Judge dismisses $750-million lawsuit against Marvel, Stan Lee [Updated]

A federal judge on Wednesday dismissed a $750-million lawsuit against Stan Lee and Marvel Entertainment over character rights and movie profits, Variety reports.

The lawsuit, filed in January 2009 by Stan Lee Media shareholders Jose Abadin and Christopher Belland, accused Lee of improperly transferring rights to characters like Spider-Man, Iron Man and the X-Men from the now-defunct company to Marvel in 1998. According to the claim, the defendants denied shareholders of the failed dot-com their rights to 50-percent ownership of Lee's co-creations at Marvel. Abadin and Belland argued they, as shareholders, were owed $750 million in profits from movies based on Lee's characters.

The suit has a complicated backstory, of course: In 1998, Marvel CEO Isaac Perlmutter used bankruptcy procedures to end Marvel's $1 million-a-year lifetime contract with Lee, negating Lee's assignment to the company of his rights to his co-creations. It also freed Lee to form Stan Lee Entertainment (which later merged with Stan Lee Media) with now-infamous entrepreneur Peter F. Paul. The company filed for bankruptcy in February 2001, and emerged from protection in November 2006. The lawsuit -- and the $5-billion one that came before it, in March 2007 -- hinged on a sequence of events that took place between August 1998, when Marvel terminated Lee's employment, and November 1998, when Lee entered into a new agreement with the company and signed over his likeness, and any claims to characters.

On Wednesday U.S. District Court Judge Paul A. Crotty rejected the lawsuit, in part because Abadin and Belland didn't acquire shares of Stan Lee Media until 1999, meaning they lacked standing. Further, securities claims against Lee already were settled. Crotty also rejected the plaintiffs' copyright claims, citing the statute of limitations, and noted that Lee's "lifetime" contract with Stan Lee Media violated California labor laws, which limits such agreements to seven years.

Update: Eriq Gardner at THR, Esq. has more details.

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