Disney and Marvel settle Spider-Man dispute with theater

Disney and Marvel have reached a settlement with a Pennsylvania theater in a copyright- and trademark-infringement case that unexpectedly turned into another front in their legal battle with Stan Lee Media.

Law360 reports American Music Theatre has agreed to stop using Spider-Man and other Disney properties without permission, bringing to an end a September 2013 lawsuit over the musical revue Broadway: Now and Forever. If the Lancaster, Pennsylvania-based theater violates the permanent injunction and consent order filed Thursday, it must pay $25,000 in actual or liquidated damages per work, plus attorneys' fees.

The theater also agreed to destroy or turn over all costumes, props, advertising and consumer products related to Spider-Man, Mary Poppins and The Lion King, all of which appeared in the production.

The dispute seemed straightforward enough; after all, Disney hadn't granted the theater a license to use any of its properties for a show. However, in the words of the entertainment giant's attorneys, the "simple case" was "transmogrified" in November 2013, when American Music Theatre responded to the lawsuit by claiming it had licensed Spider-Man ... from Stan Lee Media. The failed dot-com has argued unsuccessfully since at least 2007 that it, and not Marvel -- and, later, Disney -- hold the rights to most of the characters co-created by its co-founder and namesake, Stan Lee.

Stan Lee Media, which just two months earlier had been dealt a defeat in another jurisdiction, apparently saw this fight as another opportunity to push its ownership claims, and retroactively granted a Spider-Man license to the theater company. However, the legal maneuvering didn't end there: American Music Theatre filed a third-party counterclaim against Stan Lee Media, opening the door for the company to sue Disney, seeking a declaration on the ownership of Spider-Man and, by extension, numerous other characters.

As creative as all of that was, it ultimately led Stan Lee Media nowhere, with a federal judge ruling in October 2014 that the failed dot-com couldn't insert itself into the dispute between Disney and the theater, writing, “These issues have previously been addressed in one form or another by multiple courts around the country.”

Stan Lee Media has long insisted — in multiple jurisdictions — that between August 1998, when Marvel terminated Lee’s $1 million-a-year lifetime contract, and November 1998, when he entered into a new agreement with the House of Ideas, the legendary creator signed over his likeness and the rights to all of the characters he co-created — Spider-Man, the Avengers and the X-Men, among them — to Stan Lee Entertainment, which later merged with Stan Lee Media. That company in turned filed for bankruptcy in February 2001; it emerged from protection in November 2006, and within months, the first of numerous lawsuits (against Marvel, Lee, Disney and others) was filed.

The Ninth Circuit Court of Appeals in October 2014 called Stan Lee Media’s claims to ownership of Spider-Man and other characters “simply implausible,” pointing out that between 1998 — when Lee purportedly transferred rights to the dot-com — and 2007 — when it began litigation — the company never publicized or attempted to license these lucrative properties.

Stan Lee Media's eight-year fight has been wholly unsuccessful, with the U.S. Supreme Court just last month declining to take up its lawsuit against Lee.

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