This included U.S. federal judge Stephen Wilson's dismissal in July 2012 of SLMI's lawsuit against Lee himself.

The 9th Circuit won't revive the case.

SLMI might contend that it was assigned rights to valuable comic book characters, but a panel of appellate judges writes, "The record demonstrates that, between the date the [1998] agreement was signed and the filing of related litigation in 2007, SLMI never announced that it owned rights to these characters (even when publicly disclosing company information pursuant to a securities offering), licensed the characters, produced content related to the characters, or asserted or attempted to enforce its ownership rights."

Also watch: 'Avengers: Age of Ultron' Trailer

The inability to do anything during the five-year-long bankruptcy appears to have doomed the company.

"Meanwhile, others were openly producing content and generating revenues from the characters," continues the memorandum. "Given the significant value of these franchises, SLMI’s failure to publicize, protect, or exploit its right to profit from the characters establishes that these claims are simply implausible."

This won't be the last SLMI decision.

The company has a couple of pending appeals in the 10th Circuit that challenges a judge's dismissal of its billion-dollar copyright infringement claims against Disney. There's also a case in Pennsylvania, where Disney brought a lawsuit against a musical production titled Broadway: Now & Forever, which included Spider-Man scenes. SLMI intervened in that case, hoping to get a judge to address its claimed entitlement to the character. The 9th Circuit decision isn't technically binding on either the 10th Circuit or a Pennsylvania federal judge, but those judges will likely hear about the supplemental authority calling the claims "implausible."

Twitter: @eriqgardner