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A federal judge has dismissed a bid by Stan Lee Media Inc. to reclaim the rights to Conan the Barbarian, which the failed dot-com briefly held before going into bankruptcy in 2001. However, a bigger legal brawl still lies ahead, when the company appears before the 2nd Circuit Court of Appeals on March 8 to argue it should be allowed to pursue the rights to Spider-Man, the Fantastic Four, The Avengers and other lucrative Marvel properties.
Stan Lee Media, which operates independently of its namesake and co-founder — in fact, it’s suing Stan Lee — has struggled since emerging from bankruptcy in November 2006 to regain some of the money and glory from the heyday of the Internet bubble, primarily through lawsuits claiming the improper transfer of intellectual properties.
In the Conan lawsuit, filed in August even as Conan the Barbarian 3D arrived in theaters, the company claimed, in part, that when Conan Sales Co. bought back the rights to the Robert E. Howard characters in 2002, shareholders weren’t notified, and SLM’s interests weren’t properly represented. The complaint also alleged that Arthur Lieberman, Lee’s longtime attorney, committed fraud during the proceedings, and failed to report conflicts of interest. As a result, SLM argued, the transfer of the rights to Conan Sales Co., which subsequently sold them to Paradox Entertainment, should be annulled.
However, Hollywood, Esq. reports that U.S. District Judge Stephen Wilson wasn’t swayed by the arguments, and last week dismissed the lawsuit, finding that shareholder notice wasn’t required during the bankruptcy process — and even it was, SLM couldn’t demonstrate standing or harm. Wilson also noted that the company did, in fact, have representation during the proceedings, and that it had failed to show that Lieberman had acted improperly.
While Stan Lee Media has hit a roadblock in its pursuit of Conan, its year-old lawsuit against Lee, QED Productions and POW! Entertainment, alleging Lee improperly transferred rights to his multibillion-dollar co-creations from SLM to Marvel, faces its next test in March before the appeals court. (Actually, that lawsuit is a reboot of one filed in January 2009 against Lee, Marvel and others; the previous one was dismissed in April 2010, in part, because of lack of standing.)
As only fitting for a lawsuit involving superhero properties, the case has a long, complicated backstory — one that dates back to Marvel’s own bankruptcy: In 1998, Marvel CEO Isaac Perlmutter used bankruptcy procedures to end Marvel’s $1 million-a-year lifetime contract with Lee, negating Lee’s assignment to the company of his rights to his co-creations. It also freed Lee to form Stan Lee Entertainment (which later merged with Stan Lee Media) with now-infamous entrepreneur Peter F. Paul. The company filed for bankruptcy in February 2001. The lawsuit hinges on a sequence of events that took place between August 1998, when Marvel terminated Lee’s employment, and November 1998, when Lee entered into a new agreement with the company and signed over his likeness, as well as any claims to characters. Representatives of SLM previously have claimed that on Oct. 15, 1998, Lee transferred to that company rights to his creations and his likeness.