The lawsuit that clouds the Disney-Marvel deal

By Eriq Gardner

Disney today announced it has paid a blockbuster sum of $4 billion to acquire Marvel and its control over 5,000 characters, including such superstars as Spider-Man, The Fantastic Four, Iron Man, X-Men, and The Incredible Hulk.

But lost in the hoopla is the ongoing legal dispute over the rights to many of Marvel's most valuable characters. That's because the executors and shareholders of Stan Lee Media, an online comic site created in the 1990s, are unhappy with the way that Lee parted ways with the company that bears his name and took his intellectual property to Marvel. 

In 2007, Stan Lee Media filed a lawsuit against Marvel Entertainment that claimed that Lee assigned the rights to his creations to SLM in a 1998 "Employment Agreement/Rights Assignment" contract. In the lawsuit filed in New York District Court, SLM claimed 50 percent of all income, proceeds, and profits realized by Marvel's use of the characters.

Then, this past January, shareholders of SLM filed a separate lawsuit in California claiming $750 million in damages after a District Court denied Lee's claim that he properly transferred assets belonging to SLM.

We checked in with the lawyers involved in these cases (including Martin Garbus, who is representing the shareholders) and the lawsuits are still active. The defendants in the case have filed motions to dismiss, says one of the lawyers on the defense side, but the federal judge hasn't made a ruling yet.

Disney must be quite confident that the claims have no merit and will be dismissed to go ahead and put $4 billion on Marvel, but a forthcoming court decision has at least the possibility of making Disney's deal look a lot less sweet. 

Here's another twist of fate: Five years ago, Marvel sued Disney after the Mouse House bought the Fox Family Channel and rebranded it as ABC Family. At the time, the channel aired an animated series that featured Marvel characters. Marvel claimed that Fox couldn't transfer the copyright license to these characters to Disney. Ironic.

Comments

[joe]

When will Disney buy Stan Lee's New public company POW Entertainment POWN

[Roger Goff]

I am fairly confident that the contingent liabilty from that lawsuit will be carefully addressed in the acquisition agreement. There is certain to be an indemnity, and probably a holdback, to protect Disney from bearing the burden of a large adverse judgment.