Rearden LLC v. The Walt Disney Company

Background

The order addresses defendants’ motions for reconsideration in two related cases: Rearden LLC v. The Walt Disney Company, No. 17-cv-04006, and Rearden LLC v. Twentieth Century Fox Film Corporation, No. 17-cv-04191. Rearden LLC and Rearden Mova LLC alleged copyright, trademark, and patent infringement based on the defendants’ alleged use of Rearden’s MOVA Contour Reality Capture Program in producing major motion pictures.

The defendants previously sought summary judgment—a decision without a trial when the evidence shows no genuine dispute requiring a trial—on whether Rearden could establish the required causal connection between alleged infringement and indirect profits under 17 U.S.C. § 504(b). The earlier order granted summary judgment concerning Terminator: Genisys, Avengers: Age of Ultron, Night at the Museum: Secret of the Tomb, and Fantastic Four, but denied it concerning Beauty and the Beast, Guardians of the Galaxy, and Deadpool. The reconsideration motions challenged the denial concerning Guardians of the Galaxy and Deadpool.

Legal Standard

The defendants sought reconsideration under Local Rule 7-9(b)(3), which permits reconsideration based on a manifest failure to consider material facts or dispositive legal arguments previously presented. For indirect profits, the Ninth Circuit requires a copyright holder to provide sufficient, non-speculative evidence of a causal relationship between the alleged infringement and the profits generated indirectly from it.

Court’s Analysis

For Guardians of the Galaxy, Rearden relied on a draft press release referring to MOVA and an online interview with Kevin Feige, identified in the opinion as the president of Marvel Studios. The court found no evidence that the draft press release was publicly released and stated that any effect on viewership or gross revenue would be speculative. Even assuming that the interview’s reference to “the dots” referred to MOVA, the court found no evidence that the reference generated sales or other revenue.

For Deadpool, Rearden relied on a 19-second excerpt from an 80-minute promotional featurette that appeared on a Blu-ray, DVD, or stream of the film. The court found no evidence that the featurette promoted the movie because it could be viewed only by someone who had already purchased or rented it. Rearden offered no expert or other evidence that viewing the featurette caused people to see Deadpool again in theaters.

The court contrasted this evidence with Rearden’s evidence concerning Beauty and the Beast. That evidence included MOVA-based clips in the movie trailer, substantial trailer-viewership evidence, studies regarding trailers and movie attendance, and testimony and declarations concerning the relationship between trailer views and box-office revenue. The court found that Rearden provided no comparable causal evidence for Guardians of the Galaxy or Deadpool.

Rearden also argued that MOVA reduced production costs and thereby indirectly increased profits. The court did not decide whether cost reductions could legally substitute for the increased gross revenue discussed in the governing precedent. Instead, it held that Rearden had not shown that MOVA actually reduced costs for either Guardians of the Galaxy or Deadpool. The cited expert evidence addressed MOVA’s quality and the labor intensity of traditional animation, but did not establish the actual comparative costs or any savings in producing either film.

Disposition

The court concluded that it had erred in denying summary judgment concerning Guardians of the Galaxy and Deadpool and granted the defendants’ motions for reconsideration. The order was signed by United States District Judge Jon S. Tigar on June 8, 2022.