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Lee v. Marvel Enterprises, Inc.

United States District Court for the Southern District of New York

386 F. Supp. 2d 235 (2005)

Facts

Stan Lee (plaintiff) created several comic-book characters as part of a decades-long relationship with Marvel Enterprises, Inc. (Marvel) (defendant). Lee and Marvel entered an agreement under which Lee received 10 percent of revenue received by Marvel. Marvel went into bankruptcy. After emerging from bankruptcy, Marvel entered a new agreement with Lee. The contract provided that Lee was entitled to a participation equal to 10 percent of profits from live-action or animated television and movie productions utilizing Marvel characters, including ancillary rights. The word profits was not defined. Lee interpreted it to mean all profits from Marvel film and television projects (not including profits from licensing fees), including profits from merchandising. However, Marvel argued that Lee’s 10 percent was limited to film and television projects in which Marvel had rights of net-profit participation. Net profits entailed the subtraction of production costs, distribution fees, and other expenses from gross receipts—a practice popularly known as Hollywood accounting. Lee brought suit. Both Lee and Marvel moved for partial summary judgment on the issue of Lee’s 10 percent profit participation and ancillary rights.

Rule of Law

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Issue

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Holding and Reasoning (Sweet, J.)

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A "yes" or "no" answer to the question framed in the issue section;
A summary of the majority or plurality opinion, using the CREAC method; and
The procedural disposition (e.g., reversed and remanded, affirmed, etc.).

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