Stan Lee Media Versus Stan Lee and a Lot of Other People

As previously noted, Stan Lee is the target of a new comic book related lawsuit filed in New York on January 20, 2009. Stan Lee, however, is just one of many names in the lawsuit, which is docketed with the Southern District of New York as Abadin et al v. Marvel Characters, Inc. et al.

As this is a "derivative" suit, the plaintiffs are shareholders in Stan Lee Media, Inc. (SLMI), a Colorado corporation that ultimately went into bankruptcy. Besides Stan Lee, the parties on the defendant's side of the "v." are Marvel Entertainment, Inc., Marvel Enterprises, Inc., Marvel Characters, Joan Lee (Stan Lee's wife), Joan C. Lee (Stan Lee's daughter), Isaac Perlmutter (Marvel executive), Avi Arad (Marvel executive) and Arthur M. Lieberman (Marvel executive).

The complaint presents a mix of 13 federal and state claims ranging from copyright and trademark infringement to right of publicity violations. The plaintiffs are seeking $750 million dollars or more in damages (!), based on a supposed ownership interest in numerous comic book characters. The factual basis for the complaint is summarized below.

The suit arises from Lee's involvement in Stan Lee Entertainment (SLE). SLE was eventually dissolved in a convoluted series of transactions; and SLMI succeeded to all SLE interests. As part of an employment agreement with SLE, Lee transferred the rights to a number of characters, trademarks and domain names to the company. Numerous assets were explicitly transferred in the original assignment agreement, including rights to such undeveloped comic book characters as The Accuser, Stan’s Evil Clone (Evil Clone), and The Drifter. SLMI shareholders are claiming that by terms of an assignment clause in Lee's employment agreement, rights in prime Marvel comic book characters such Spiderman and The Incredible Hulk were also transferred to the company.

SLMI's argument is interesting because as readers of this site may know, these suits are all about contracts and copyrights. SLMI claims that Lee created characters such as Spiderman outside of his scope of employment with Marvel (i.e., not as a work for hire). It is claimed that Lee had an interest as co-creator in these comic book characters at the time of contract formation with SLME, which was subsequently transferred to SLMI.

Certainly, if Lee retained an interest in the Marvel comic book characters as claimed (plaintiffs have to prove it), the assignment clause in the employment agreement cited in their complaint could be interpreted as giving them some rights in those characters (plaintiffs have to prove it). It is also interesting to note that in the related California case of QED LLC v. Nesfield, et. al, which involves a similar fight over SLMI assets, plaintiffs made no claims to Marvel assets. They only claimed an interest in materials explicitly outlined in their asset purchase agreement with Stan Lee; no claim was made to rights obtained via the employment agreement.

1. Stan Lee Media, Inc. complaint