Archive for January, 2009

1st Amendment Icon Martin Garbus Esq Leads Legal Fight For Spider Man’s Rights

Friday, January 30th, 2009

 

The American Lawyer reported the best analysis of the next phase of the landmark Stan Lee Media shareholders vs. Marvel, Ike Perlmutter, Stan Lee, Arthur Lieberman litigation.

Interestingly, as a testament to Stan Lee’s good will with the journalists who were weaned on Spider Man and Silver Surfer, the media has ignored reporting on the significance of the efforts by Stan Lee’s dot com shareholders to recover claims, rights and monies they own. By virtue of Stan Lee’s assignment of his entire “creative universe- and rights to his name and likeness”  in exchange for 3.6 million shares in Stan Lee Media (worth $100 million in February 2000)  Stan Lee Media owns all Lee’s creator’s rights and claims to all his Marvel creations, notwithstanding the various illegal actions taken by Marvel and Lee to hide those rights.

What was of dubious value in 1998 has become the holy grail of the world’s movie entertainment franchises. The legal actions by those who were assigned an interest in Stan Lee’s rights (since Stan kept 26% of the rights through his stock ownership) against Stan and Marvel to assert those rights, will become a new landmark in Hollywood legal history.

January 29, 2009 5:45 PM

Bam! Whap! Marty Garbus Joins the Tortured Legal History of Stan Lee; Marvel

Posted by Brian Baxter

Famed trial lawyer Martin Garbus–whose notable clients have included such high-profile humorists as Lenny Bruce and Don Imus–is back in court for a dispute with comics at its heart, only this time they’re of the superhero, not the standup, variety.

On Monday, Garbus filed a derivative suit in U.S. district court in Manhattan on behalf of four shareholders of Stan Lee Media, Inc., (SLMI) against legendary comic book creator Stan Lee, Marvel Entertainment, and several other individuals.

In the suit, Garbus claims the defendants violated his clients’ copyrights, ignored their rights as SLMI shareholders, and improperly pocketed $750 million in proceeds from Marvel-owned franchises like Spider-Man, Iron Man, and the X-Men. (The $750 million figure represents a 50 percent ownership stake in Marvel and Lee-held properties.)

In his complaint, Garbus accuses Marvel, Lee, Lee business partner Arthur Lieberman, current Marvel CEO Isaac Perlmutter, and Avi Arad, a major Marvel shareholder, of colluding “to hide and misappropriate financial interests in Lee’s creations assigned to Stan Lee Media in 1998 and reaffirmed in 1999.”

“Marvel says they have those rights subsequent to an agreement between Stan Lee and [SLMI] signed on October 15, 1998,” says Garbus. The problem, says Garubs, is that the same people who signed that agreement (including Lee and Lieberman) later put SLMI into bankruptcy. “At the same time [Lee and Lieberman] were preparing bankruptcy papers, they were taking assets out of the bankrupt estate.”

Garbus gained some ammunition for his suit on Tuesday when, in a related case, U.S. district court judge Stephen Wilson in Los Angeles ruled that Stan Lee himself may have violated U.S. bankruptcy laws.

Put it all together and you’ve got the latest installment in a tortured legal history–a tangled web of litigation over issues of ownership, royalties, management, licensing and rights that has featured villainous figures such as Ronald Perelman and Carl Icahn.

To recap quickly: Once owned by Perelman, Marvel was hit hard when the comic book bubble–yes, there was one–burst in the early nineties. The company was forced into bankruptcy in 1996 as part of a dispute between Perelman and Icahn. Both were ousted when Perlmutter and Arad acquired Marvel in 1998 as part of a reorganization plan.

According to a 2008 Barron’s story, Perlmutter used bankruptcy proceedings to reject Marvel’s $1 million-per-year lifetime contract with Lee, which voided the exclusive rights Lee had assigned to the company for his iconic characters. (Marvel emerged from Chapter 11 in October 1998.)

Lee responded by forming SLMI in 1998–along with Hollywood entrepreneur Peter Paul–as a Web-based production and marketing company to control his intellectual property. The new company itself filed for bankruptcy in 2001.

In 2002, Lee sued Marvel claiming that it had reneged on a November 1998 contract under which he was to get–in addition to the lifetime salary mentioned previously–a 10 percent cut of movie and television deals for characters that Lee created. A subsequent settlement was sealed, but Barron’s reports that Marvel took a $10 million charge in connection with it.

When SLMI emerged from bankruptcy in 2006 under the leadership of Wall Street trader James Nesfield–a one-time whistleblower for former New York State AG Eliot Spitzer–it was eager to settle old scores with Lee and Marvel over ownership of Lee’s characters.

No longer associated with SLMI, Lee struck first. Along with his new production company, POW! Entertainment, Lee slapped SLMI and Nesfield with a $50 million trademark infringement suit in federal court in Los Angeles in January 2007. Lee accused SLMI of hijacking his name and image and preventing him from developing new characters via deals with Disney and Virgin Comics.

In March 2007, SLMI hit back, suing Lee and Marvel in New York in a case echoing many of the same claims filed by Garbus in federal court on Monday. (The March 2007 case was eventually dismissed without prejudice in September 2008; Garbus says he took over the matter for SLMI at that point from King & Spalding partner Ethan Horowitz.)

In July 2007, SLMI filed yet another suit in federal court in Los Angeles against Stan Lee and POW!, which SLMI claims took assets from its estate while it languished in bankruptcy.

Got all that? Now we’re up to date.

The ruling by Wilson on Tuesday stayed the 2007 trademark infringement suit filed by Lee and POW!. Wilson also held that Lee and his POW! partner Lieberman–a former Dickstein Shapiro IP partner–had no legal basis for transferring copyrights and trademarks on superhero-related assets from then-bankrupt SLMI to Lee-controlled entities including POW!.

Garbus calls Wilson’s ruling significant because it finds the same individuals guilty of wrongdoing that he’s trying to prove improperly transferred assets out of SLMI years ago. Garbus describes what Lee and Marvel have done to SMLI as a “practice of looting.”

“I think it’s fairly well agreed that if [the 1998] agreement is still valid,” he says, “it transfers all the rights to all Marvel characters by Stan Lee into SLMI.”

That has SLMI claiming that it’s entitled to recover as much as $1 billion from Marvel and Lee as well as obtain a 50 percent interest in future profits.

Lawyers for Lee–Sherman & Howard partner Mark Williams–and POW!–McGuireWoods partner David Van Etten–were not immediately available for comment on Wilson’s ruling. But POW! issued a press release decrying the “unfounded statements” being made by Garbus and SLMI.

POW! states that it’s “impossible to conclude” that SLMI shareholders could reap $1 billion in damages, as it disputes that three of the four plaintiffs filing claims are even legitimate shareholders to begin with.

Wilson also noted in his ruling that further proceedings would be necessary in the case, POW! states, adding that when the matter is concluded “Stan Lee believes that justice and truth will prevail, and the illegal acts of those associated with the ‘plaintiffs’ in the New York suit will be exposed.”

In the New York action filed by Garbus, Marvel has retained Paul Hastings Janofsky & Walker partners David Fleischer and Jodi Kleinick. The firm declined to comment on the latest litigation, but when The Associated Press contacted Lee’s lawyer, Sherman’s Williams, he said the most recent SLMI filing was filled with “ridiculous claims.”

For lawyers looking to sort out the whole mess, it will likely take a superhuman effort.

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It might be interesting for people to read all of the SEC filings by Marvel and POW! Hmmm, what did they tell their shareholders?

And I hope this won’t be removed. This is from the transcript of Jan. 9 in Judge Wilson’s courtroom. He didn’t seem very pleased.

THE COURT: Wasn’t my original question, and correct me if I’m wrong, regarding what payments were made to the creditors?

MR. WILLIAMS: It was.

THE COURT: And so you didn’t answer in a straight forward way.

MR. WILLIAMS: I apologize, Your Honor.

THE COURT: You know something, I must say this without sounding personal, but when this happens I think it’s appropriate for the court to not let it slip by. I get the impression that you are somewhat deceptive with the court. That’s my impression and I hope it’s an erroneous impression, but on more than one occasion when we’ve had hearings you’ve done or said things which leave me with that impression. That doesn’t help your client.

MR. WILLIAMS: I apologize, Your Honor.

THE COURT: Don’t let those slip-ups happen again.

MR. WILLIAMS: Yes, Your Honor.

 

A 13D Report by Nesfield as a shareholder of Marvel Entertainment (MVL)in November, 2007, details the collusion between Perlmutter as Chairman and largest shareholder of Marvel, Lee and his “handler” partner/lawyer Arthur Lieberman. The unprecedented filing,detailing serial SEC and Federal criminal acts was immediately challenged by SEC officials because of the damning details of SEC frauds included, yet the SEC has allowed it to remain on the SEC site continuously since then. If the 13D is accurate, the Stan Lee Media claims will prevail and Perlmutter will be forced to reliquish his fiduciary duties for the company.

 

Marvel’s spokesman has responded to the claims of SLM shareholders described in a Barron’s article in June 2008 by repeating Marvel’s Mantra that Stan Lee never claimed ownership in his characters. Yet Marvel’s lawyers, Chairman and others know Lee claimed in his 2002 law suit against Marvel in Manhattan Federa Court that he gave Marvel “a conditional assignment” of his “world famous creations” as part of his Nov 1998 Employment Agreement. When the Judge ruled that Lee was entitled to 10% of the profits earned by Marvel on his creations in January 2005, (and settled for $14million in April 05) Lee’lawyers issued a press release describing Lee’s November 1998 Employment Agreement as a “profit sharing venture” between Lee and Marvel. Would Marvel’s ongoing publication of false and misleading statements to the investing public about Lee’s claims to his characters, and the est.$14million secret settlement Marvel gave Lee, constitute serial 10(b)5 violations by the company warranting classification of Marvel as a continuing criminal enterprise under RICO?

Federal Judge Rules Stan Lee and POW Entertainment Looted Estate of Stan Lee Media

Wednesday, January 28th, 2009

Stan Lee and his IP lawyer-partner, Arthur Lieberman of Dickstein Shapiro, were dealt a stunning defeat in their $50 million federal suit in Los Angeles against certain shareholders of Lee’s original company, Stan Lee Media. The Judge ruled Lee and his associates did not legally owned the properties they were suing for damages on.

Lee accused these shareholders of illegally using images of characters, The Accuser and The Drifter, that Lee originally created for Stan Lee Media. Lee sued because images of the characters were used on a corporate web site created to expose the the frauds Lee committed on the company while it was in Chapter 11 Bankruptcy protection from 2001-2006, under Lee’s control as Debtor in Possession.

Federal Judge Stephen Wilson issued a scathing order denying Lee and POW’s Motion for Summary Judgment for copyright infringements on properties the Court ruled Lee illegally transferred. The ruling confirms that Stan Lee and former Stan Lee Media officers Gill Champion, COO and Junko Kobyashi Controller, along with former SLM IP lawyer Arthur Lieberman colluded to make Kobyashi Debtor in Possession Representative of Stan Lee Media in Bankruptcy so she could transfer assets to Gill Champion as President of a new public company they created and were officers in, POW Entertainment. The illegal copyright transfers from Styan Lee Media to POW’s subsidiary QED were recorded in the copyright office by Lieberman, signed by Kobyashi and Champion and done without the knowledge or approval of the Stan Lee Media Estate Bankruptcy court!

To add insult to injury, the Lee “Gang of Four” issued numerous press releases announcing the acquisition of the properties, i.e. The Driufter and The Accuser, by POW Entertainment to sell some of the 100 million shares they issued for the new bulletin board company they controlled!

What seems particularly ironic is that a London Financial Times feature story, “POW Factor of a Comic Book Hero”,  was just published on January 11, 2009, detailing what an astute businessman Stan Lee is in addition to being a creative genius.

The Order raises a host of legal issues for Lee and his gang- various Bankruptcy fruads, SEC frauds relating to Stan Lee Media and the new public company, POW Entertainment, Copyright fraud, investor fraud and business fraud on all the major entertainment companies that were induced to do business with Lee and the Gang using looted intellectual properties . Let the suits begin!