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4-Traders Homepage  >  Equities  >  Nyse  >  Walt Disney Company (The)    DIS

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Walt Disney : Disney's 'Beauty and the Beast' Gets Entangled in Visual-Effects Lawsuit

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07/17/2017 | 09:17pm CET
By Ben Fritz 

A lawsuit against Walt Disney Co. has roped the entertainment giant into a long-running legal dispute over ownership rights to a visual-effects technology, potentially threatening the company's ability to profit from the top-grossing movie so far this year.

Rearden LLC, a company controlled by Silicon Valley entrepreneur Steve Perlman, on Monday sued Disney in U.S. District Court in San Francisco, alleging copyright, patent and trademark infringement, stemming from Disney's use of a facial-capture technology in the March blockbuster "Beauty and the Beast," as well as 2014's "Guardians of the Galaxy" and 2015's "Avengers: Age of Ultron."

Rearden is seeking injunctions to stop Disney from selling or showing these movies until the two companies reach a deal.

The dispute centers on a technology called MOVA Contour. In "Beauty and the Beast," it was used to turn actor Dan Stevens' facial performance into that of the beast. In "Guardians" and "Age of Ultron," it was used in the portrayal of the alien Thanos.

The lawsuit alleges Disney knew, or should have known, that Rearden -- not Digital Domain, the visual-effects firm Disney paid for the work -- had sole rights to MOVA.

Disney didn't immediately respond to a request for comment.

Since 2015, Rearden has been fighting in court against companies affiliated with Digital Domain over MOVA.

Various studios have used the technology, with no resulting legal conflict, in films including "The Curious Case of Benjamin Button," "Gravity" and Disney's "Tron: Legacy." Mr. Perlman has alleged a former employee stole the technology and unlawfully sold it to the Digital Domain-affiliated companies.

In June, a federal judge issued a preliminary injunction preventing Digital Domain from continuing to use MOVA. A trial in the case was held in December, and a ruling is pending.

Digital Domain didn't immediately respond to a request for comment.

MOVA was launched to much fanfare in 2006 by Mr. Perlman, a former Apple Inc. executive best known for selling WebTV to Microsoft Corp. in 1997. The system, which translates an actor's movements to a digital character, won a science and technology Academy Award in 2015.

In the lawsuit filed Monday, Rearden alleges that Disney should have known the technology didn't belong to Digital Domain because in 2013, its movie studio considered acquiring the technology from the former employee. At the time, Rearden sent a letter stating that it owned the technology and Disney dropped out of the bidding as a result, according to testimony from the former employee. In addition, the lawsuit alleges, Disney previously contracted directly with Rearden to use MOVA on four films released between 2010 and 2012.

"Disney never bothered to contact its longtime MOVA Contour service provider Rearden LLC to ask any questions or to verify Disney's authorization to use the MOVA Contour system, methods, trade secrets or trademarks that Disney knew Rearden owned," the lawsuit states.

In addition to the injunctions, Rearden is seeking orders to destroy all infringing copies of "Guardians of the Galaxy," "Avengers: Age of Ultron" and "Beauty and the Beast" and is asking for financial damages.

"Beauty and the Beast" has grossed $1.26 billion globally, and "Guardians" grossed $773 million.

Write to Ben Fritz at [email protected]

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Financials ($)
Sales 2018 58 588 M
EBIT 2018 15 161 M
Net income 2018 9 515 M
Debt 2018 20 372 M
Yield 2018 1,54%
P/E ratio 2018 17,54
P/E ratio 2019 16,46
EV / Sales 2018 3,20x
EV / Sales 2019 3,12x
Capitalization 167 B
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Robert A. Iger Chairman & Chief Executive Officer
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