Studios Must Face Trimmed Lawsuit Over CG Characters in Blockbuster Movies

Beauty And The Beast 5 - Dan Stevens - Still - H - 2016

Disney, Fox and Paramount got a mixed decision on Wednesday in a case that tests Hollywood's liability for using a technology determined to be stolen to create photorealistic computer graphic effects in huge films including Guardians of the Galaxy, Deadpool and Night at the Museum. A federal judge has rejected the plaintiff's bold copyright claim, but won't dismiss assertions that the studios induced patent infringement nor committed trademark infringement.

The lawsuit comes from Rearden LLC, a firm founded by Silicon Valley entrepreneur Steve Perlman that previously defended and then counterclaimed against Digital Domain 3.0 and the Chinese company, Shenzhenshi Haitiecheng Science and Technology Co., Ltd. Ultimately, in a battle that involved an FBI investigation into economic espionage, Rearden came out as the victorious winning owner of motion-capture technology known as the MOVA Contour Program, which captures and tracks the 3D shape and motion of a human face to sub-millimeter precision. The technology might be most famous for de-aging Brad Pitt in the 2008 film The Curious Case of Benjamin Button.

Rearden has followed up its win in the Shenzhenshi case by bringing suit against various studios that contracted with Digital Domain to use the technology. In considering a motion to dismiss, U.S District Court Judge Jon Tigar was tasked with figuring out which claims made by the plaintiff were plausible ones to move forward.

Perhaps the most unusual claim came on the copyright front where Rearden argued a software program's output can be owned by the programmer instead of the end user so long as the program does the "lion's share" of operations required to create output. In response, the studios pointed to the substantial creative input of directors and actors and warned if that the theory held, it could mean that Adobe or Microsoft would be deemed the author-owners of works created by using Photoshop or Word.

The studios win this point.

"The Court does not find it plausible that the MOVA Contour output is created by the program without any substantial contribution from the actors or directors," writes the judge. "Unquestionably, the MOVA program does a significant amount of work to transform the two dimensional information captured on camera into three dimensional Captured Surface and Tracking Mesh outputs. But this cannot be enough, since all computer programs take inputs and turn them into outputs."

After a reference to actor Dan Stevens' work in last year's Beauty and the Beast, Tigar concludes that Rearden has not plausibly alleged that its program “‘does the lion’s share of the work" or that the user’s input is "marginal." Thus, the theory that Rearden owns copyright ownership of the output fails — a huge relief to the owners of movies that have earned billions of dollars in ticket sales.

The studios don't fare quite as lucky on the two other fronts of intellectual property.

First, there's patents, which cover ownership of inventions. 

The studios do succeed in dismissing Rearden's claim of direct patent infringement upon the judge's conclusion that "it would stretch the boundaries of the patent law past their breaking point to equate a contract to provide services with the use of a system."

But when it comes to contracting with Digital Domain for MOVA, Disney can't get rid of a claim for actively inducing patent infringement. (Given that the studios have pushed secondary liability at least on the copyright front, there's some irony here.)

The judge points to allegations that Disney performed intellectual property diligence to verify ownership of MOVA facial motion-capture plus demand letters sent by Rearden.

"Assuming the truth of these allegations, it is not an unreasonable inference that Disney became aware of Rearden’s patents, and continued to be aware that the MOVA technology was patented when it contracted with DD3," states the opinion. "The allegations are inarguably thin, but they are enough to survive a motion to dismiss."

Maybe the most surprising development comes with respect to trademarks. (As a reminder, copyright protects original works of authorship while trademark protects words, phrases and designs that identify the source of goods and services.)

Tigar states that Disney's use of a MOVA service mark in credits for Guardians of the Galaxy might lead viewers to "believe that Rearden endorsed" the movie. The same goes for Fox's use of a MOVA service mark in credits for Deadpool.

The judge also writes that when Beauty and the Beast's Stevens spoke at a press conference that the facial capture on the Beast "was done separately using a technology called MOVA," this also could have created confusion. Similarly, the judge won't reject trademark claims over what was said about MOVA in commercial advertising and promotion for Fox's Fantastic Four as well as Paramount's Terminator: Genisys.

The defendants argued that statements about MOVA or using the MOVA mark constituted descriptive fair use, but with one exception pertaining to one of the claims over Beauty and the Beast, that's not enough at this stage, which is still an early one, but nevertheless, may command attention.

The full decision is below.