Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 1 of 30 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA. Deadline.

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1 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 1 of 30 DISNEY ENTERPRISES, INC., et al., UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA VS. Plaintiffs, Case No: 5:13-cv (JSL) ENTERTAINMENT THEATRE GROUP d/b/a AMERICAN MUSIC THEATRE; JAMES D. MARTIN; FREDERICK W. STEUDLER, JR.; and DWIGHT H. BRUBAKER, STAN LEE MEDIA, INC., Defendants, and Defendant / Intervenor. ENTERTAINMENT THEATRE GROUP d/b/a AMERICAN MUSIC THEATRE, STAN LEE MEDIA, INC. -against- DISNEY ENTERPRISES, INC.; and MARVEL CHARACTERS, INC., Counterclaim-Plaintiff, and Counterclaim-Plaintiff/Intervenor, Counterclaim-Defendants. Case No: 5:13-cv (JSL) DEFENDANTS' OPPOSITION IN RESPONSE TO PLAINTIFFS' MOTION TO DISMISS AMENDED COUNTERCLAIMS AND INTERVENOR COMPLAINT AND TO STRIKE AMENDED AFFIRMATIVE DEFENSES

2 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 2 of 30 Table of Contents Page I. INTRODUCTION 1 II. BACKGROUND 3 III. ARGUMENT 6 A. Legal Standard 6 B. Res Judicata Does Not Bar AMT's Counterclaims And Affirmative Defenses As The Causes Of Action At Issue In This Litigation Are Not The Same Causes Of Action At Issue In The Prior SLMI-Related Litigations The Present Litigation Does Not Involve The Same Cause Of Action As The Prior SLMI-Related Litigations AMT Is Not In Privity With SLMI Or The Abadin Plaintiffs And, Thus, AMT Cannot Be Bound By The Decisions Reached In The Prior SLMI-Related Litigations. 12 C. Collateral Estoppel Or Issue Preclusion Does Not Bar AMT's Counterclaims As Identical Issues Are Not Present And The Issue Of Ownership Has Never Been Actually Litigated 15 D. AMT's Counterclaims And Affirmative Defenses Are Not Time Barred As Such Claims Have Been Defensively Asserted To Defeat Plaintiffs' Claims. 19 E. Plaintiffs Lack Standing To Challenge SLMI' s License To AMT SLMI Has The Capacity To License The Spider-Man Copyrights To AMT; AMT Should Not Be Precluded From Challenging Plaintiffs' Alleged Ownership In The Copyrights 21 F. AMT Should Not Be Precluded From Challenging The Validity Of Disney's And/Or Marvel's Alleged Copyrights In Spider-Man 22 IV. CONCLUSION 24

3 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 3 of 30 Cases Table of Authorities Page(s) Abadin et al. v. Marvel Entertainment, Inc. et al., 09-Civ-0715, 2010 U.S. Dist. LEXIS (S.D.N.Y. Mar. 31, 2010) passim Alexander Binzel Corp. v. Nu-Tecsys Corp., No. 91 C. 2092, 1991 U.S. Dist. LEXIS (N.D. Ill. Sept. 30, 1991) 14 Allen et al. v. McCurry, 449 U.S. 90 (1980) 14 Anspach v. City of Phila., 380 Fed. Appx. 180 (3d Cir. 2010) 15 Apparel Bus. Sys., LLC v. Tom James Co., Civ. No , 2008 U.S. Dist. LEXIS (E.D. Pa. Mar. 31, 2008) 17, 23 Arco Polymers, Inc. v. Studiengesellschaft Kohle mbh, No. 78-Civ-2917, 555 F. Supp. 547 (E.D. Pa. 1982) 15 Ashcroft v. Iqbal, 556 U.S. 662 (2009) 7 Awanderlust Travel, Inc. v. Kochevar, 21 P.3d 876 (Colo. App. 2001) 21 Bell Atlantic Corp. v. Twombley, 550 U.S. 544 (2007) 7 Bieg v. Hovnanian Enters., Inc., 157 F. Supp. 2d 475 (E.D. Pa. 2001) 23 Emad Elkadrawy v. The Vanguard Group, Inc., 584 F.3d 169 (3d Cir 2009) 8 Estate of Hogarth v. Edgar Rice Burroughs, Inc., 342 F.3d 149 (2d Cir. 2003) 20 Humphreys v. Budget Rent A Car System Inc., No. 10-CV-1302, 2013 U.S. Dist. LEXIS (E.D. Pa. Mar. 4, 2013) 12 Luckenbach Steamship Co., Inc. v. United States, 312 F.2d 545 (2d Cir. 1963) 9, 11, 19 Marvel Characters, Inc. v. Kirby, 726 F.3d 119 (2d Cir. 2013) 22

4 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 4 of 30 Nat '1 Railroad Passenger Corp. v. Pa. Public Utility Commission et al., 288 F.3d 519 (3d Cir. 2002) 17, 18 O'Leary v. Liberty Mutual Ins. Co., 923 F.2d 1062 (3d Cir. 1991) 15 O'Leary v. Liberty Mutual Ins. Co., 923 F.3d F.2d 1062, 1065 (3d Cir. 1991) 8 Picture Patents, LLC v. Aeropostale, Inc., 788 F. Supp. 2d 127 (S.D.N.Y. 2011) 10, 11 Picture Patents, LLC v. Terra Holdings, LLC, No. 07-Cvi-5465 (HBP), 2008 U.S. Dist. LEXIS (S.D.N.Y. Dec. 3, 2008) 11 Pritchett v. Pound, 473 F.3d 217 (5th Cir. 2006) 20 In re Prosser, No , 2013 U.S. App. LEXIS (3d Cir. Aug. 1, 2013) 16, 17 Roche v. Sparkle City Realty, Civ. No , 2009 U.S. Dist. LEXIS (E.D. Pa. June 15, 2009) 8 Rumford Chem. Works v. Hygienic Chem. Co., 148 F. 862 (3d Cir. 1906) 13 Semtek Int I Inc. v. Lockheed Martin Corp., 531 U.S. 497 (2001) 8 SEPTA v. AECOM USA, Inc., No. 10-CV-117, 2010 U.S. Dist. LEXIS (E.D. Pa. Dec. 9, 2010) 7 Smith v. Bayer Corp., 131 S.Ct (2011) 13 Smith v. Cowden (In re Cowden), 337 B.R. 512 (W.D. Pa. Bank. 2006) 11 Souders v. Bank of Am., 1:CV , 2012 U.S. Dist. LEXIS (M.D. Pa. Dec. 6, 2012) 21 Stan Lee Media Inc., et al. v. Stan Lee, et al., No. 2:07-cv-00225, 2012 U.S. Dist. LEXIS (C.D. Cal. Aug. 23, 2012) 8 Stan Lee Media, Inc. v. The Walt Disney Company, No. 12-cv-2663, 2013 U.S. Dist. LEXIS (D. Col. Sept. 5, 2013) 8

5 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 5 of 30 Stan Lee v. Marvel Enterprises, Inc. et al., 765 F. Supp.2d 440 (S.D.N.Y. 2011) 8 Stone v. Hank Williams, Jr. et al., 970 F.2d 1043 (2d Cir. 1992) 10 Taggart v. Chase Bank USA, NA. et al., 375 Fed. Appx. 266 (3d Cir. 2010) 8 Taylor v. Sturgell, 553 U.S. 880 (2008) 12, 15 TruePosition, Inc. v. LM Ericsson Tel. Co., Civ. No , 2013 U.S. Dist. LEXIS (E.D. Pa Oct. 9, 2013) 7 United States v. Western Pacific Railroad Co. et al., 352 U.S. 59 (1956) 9, 20 Warren Gen. Hosp. v. Amgen Inc., 643 F.3d 77 (3d Cir. 2011) 6 William A. Graham Co. v. Haughey et al., 568 F.3d 425 (3d Cir. 2009) 10 Statutes 17 U.S.C. 507(b) 20 Colo. Rev. Stat (2013) 21 Other Authorities AMT's Broadway: Now and Forever 20 Fed. R. Civ. P. 12(f) 7 Melville B. Nimmer, David Nimmer, Nimmer on Copyright (2013) 18, 23 iv

6 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 6 of 30 Defendant and Counterclaim-Plaintiff Entertainment Theatre Group d/b/a American Music Theatre ("AMT") and Defendants James D. Martin, Frederick W. Steudler, Jr. and Dwight H. Brubaker (collectively, along with AMT, the "AMT Defendants"), by and through their undersigned attorneys, hereby submit this Opposition in Response to Plaintiffs and Counterclaim-Defendants Disney Enterprises, Inc.'s ("Disney's") and Marvel Characters, Inc.'s ("Marvel's") Motion to Dismiss Amended Counterclaims and Intervenor Complaint and to Strike Amended Affirmative Defenses ("Motion"). For the reasons discussed in more detail below, AMT Defendants respectfully request that the Court DENY the Motion in its entirety. I. INTRODUCTION Plaintiffs are correct this is a straightforward case. Motion at 1. AMT, a small theatre company in Lancaster, Pennsylvania acting on appropriate advice of counsel and pursuant to valid licenses put on a production of a highly original, transformative show called Broadway: Now and Forever that included, among other things, various performances of songs appearing in past and present Broadway musicals. Upon learning of AMT's production, Disney and Marvel (and other Plaintiffs in this action) felt it necessary to flex their muscles and force AMT to stop its small town production, asserting that the same infringed upon, inter alia, such parties' alleged copyrights. When AMT, again on advice of counsel, continued to produce this show despite Plaintiffs' baseless threats, Plaintiffs grew angry and, in September of 2013, filed suit against AMT in this district alleging, inter alia, causes of action for copyright infringement, including infringement of certain works relating to Spider-Man.' Upon learning of this suit and the fact that Disney and Marvel had asserted copyrights in Spider-Man against AMT, SLMI approached AMT and advised that SLMI was the actual owner 1 While Plaintiffs assert in their Motion that they own intellectual property from Spider-Man Turn Off the Dark, there is some question as to whether this is the case and discovery will illuminate this issue. It should be noted upfront, however, that Plaintiffs did not assert any copyrights in Spider-Man Turn Off the Dark against the AMT Defendants. See generally Complaint (D.E. 1). 1

7 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 7 of 30 of any and all copyrights in Spider-Man pursuant to a 1998 Agreement entered into between its predecessor and Stan Lee. Accordingly, SLMI, with an eye towards collecting assets owed to it and disposing of its property, offered to grant to AMT, in exchange for a royalty, a nunc pro tunc retroactive license 2 covering AMT's use of Spider-Man in Broadway: Now and Forever, as well as certain other exclusive rights. AMT accepted the same. With Plaintiffs' rights in Spider-Man now in question, AMT counterclaimed against Plaintiffs for declaratory judgment, seeking a declaration that its license with SLMI was valid and that Marvel and Disney lacked ownership of the copyrights in Spider-Man. AMT filed a similar third party complaint against SLMI and SLMI responded with a third-party counterclaim. Plaintiffs then moved to dismiss AMT's counterclaims and SLMI's third-party claims. In response, SLMI withdrew its third party complaint and AMT filed, as of right, an Amended Answer with additional counterclaims, including a declaratory judgment counterclaim seeking a declaration that Plaintiffs' alleged copyrights in Spider-Man are invalid as a matter of law. SLMI moved to intervene, which went unopposed. Plaintiffs then filed this Motion. Plaintiffs' Motion is based on a fundamental misunderstanding of the law, namely, that AMT's Counterclaims and affirmative defenses are barred by res judicata or collateral estoppel because a district court in a prior litigation held that certain of SLMI's derivative shareholders were barred, on the bases of statute of limitations, laches and estoppel, from asserting that SLMI owns copyrights in certain Lee-created works when bringing a copyright infringement case against various Marvel entities. However, the district court in this prior litigation never actually determined this ownership issue. Nor did it determine whether, as asserted here, Marvel and/or Disney hold valid copyrights in the Spider-Man works. It is black letter law that defensively asserted claims such as those brought by AMT in the instant action involve different causes of 2 Retroactive licenses such as these are commonplace in the industry when rights are asserted by a party against another after a production has commenced. 2

8 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 8 of 30 action than those at issue in this prior case and that such claims cannot be time barred. Thus, res judicata and collateral estoppel are inapplicable here and Plaintiffs' arguments must fail. But Plaintiffs' arguments as against AMT also fail for other reasons. First, AMT wasand is not in privity with SLMI for purposes of res judicata and collateral estoppel, for the reasons discussed in more detail herein. Second, granting Plaintiffs' Motion as against AMT would be contrary to law. Doing so would effectively preclude AMT from challenging Marvel's and/or Disney's ownership rights in Spider-Man and, thus, would constructively grant Disney and Marvel rights in these works. This would unlawfully shift the burden of proof regarding ownership in these works to AMT and, thus, would go against well-established precedent that the burden of proof in asserting ownership rests with plaintiffs. For these, and the additional reasons set forth in more detail below, AMT Defendants respectfully request that this Court DENY Plaintiffs' Motion in its entirety. II. BACKGROUND Contrary to Disney's and Marvel's skewed view of the facts set forth in the Motion, see, e.g., Motion at 4-5, Stan Lee ("Lee") did not create his iconic comic book characters (including, for example, Spider-Man, Iron Man, The Incredible Hulk, Thor, The X-Men, and The Avengers) in his role as an employee at Marvel Comics. To the contrary, while working for Marvel Comics between 1945 and the autumn of 1968 Lee created and developed such characters, including Spider-Man, as an independent contractor, that is, in his spare time and outside the scope of his employment. See, Decl. of Melanie A. Miller attached as Exhibit A, at Ex. 1 TT ("Miller Decl."). These Lee-created works were not "works for hire," Motion at 4, under the Copyright Act and the copyrights therein vested in Lee, not Marvel. From the time Lee was hired as an employee of Marvel Entertainment Group, Inc. (the predecessor to Marvel Entertainment, Inc.), until his termination in August 1998, Marvel "paid Lee both a salary for Lee's exclusive services 3

9 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 9 of 30 and extra compensation for Marvel's right to use, develop and exploit Lee's interest in the characters he had previously conceived, created and developed." Id. at Ex After Lee's termination from Marvel, Stan Lee Entertainment Inc., the predecessor to SLMI, was founded. On October 15, 1998, Lee assigned to Stan Lee Entertainment Inc. via a written agreement (the "1998 Agreement") "all right, title and interest [Lee] may have or control, now or in the future" in his prior-created comic book characters, including Spider-Man, as well as other works. Id. at Ex. 1 I 49; Amended Answer (D.E. 55) at Ex. A. A month later, in November 1998, Lee signed a written agreement with Marvel Enterprises, Inc., in which Lee allegedly conditionally assigned certain rights in Spider-Man and other of his characters even though Lee did not own such rights at that time. 3 Amended Answer (D.E. 55) at 10. On November 28, 2006, the 1998 Agreement was recorded with the U.S. Copyright Office, whereas the November 1998 Agreement has never been so recorded. Id. at TT 9, 11, Ex. C. Accordingly, as a matter of law, SLMI, as successor-in-interest to Stan Lee Entertainment Inc., is the rightful owner of the copyrights in Stan Lee's iconic comic book characters, including Spider-Man. In 2009, certain derivative shareholders of SLMI filed sued against Marvel Entertainment, Inc., Marvel Enterprises, Inc., Stan Lee and Arthur M. Lieberman in the Southern District of New York, alleging, on behalf of SLMI, that, inter alia, these defendants infringed upon SLMI's rights in certain works and characters created by Lee in light of, inter alia, the 1998 Agreement. See Miller Decl. at Ex. 1. The District Court for the Southern District of New York ultimately dismissed this case on the basis that the plaintiffs lacked derivative standing to sue under the Federal Rules of Civil Procedure. Abadin et al. v. Marvel Entertainment, Inc. et al., 09-Civ-0715, 2010 U.S. Dist. LEXIS 32069, at *10-*11 (S.D.N.Y. Mar. 31, 2010). The 3 The existence of this assignment begs the question if, as Disney and Marvel contend, Lee's rights in Spider-Man and the other related works were "works for hire," why was such as copyright assignment necessary? 4

10 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 10 of 30 District Court also dismissed the Abadin plaintiffs' copyright claims on the basis of being barred by the statute of limitations and the doctrines of laches and estoppel. Id. at *18. Additional cases were subsequently filed by SLMI affirmatively asserting causes of action for, inter alia, copyright infringement against Marvel Entertainment Inc., The Walt Disney Company and related entities. Motion at 5 (Abadin and these cases are collectively referred to herein as the "Prior SLMI-Related Litigations"). Importantly, while certain of these cases have been dismissed on res judicata or collateral estoppel grounds, no court has ever expressly decided the issue as to whether the 1998 Agreement vested in SLMI rights in and to the Spider-Man character and other Lee characters and whether Marvel and/or Disney have valid copyrights in the same. Disney effectively conceded as much when, in prior litigation against SLMI, it argued that "[i]t is not that [SLMI's] 'ownership of the copyright at issue in this action was litigated in Abadin' and other prior litigations... ; rather, the issue that [SLMI] seeks to litigate... is whether it can timely assert ownership rights to the Marvel characters that are the subject of the Amended Complaint arising from the 1998 Agreement." Miller Decl. at Ex. 2, p. 7. Given that no court has expressly decided these issues, AMT should not be precluded from asserting potential defenses and defensive claims related thereto, particularly when Disney and Marvel have invited discussion on such issues by asserting their alleged rights against AMT. Despite the fact that Disney and Marvel lack ownership in the copyrights in Spider-Man and other Lee characters, they have nonetheless continued to exploit the same and have attempted to enforce their non-existent rights in such works against third parties. Accordingly, on September 24, 2013, they (among others) filed suit against AMT alleging, inter alia, that AMT, via its production of Broadway: Now and Forever, infringed upon their alleged copyrights that incorporate the Spider-Man character. See generally Complaint (D.E. 1). 5

11 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 11 of 30 Only after this Complaint was filed and served did AMT learn that SLMI was the proper rightholder in the Spider-Man character and the Lee-created works. Accordingly, as is common in the industry, AMT then entered into a nunc pro tunc license agreement with SLMI, wherein SLMI granted to SLMI, among other things, exclusive rights in the Spider-Man character, including use in connection with the production of Broadway: Now and Forever. See generally Appendix to Motion (D.E. 63). Moreover, in light of AMT's knowledge that SLMI was the proper rightholder in Spider-Man, AMT, when answering Plaintiffs' Complaint, asserted defensive declaratory judgment counterclaims ("Counterclaims") and affirmative defenses against Disney and Marvel. AMT in its First Amended Complaint amended these Counterclaims and affirmative defenses to seek confirmation that SLMI is in fact the owner of the copyrights in Spider-Man and a conclusion that Disney's and Marvel's alleged copyrights in Spider-Man are invalid as a matter of law. See Amended Answer (D.E. 55) at SLMI subsequently filed a Motion to Intervene and a corresponding Intervenor Complaint, which motion was granted as unopposed. See Motion to Intervene (D.E. 56) and Order (D.E. 59). By affirmatively asserting their alleged copyrights in Spider-Man against AMT, Plaintiffs have opened the door for AMT to challenge the validity of these rights and Plaintiffs' alleged ownership in the same. Res judicata and collateral estoppel do not act to bar such defensive assertions, particularly where, as here, the underlying decision upon which these theories would rest was based upon a time-bar and not an adjudication of the actual ownership issue. III. ARGUMENT A. Legal Standard "[A] motion to dismiss may be granted only if, accepting all well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court finds that plaintiff s claims lack facial plausibility." Warren Gen. Hosp. v. Amgen Inc., 643 F.3d 77, 6

12 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 12 of (3d Cir. 2011); see also Bell Atlantic Corp. v. Twombley, 550 U.S. 544, 570 (2007) (to survive a motion to dismiss, a plaintiff need only allege "enough facts to state a claim to relief that is plausible on its face"); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (a plaintiff need only include sufficient factual content "that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged"). This standard applies with "equal force to crossclaims, counterclaims and third party complaints." SEPTA v. AECOM USA, Inc., No. 10- CV-117, 2010 U.S. Dist. LEXIS , at *9 (E.D. Pa. Dec. 9, 2010). Similarly, under Fed. R. Civ. P. 12(0, an affirmative defense may be stricken if it "rest[s] on the same legal grounds as... [a] legally-insufficient Counterclaim[.]" TruePosition, Inc. v. LM Ericsson Tel. Co., Civ. No , 2013 U.S. Dist. LEXIS , at *30 (E.D. Pa Oct. 9, 2013). However, an affirmative defense will be deemed to be legally insufficient only if the defense cannot succeed under 'any set of facts which may be inferred from the allegations of the pleading," id. at *31 (quoting BJ Energy LLC v. PJM Interconnection, LLC, Nos , , 2010 U.S. Dist. LEXIS 36969, at *6 (E.D. Pa. Apr. 13, 2010)). Applying these standards here, it is plain that AMT's Counterclaims and affirmative defenses have been sufficiently pleaded and are legally sufficient to as to survive dismissal. B. Res Judicata Does Not Bar AMT's Counterclaims And Affirmative Defenses As The Causes Of Action At Issue In This Litigation Are Not The Same Causes Of Action At Issue In The Prior SLMI-Related Litigations. Res Judicata does not act to bar AMT's Counterclaims or affirmative defenses as the causes of action in this litigation and the Prior SLMI-Related Litigations are dissimilar. Moreover, AMT's Counterclaims and affirmative defenses should not be barred as AIVIT and SLMI are not in privity. Res judicata applies to bar relitigation of a claim when three circumstances are present: "(1) a final judgment on the merits in a prior suit involving (2) the same parties or their privies and (3) a subsequent suit based on the same cause of action." 7

13 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 13 of 30 Taggart v. Chase Bank USA, NA. et al., 375 Fed. Appx. 266, 268 (3d Cir. 2010). Moreover, "a judgment 'on the merits' is [no longer] necessarily a judgment entitled to claim-preclusive effect." Semtek Int I Inc. v. Lockheed Martin Corp., 531 U.S. 497, 503 (2001). For the reasons discussed in more detail below, at least two of the factors required to prove res judicata are not present in this case and, in any event, AMT's Counterclaims should not be barred on this basis. 1. The Present Litigation Does Not Involve The Same Cause Of Action As The Prior SLMI-Related Litigations. This case does not involve the "same cause of action" as the Prior SLMI-Related Litigations. "There is no bright-line test for determining when the causes of action in two suits are identical for res judicata purposes." O'Leary v. Liberty Mutual Ins. Co., 923 F.3d F.2d 1062, 1065 (3d Cir. 1991). While many factors are applicable to this analysis, one important factor is "the essential similarity of the underlying events giving rise to the various legal claims." Emad Elkadrawy v. The Vanguard Group, Inc., 584 F.3d 169, 173 (3d Cir 2009). Here, the underlying events giving rise to AMT's legal claims are different from those at issue in the Prior SLMI-Related Litigations. The causes of action asserted in Abadin and each of the subsequent Prior SLMI-Related Litigations were based on affirmative assertions of copyright infringement and other affirmative causes of action in certain Lee-created works by, respectively, the Abadin plaintiffs and SLMI. See generally Stan Lee Media, Inc. v. The Walt Disney Company, No. 12-cv-2663, 2013 U.S. Dist. LEXIS (D. Col. Sept. 5, 2013); Stan Lee Media Inc., et al. v. Stan Lee, et al., No. 2:07-cv-00225, 2012 U.S. Dist. LEXIS (C.D. Cal. Aug. 23, 2012); Stan Lee v. Marvel Enterprises, Inc. et al., 765 F. Supp.2d 440 (S.D.N.Y. 2011). Here, however, AMT's Counterclaims are based on defensive assertions, similar to claims for recoupment, see, e.g., Roche v. Sparkle City Realty, Civ. No , 2009 U.S. Dist. LEXIS 51555, at *8 (E.D. Pa. June 15, 2009) (noting that recoupment may be asserted after the 8

14 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 14 of 30 limitations period when used in defense to a debt collection action), which claims arose once Disney and Marvel asserted against AMT their alleged ownership of the Spider-Man copyrights. Under such circumstances, it cannot be said that this case involves the "same cause of action" alleged in the Prior SLMI-Related Litigations, as doing so would effectively allow cases decided on the bases of statutes of limitations, laches and/or estoppel to later bar the assertion of applicable defenses and defensive claims based on issues that were never fully litigated or decided, which is contrary to the basic policy behind such doctrines. The purpose of such statutes [of limitations] is to keep stale litigation out of the courts. They are aimed at lawsuits, not at the consideration of particular issues in lawsuits.... To use the statute of limitations to cut off the consideration of a particular defense in the case is quite foreign to the policy of preventing the commencement of stale litigation. We think it would be incongruous to hold that once a lawsuit is properly before the court, decision must be made without consideration of all the issues in the case and without the benefit of all the applicable law. If this litigation is not stale, then no issue in it can be deemed stale. United States v. Western Pacific Railroad Co. et al., 352 U.S. 59, 72 (1956) (emphasis added). Similarly here, since Disney's and Marvel's litigation against AMT is not stale, AMT's defensive claims are not stale. Indeed, unlike with affirmative causes of action, such as those asserted in the Prior SLMI-Related Litigations, "[1]imitations statutes do not apply to declaratory judgments as such. Declaratory relief is a mere procedural device by which various types of substantive claims may be vindicated. There are no statutes which provide that declaratory relief will be barred after a certain period of time." Luckenbach Steamship Co., Inc. v. United States, 312 F.2d 545, 548 (2d Cir. 1963). Accordingly, "[n]on-liability for which plaintiff seeks a declaration is not a 'cause of action' within the meaning of the limitations section... [as it is the] negative of the claim or cause of action for respect to which the declaration is sought" and can therefore be asserted so long as the claim can be asserted. Id. at 549. Thus, affirmatively asserted claims of relief are

15 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 15 of 30 not the same "causes of action" as defensively asserted counterclaims or affirmative defenses, such as those at issue here. Moreover, given that Disney and Marvel have affirmatively asserted their alleged rights in the Spider-Man works against AMT, AMT should be able to freely assert defensive declaratory judgment counterclaims these entities do not hold valid copyrights and that, instead, SLMI is the valid owner of the Spider-Man copyrights. This is particularly so given the fact that no court has ever actually decided whether Disney and/or Marvel's alleged copyrights in Spider- Man are valid in light of the 1998 Agreement or whether SLMI is the rightful owner in such rights. After all, the statute of limitations cannot bar a defensive claim for ownership of a right. See Picture Patents, LLC v. Aeropostale, Inc., 788 F. Supp. 2d 127, 139, 141 (S.D.N.Y. 2011) (even if IBM's claim to ownership would be barred by statute of limitations, the statute of limitations "does not bar IBM from raising IBM's ownership of the Patents as a defense against Pictures Patents' claims or in counterclaims for declaratory judgment," particularly where, as here, defendants were "haled into court only at [Plaintiffsl assistance"). It would be incongruous for this Court to apply res judicata to such defensive claims where the underlying decision was based on a time bar argument. Furthermore, prohibiting AMT from raising its defensive claims on the basis of res judicata would effectively mean that Disney and/or Marvel have acquired ownership of the Spider-Man copyrights via adverse possession, namely, by claiming such rights for a period of time without challenge from SLMI. This is contrary to law. After all, "[o]ne's entitlement to a copyright or a renewal is... determined by statute... and the statute nowhere suggests that one loses" his or her right in the copyright merely by delaying in asserting that right. Stone v. Hank Williams, Jr. et al., 970 F.2d 1043, 1051 (2d Cir. 1992). See William A. Graham Co. v. Haughey et al., 568 F.3d 425, 436 (3d Cir. 2009) ("the legislative history makes clear that Congress 10

16 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 16 of 30 intended the Copyright Act's statute of limitation to apply 'to the remedy of the person affected thereby, and not to his substantive rights"); see also Picture Patents, LLC v. Terra Holdings, LLC, No. 07-Cvi-5465 (HBP), 2008 U.S. Dist. LEXIS 98030, at *10 n.1 (S.D.N.Y. Dec. 3, 2008) (suggesting that there is "no authority supporting the proposition that title" to a patent or copyright "can be acquired through adverse possession"). In short, even if AMT would otherwise be precluded from affirmatively asserting its rights in Spider-Man against Disney and Marvel in light of the Prior SLMI-Related Litigations, AMT should not be prohibited from defensively asserting these rights or challenging Disney's and Marvel's alleged rights via declaratory counterclaims and affirmative defenses 4 when it is Marvel and Disney who have effectively placed their rights in the Spider-Man copyrights at issue and "disturbed the equilibrium between the parties." Picture Patents, LLC, 788 F. Supp. 2d at 141. As the above-referenced case law makes plain, claims based upon affirmative assertions of rights, such as those at issue in Abadin and the Prior SLMI-Related Litigations can be timebarred and are, in essence, different causes of action than defensive claims based upon assertions of ownership and invalidity, which claims can only be raised once rights are affirmatively asserted against a party. These defensive claims cannot be time barred. As AMT's defensive claims particularly AMT's Second Counterclaim and affirmative defenses are responsive to Plaintiffs' claims and, therefore, could not have been asserted in the Prior SLMI-Related Litigations, they are "necessarily dissimilar" from these earlier causes of action. Res judicata will not bar a cause of action if "both could not have been brought in the prior proceeding in question." Smith v. Cowden (In re Cowden), 337 B.R. 512, 529 (W.D. Pa. Bank. 2006). Accordingly, Marvel and Disney's res judicata argument must fail on this basis alone. 4 This reasoning applies a fortiori to AMT's affirmative defenses, as they are plainly raised in response to Plaintiffs' claims and, therefore, are not a "cause of action." Luckenbach Steamship Co., Inc., 312 F.2d at

17 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 17 of AMT Is Not In Privity With SLMI Or The Abadin Plaintiffs And, Thus, AMT Cannot Be Bound By The Decisions Reached In The Prior SLMI-Related Litigations. Marvel's and Disney's res judicata arguments must also fail as against AMT as AMT is not the same party as SLMI, nor is or was it in privity with SLMI or, for that matter, the Abadin plaintiffs. Marvel and Disney concede that "AMT was not a party to the Dismissed SLMI Cases." Motion at 13. Thus, the only question to be determined by this Court is whether AMT was or is in privity with this entity or the Abadin plaintiffs. "Privity 'is merely a word used to say that the relationship between one who is a party on the record and another is close enough to include that other within the res judicata." Humphreys v. Budget Rent A Car System Inc., No. 10-CV-1302, 2013 U.S. Dist. LEXIS 30377, at *17 (E.D. Pa. Mar. 4, 2013). "A relationship is usually considered to be sufficiently close 'only when... the non-party actually controls the litigation." Id at *18 (emphasis added). "Put another way, privity will depend upon what obligation, if any, the representing party had to safeguard the interests of the nonparty." Id (emphasis added). There are only six narrow circumstances in which a court will find privity and preclude a nonparty from litigating a matter, namely, (1) where a person agrees to be bound by a determination of the issues in the first case; (2) where there are "pre-existing 'substantive legal relationship[s]" between the person to be bound and a party to the judgment; (3) where a nonparty was adequately represented by someone "with the same interests who [wa]s a party"; (4) if the nonparty "assumed control" over the prior litigation; (5) if a party is relitigating through a proxy; and (6) if a special statutory scheme expressly precludes successive litigation by nonlitigants. Taylor v. Sturgell, 553 U.S. 880, (2008). Here, plainly exceptions (1), (4), and (6) are not at issue, as AMT never agreed to be bound by the decisions reached in the Prior SLMI-Related Litigations, AMT had no control over let alone knowledge of the Prior SLMI- 12

18 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 18 of 30 Related Litigations prior to being approached by SLMI in the Fall of 2013, and there is no special statutory scheme at issue. Accordingly, we need only address exceptions (2), (3) and (5). It is plain that the second exception does not apply to AMT as there was not a "preexisting" legal relationship at the time AMT was sued by Marvel and Disney AMT entered into the license agreement with SLMI only after it was sued by the Disney Plaintiffs and with an eye towards defending against Plaintiffs' claims. See generally Appendix to Motion (D.E. 63). While this license applied retroactively, Marvel and Disney provide no authority that such a retroactive license, entered into after a Defendant is sued suffices to show privity. Cf Rumford Chem. Works v. Hygienic Chem. Co., 148 F. 862, (3d Cir. 1906) ("The rule invoked is only applicable to cases where by agreement a joint defense is made or a principal defends his agent, or a licensor [defends] his licensee, or other like relations contractual or representative exist.") (emphasis added). Moreover, there was plainly no pre-existing legal relationship between AMT and the Abadin plaintiffs, and the Supreme Court has frowned upon finding privity between non-parties in cases involving similar circumstances. See, e.g., Smith v. Bayer Corp., 131 S.Ct. 2368, (2011) (finding no privity between a class action plaintiff and plaintiffs in a prior class action suit involving the same defendant and similar claims, where the district court in the prior suit refused to certify the prior plaintiffs as a class and alternatively dismissed prior plaintiffs' claims on the merits). Similarly, the third exception does not apply under the circumstances, as AMT is not a fiduciary of SLMI or the Abadin plaintiffs, nor does AMT have the same interests as these entities. To the contrary, whereas AMT is interested in proving the invalidity of Marvel's and Disney's alleged copyrights, SLMI has made no such claims. See, e.g., SLMI's Intervenor Complaint (D.E. 56-2). Tellingly, Marvel and Disney do not even assert this privity exception in their Motion. Motion at

19 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 19 of 30 Finally, the fifth exception is not applicable here because AMT is not a proxy to or agent of SLMI or the Abadin plaintiffs. While having been alerted to these potential ownership issues by SLMI, AMT is asserting them mainly for its own benefit and to avoid potential liability from Marvel and Disney. Once AMT was sued by Marvel and Disney, it behooved AMT to obtain a license in the Spider-Man copyrights from any available source. AMT obtained the license from SLMI, but is raising separate counterclaims against Disney's and Marvel's alleged rights. Under these circumstances, AMT cannot be viewed as a proxy for SLMI or, a fortiori, the Abadin plaintiffs. See, e.g., Alexander Binzel Corp. v. Nu-Tecsys Corp., No. 91 C. 2092, 1991 U.S. Dist. LEXIS 13538, at * (N.D. Ill. Sept. 30, 1991) (finding no privity for res judicata purposes between trademark holder and trademark holder's "exclusive authorized United States distributor of products bearing the trademarks and logos" where the parties had certain different interests). Moreover, it is plain that AMT has never had the opportunity to challenge Disney and/or Marvel's alleged ownership in the asserted copyrights. Nor were SLMI or the Abadin plaintiffs looking out for AMT's interests when they adjudicated their claims against Marvel, Disney and Lee. The fact remains that Disney called into question its ownership in these copyrights when it asserted them against AMT and AMT should be able to raise every argument in its arsenal to defend against Disney's claims of infringement. After all, "one general limitation the Court has repeatedly recognized is that the concept of collateral estoppel cannot apply when the party against whom the earlier decision is asserted did not have a 'full and fair opportunity' to litigate that issue in the earlier case." Allen et al. v. McCurry, 449 U.S. 90, 95 (1980). AMT has had no such opportunity. Although AMT entered into a nunc pro tunc license and common interest agreement with SLMI regarding the Spider-Man copyrights and this litigation, respectively, the existence of these agreements should not be sufficient for the Court to find privity under these unique 14

20 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 20 of 30 circumstances. While "[Arivity is an ambiguous term, a shorthand designation for those persons who have a sufficiently close relationship with the record parties to be bound by the judgment," Arco Polymers, Inc. v. Studiengesellschaft Kohle mbh, No. 78-Civ-2917, 555 F. Supp. 547, 550 (E.D. Pa. 1982) (citations omitted), nonparty preclusion is only available in "limited circumstances," and the courts have taken a "constrained approach to nonparty preclusion." Taylor v. Sturgell et al., 553 U.S. 880, 898 (2008). Where, as here, there was not a preexisting legal relationship prior to the commencement of suit and AMT never had the full and fair opportunity to defend against Marvel and/or Disney's alleged ownership in the copyrights at issue, privity should not be found. Thus, Marvel and Disney's res judicata arguments must fail as against AMT and its Counterclaims and its affirmative defenses for this reason as well. C. Collateral Estoppel Or Issue Preclusion Does Not Bar AMT's Counterclaims As Identical Issues Are Not Present And The Issue Of Ownership Has Never Been Actually Litigated For similar reasons as discussed above in Section III.B, AMT's Counterclaims are not barred by the doctrine of collateral estoppel. Collateral estoppel or issue preclusion will act to bar the relitigation of an issue when "(1) the identical issue was previously adjudicated; (2) the issue was actually litigated; (3) the previous determination was necessary to the decision; and (4) the party being precluded from relitigating the issue was fully represented in the prior action." Anspach v. City of Phila., 380 Fed. Appx. 180, 183 (3d Cir. 2010) (quoting Jean Alexander Cosmetics, Inc. v. L 'Oreal USA, Inc., 458 F.3d 244, 249 (3d Cir. 2006)). Here, these factors are not satisfied and, thus, AMT's Counterclaims should not be barred by collateral estoppel. First, it should be noted that the issues raised in AMT's Counterclaims and affirmative defenses were never "actually litigated." "An issue is 'actually litigated' when it 'is properly raised, by the pleadings or otherwise, and is submitted for determination, and is determined." 0 'Leary v. Liberty Mutual Ins. Co., 923 F.2d 1062, 1066 (3d Cir. 1991) (citations omitted) 15

21 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 21 of 30 (emphasis added). No court has ever determined the issue of whether SLMI owns the copyrights in Spider-Man as a result of the 1998 Agreement, a point which Disney effectively conceded. See Miller Decl. at Ex. 2, p.7 (Disney stated,"[ilt is not that [SLMI's] 'ownership of the copyright at issue in this action was litigated in Abadin' and other prior litigations... ; rather, the issue that [SLMI] seeks to litigate... is whether it can timely assert ownership rights to the Marvel characters that are the subject of the Amended Complaint arising from the 1998 Agreement."). Thus, this issue has never been "actually litigated." Moreover, to AMT's knowledge, no court has ever determined whether Stan Lee's second assignment to Marvel validly assigned any rights to this entity in light of the fact that Stan Lee did not own the alleged copyrights that were assigned at that time. Therefore, the issue upon which AMT's Second Counterclaim rests was also not ever actually litigated. The claims brought by AMT are thus not barred by collateral estoppel and, similarly, AMT's affirmative defenses should not be stricken. Second, for at least the same reasons as discussed above in Section III.B.1, the issues raised in AMT's Counterclaims and affirmative defenses should not be considered to be "identical issue[sl" as those raised in the Prior SLMI-Related Litigations. Moreover, at least with respect to AMT's Second Counterclaim and affirmative defenses, it should be noted that the "identical issue" was never previously adjudicated. The collateral estoppel analysis focuses "not on whether the facts underlying the cases are the same, but instead on whether the same issue has been conclusively determined in a prior decision." In re Prosser, No , 2013 U.S. App. LEXIS 15853, at *6-*7 (3d Cir. Aug. 1, 2013). In In re Prosser, then, the Third Circuit determined that two separate, distinct issues were asserted where the first action involved the question whether Prosser retained ownership of the property he attempted to transfer to Appellant and the second action involved the issue whether Appellant's ownership interests 16

22 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 22 of 30 resulted from a fraudulent conveyance from Prosser. Id at *7 "Thus, although the same factual scenario gave rise to the two actions, the issues decided in each were entirely distinct." Id Same here with respect to at least AMT's Second Counterclaim and affirmative defenses. At issue in the Prior SLMI-Related Litigations was the issue of whether SLMI had valid ownership rights in copyrights in certain Lee-created works sufficient to support various affirmative causes of action, such as copyright infringement. At issue in AMT's Second Counterclaim and affirmative defenses, however, is the validity of Marvel's and/or Disney's asserted copyrights given that Lee's 1998 assignment to Marvel effectively assigned no rights to Marvel. This is a different issue under the doctrine set forth in In re Prosser. Accordingly, even if AMT's first Counterclaim is barred by collateral estoppel, at least AMT's Second Counterclaim and affirmative defenses should survive dismissal for this reason alone. Third, for the reasons set forth above in more detail in Section III.B.2, AMT should not be considered to have been "ffilly represented" by SLMI in the prior proceeding. Accordingly, AMT's Counterclaims and affirmative defenses should not be barred by collateral estoppel for this reason as well. Finally, even if all of these factors are satisfied and issue preclusion would otherwise apply to bar the relitigation of ownership, one or more of the equitable exceptions to collateral estoppel are applicable to this case. See Nat'l Railroad Passenger Corp. v. Pa. Public Utility Commission et al., 288 F.3d 519, 525 n.3 (3d Cir. 2002) (setting forth the five exceptions to the general rule of issue preclusion set forth in Section 28 of the Restatement Second). First, the burden of proving ownership in this proceeding has shifted from SLMI (or its alleged privies) to the Disney Plaintiffs. See, e.g., Apparel Bus. Sys., LLC v. Tom James Co., Civ. No , 2008 U.S. Dist. LEXIS 26313, at *42 (E.D. Pa. Mar. 31, 2008) (noting plaintiff "has the burden of proving ownership"). Whereas the Abadin plaintiffs and/or SLMI were responsible for 17

23 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 23 of 30 proving ownership at issue in the Prior SLMI-Related Litigations, as they were the entities asserting infringement of their rights, here Disney and Marvel have that burden. Accordingly, for this reason alone "relitigation of the issue [of ownership]... is not precluded." Nat'l Railroad Passenger Corp., 288 F.3d at 525 n.3 (quoting Restatement Second). Second, the ownership issue is one of law, see, e.g., Melville B. Nimmer, David Nimmer, 4 Nimmer on Copyright 13.01[B] ("plaintiff's ownership constitutes a conclusion of law"), and the "two actions involve claims that are substantially unrelated." Nat'l Railroad Passenger Corp., 288 F.3d at 525 n.3 (quoting Restatement Second). Indeed, as discussed above in Section III.B.1, this action involves different causes of action than those at issue in the Prior SLMI- Related Litigations. Accordingly, the claims must also be substantially unrelated. This is particularly true with respect to AMT's Second Counterclaim for invalidity, as the issue of the validity of Marvel's and/or Disney's copyrights has never been litigated. Third, "[t]here is a clear and convincing need for a new determination of the issue... because of the potential adverse impact of the determination on the public interest or the interests of the persons not themselves parties to the initial action." Id. If AMT is precluded from arguing ownership in this proceeding, Disney and Marvel will be able to continue to assert their non-existent rights against third parties and would have effectively acquired, via adverse possession, rights in the Spider-Man works and other Lee-created works, to the detriment of such third parties and the public interest. Moreover, if preclusion is found AMT will be effectively unable to challenge Disney's and Marvel's ownership in the Spider-Man works, despite the fact that it is Disney's and Marvel's burden to prove ownership, to its great detriment. Precluding AMT from raising this argument may ultimately mean AMT is subject to hefty damages and other relief to which Disney and Marvel are not otherwise entitled. Finding preclusion in this case would be patently unjust and contrary to law. Therefore, this exception applies as well. 18

24 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 24 of 30 As at least three of the five exceptions to the general rule of issue preclusion are satisfied by the facts of this case, it goes without question that collateral estoppel should not apply under the circumstances, particularly where any one such exception would suffice. Accordingly, AMT should not be precluded from bringing its claims and affirmative defenses. D. AMT's Counterclaims And Affirmative Defenses Are Not Time Barred As Such Claims Have Been Defensively Asserted To Defeat Plaintiffs' Claims. AMT's Counterclaims and affirmative defenses are timely, as they have been asserted in response to and to defeat Disney and Marvel's claims for infringement against AMT. As discussed above in Section III.B.1, since Disney and Marvel commenced this copyright infringement case over Spider-Man, Disney and Marvel should effectively be precluded from using a time-bar argument to prevent the Court from adjudicating the merits of the Spider-Man copyright ownership issue. After all, "fflor purposes of the statute of limitations non-liability is inextricably linked with that cause of action. So long as the claim can be made, its negative can be asserted." Luckenbach Steamship Co., Inc., 312 F.2d at 548. Accordingly, since Disney and Marvel have placed at issue their ownership in the Spider-Man copyrights and raised affirmative claims based on the same, AMT should be able to assert the inverse of such claims, namely, that Disney and Marvel do not own such copyrights. AMT's Counterclaims and affirmative defenses should not be time barred for yet another reason. As Disney and Marvel note, affirmative claims under the Copyright Act accrue when a "plaintiff discovers, or with due diligence should have discovered, the injury that forms the basis for the claim." Motion at (quoting William A. Graham Co., 568 F.3d at 433). The injury forming the basis of both of AMT's Counterclaims is, in essence, Disney and Marvel's assertion of invalid copyrights and/or copyrights owned by SLMI against AMT. AMT, however, had no knowledge that Disney's and/or Marvel's alleged copyrights in Spider-Man may be invalid and of SLMI's ownership rights in the Spider-Man works until the Fall of 2013, when SLMI 19

25 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 25 of 30 approached AMT regarding obtaining a license in the Spider-Man works. AMT, then, had no basis upon which to assert its Counterclaims until this time. Even if, in the exercise of due diligence, AMT would have learned of the Prior SLMI-Related Litigations and, correspondingly, SLMI' s ownership rights in Spider-Man and the invalid nature of Disney and Marvel's Copyrights when it first commenced production of Broadway: Now and Forever, it would not have learned of such rights until April of 2012 at the earliest. AMT therefore asserted its Counterclaims well within the three-year statute of limitations set forth in 17 U.S.C. 507(b). Moreover, according to widely accepted law, "a defendant who is not seeking any affirmative relief and who asserts a defense only to defeat plaintiff's claim is not barred by the Act's statute of limitations," as a "potential defendant is not required to seek at the earliest opportunity a declaration that a defense to a claim not yet brought is valid." Pritchett v. Pound, 473 F.3d 217, 220 (5th Cir. 2006); see also Estate of Hogarth v. Edgar Rice Burroughs, Inc., 342 F.3d 149, 164 (2d Cir. 2003) ("[e]ven if circumstances had existed when Watson-Guptill filed applications for registration in the 1970s that would have entitled ERB to seek a declaration of non-liability against a claim by Burne Hogarth, ERB would not have been obliged to seek such declaratory relief. Potential defendants are not required to seek at the earliest opportunity a declaration that a defense to a claim not yet brought is valid."). Here, AMT raised its Counterclaims solely in defense to Plaintiffs' claims that AMT's Broadway: Now and Forever production infringed upon such entities' alleged copyrights. Accordingly, AMT's Counterclaims should not be time barred. Finally, even if AMT's Counterclaims are time barred, its affirmative defenses should still be able to be asserted. See Estate of Hogarth, 342 F.3d at 164; Western Pacific R.R. Co., 352 U.S. at 72 ("To use the statute of limitations to cut off the consideration of a particular 20

26 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 26 of 30 defense in the case is quite foreign to the policy of preventing the commencement of stale litigation."). E. Plaintiffs Lack Standing To Challenge SLMI's License To AMT; SLMI Has The Capacity To License The Spider-Man Copyrights To AMT; AMT Should Not Be Precluded From Challenging Plaintiffs' Alleged Ownership In The Copyrights Disney and Marvel claim that AMT's Counterclaims, together with its affirmative defenses "[p]remised on AMT's purported license from SLMI" must fail as SLMI was incapable of issuing a license under Colorado law. Motion at However, Plaintiffs lack standing to challenge this contract and, in any event, SLMI was capable of issuing this license. It is generally accepted that a non-party to a contract lacks standing to challenge the validity thereof. See, e.g., Souders v. Bank of Am., 1:CV , 2012 U.S. Dist. LEXIS , at *24-*29 (M.D. Pa. Dec. 6, 2012) (plaintiff lacked standing to challenge assignment contract where she was neither a party to nor third-party beneficiary of such contract (citing Shuster v. Pa. Turnpike Commonwealth, 149 A.2d 447, 452 (1953), for the proposition that a third party to a contract lacks standing to argue a contract is invalid). Because Disney and Marvel are not parties to the SLMI License Agreement, they lack standing to challenge the same. In any event, the SLMI license is valid. As a dissolved corporation, SLMI was 5 able to, inter alia, "dispos[e] of its properties," "collect[] its assets" and "do[] every other act necessary to wind up and liquidate its affairs." Colo. Rev. Stat (2013). Here, SLMI's license is, in effect, a contract to collect SLMI's assets, including certain royalties, as well as an agreement disposing, in part, of SLMI's rights in the Spider-Man copyrights by exclusively licensing the same to AMT. Colorado law "allow[s a] plaintiff to enter into the contract for sale of its corporate assets, to pursue collection of the promissory note, and otherwise to enforce the parties' agreements." Awanderlust Travel, Inc. v. Kochevar, 21 P.3d 876, 878 (Colo. App. 5 It is unlikely that SLMI is still considered administratively dissolved, as it filed papers identifying a new, registered agent with the Colorado Secretary of State in March. Thus, Plaintiffs' arguments on this issue are moot 21

27 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 27 of ). As an exclusive copyright license is but another form of disposing of one's assets, SLMI had ample authority to enter into the license agreement at issue and the license is in effect. In any event, AMT's Second Counterclaim and its first through sixth affirmative defenses are not based on the license grant obtained from SLMI. See Amended Answer at 16-17, Rather, AMT's Second Counterclaim is for declaratory judgment that Disney / Marvel's copyrights are invalid as a matter of law, id. at 24, and AMT's affirmative defenses are for, inter alia, invalidity of Disney's and/or Marvel's copyrights. The only affirmative defense that touches upon the license is AMT's seventh affirmative defense, but AMT also claims an appropriate license from other entities, namely, ASCAP and BMI. Id. at 17. Thus, even if SLMI was unable to grant the license at issue and its license was void ab initio, this fact should not affect AMT's Second Counterclaim or its affirmative defenses challenging the validity of the copyrights asserted against it. F. AMT Should Not Be Precluded From Challenging The Validity Of Disney's And/Or Marvel's Alleged Copyrights In Spider-Man There is a real issue whether Disney and/or Marvel effectively own the copyrights in Spider-Man, and no court has ever adjudicated the same. While Disney and Marvel claim that the "Second Circuit has recently affirmed that Marvel has held the copyrights to these characters since Marvel commissioned them in the 1960s," Motion at 3-4, this is not so. The Second Circuit in its opinion in Marvel Characters, Inc. v. Kirby, 726 F.3d 119 (2d Cir. 2013), determined only that certain works created in part by Jack Kirby were presumed to be works made for hire to Marvel. 726 F.3d at 125, 143. Moreover, this opinion expressly did not include Spider-Man related works, as the case makes plain that Kirby did not work on such works. See id at 126 (quoting Stan Lee as saying, "I wanted to use Jack for everything, but I couldn't because he was just one guy." "So I said: All right, forget it, Jack. I will give [the Spider-Man strip] to somebody else." (bracketed portion in original)). 22

28 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 28 of 30 In addition, as noted above, none of the district courts that have opined on this matter in the Prior SLMI-Related Litigations have expressly concluded that Disney and/or Marvel own the copyrights in the Spider-Man character. This issue has never been decided. There is a strong chance that these entities do not own these rights, as Lee's assignment to Marvel in 1998 was effectively invalid given that Lee had previously assigned his rights in Spider-Man to SLMI. Amended Answer at Counterclaim n 5-8, 28. As Disney and Marvel effectively asserted the Spider-Man works against AMT, it is their burden to prove that they own valid copyrights in the same. Apparel Bus. Sys., LLC v. Tom James Co., No. 06-CV-1092, 2008 U.S. Dist. LEXIS 26313, at *30 (E.D. Pa. Mar. 31, 2008). At least one of the asserted copyrights was allegedly assigned to Marvel after being previously registered to a third party. See attached Exhibit B. "[G]iven that nothing in the registration certificate filed by [the] predecessor evidences [Marvel's] own right to claim through the original copyright claimant," Marvel has the burden of proving its chain of title in this work. 3 Nimmer on Copyright 12.11[C]. By precluding AMT from challenging Plaintiffs' alleged ownership rights in Spider-Man, the Court would be constructively granting Plaintiffs rights in these works and shifting the burden of proof regarding ownership to AlVIT. This is contrary to law. Finally, AMT notes that if Disney and/or Marvel were to assert their alleged copyrights in Spider-Man against any other third party in the future, such third party would not be precluded from arguing that Disney and Marvel lack copyright ownership in Spider-Man as a result of the 1998 transfer to SLMI. See, e.g., Bieg v. Hovnanian Enters., Inc., 157 F. Supp. 2d 475, (E.D. Pa. 2001) (allowing third party infringer, Hovnanian, to raise the invalidity of a transfer in copyright under Section 204(a) as a defense where the transferor and transferee are in disagreement as to whether the transfer took place). To preclude AMT from asserting this defense simply because it acquired a license from a transferee would be a waste of judicial 23

29 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 29 of 30 economy under the circumstances and would be utterly inequitable, as it would effectively allow Marvel and Disney to continue to attempt to exploit rights in works that they may not have. Under the circumstances, AMT should be allowed to bring its invalidity counterclaim and affirmative defenses even if the court ultimately finds that its ownership counterclaim and license-based affirmative defense are precluded. IV. CONCLUSION For the foregoing reasons, AMT Defendants hereby respectfully request that this Court DENY Disney's and Marvel's Motion in its entirety. Dated: March 11, 2014 Respectfully submitted, /s/ Melanie A. Miller Camille M. Miller Melanie A. Miller J. Trevor Cloak Cozen O'Connor 1900 Market Street Philadelphia, PA (215) (215) Attorneys for Defendants 24

30 Case 5:13-cv JLS Document 64 Filed 03/11/14 Page 30 of 30 CERTIFICATE OF SERVICE I, the undersigned, hereby certify that a true and correct copy of the forgoing was filed electronically through this Court's ECF System and is available for viewing and downloading from this Court's ECF System. I further certify that an electronic copy of the foregoing was served upon all counsel of record through this Court's ECF System at the address listed in the Court's database as follows: WILSON M. BROWN, III wilson.brown@dbr.com MICHAEL METZ-TOPODAS michael.metz-topodas@dbr.com TONIA ANN PATTERSON tonia.patterson@dbr.com JAMES W. QUINN james.quinn@weil.com RANDI W. SINGER randi.singer@weil.com, jessica.costa@weil.com, Reed.Collins@weil.com, Sabrina.Perelman@weil.com, MCO.ECF@weil.com R. BRUCE RICH bruce.rich@weil.com DAVID E. LANDAU dlandau@duanemorris.com Dated: March 11, 2014 Vs/ Melanie A. Miller Melanie A. Miller

31 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 1 of 63 EXHIBIT A

32 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 2 of 63 DISNEY ENTERPRISES, INC., et al., UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA VS. Plaintiffs, Case No: 5:13-cv (JSL) ENTERTAINMENT THEATRE GROUP d/b/a AMERICAN MUSIC THEATRE; JAMES D. MARTIN; FREDERICK W. STEUDLER, JR.; and DWIGHT H. BRUBAKER, STAN LEE MEDIA, INC., Defendants, and Defendant / Intervenor. ENTERTAINMENT THEATRE GROUP d/b/a AMERICAN MUSIC THEATRE, STAN LEE MEDIA, INC. -against- DISNEY ENTERPRISES, INC.; and MARVEL CHARACTERS, INC., Counterclaim-Plaintiff, and Counterclaim-Plaintiff/Intervenor, Counterclaim-Defendants. Case No: 5:13-cv (JSL) DECLARATION OF MELANIE A. MILLER IN SUPPORT OF DEFENDANTS' OPPOSITION IN RESPONSE TO PLAINTIFFS' MOTION TO DISMISS AMENDED COUNTERCLAIMS AND INTERVENOR COMPLAINT AND TO STRIKE AMENDED AFFIRMATIVE DEFENSES I, Melanie A. Miller, declare under penalty of perjury as follows: 1. I am a Member at Cozen O'Connor and I am admitted to practice in the Commonwealth of Pennsylvania, including before this Court. Cozen O'Connor represents

33 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 3 of 63 Defendants James D. Martin, Frederick W. Steudler, Jr. and Dwight H. Brubaker, as well as Defendant / Counterclaim-Plaintiff Entertainment Theatre Group d/b/a American Music Theatre, in connection with, inter alia, this litigation. 2. Attached hereto as Exhibit 1 is a true and correct copy of Verified Amended Shareholders Derivative Complaint filed by plaintiffs Jose Abadin and Christopher Belland in connection with Abadin et al. v. Marvel Entertainment Inc. et al., 09 Civ (PAC) before the United States District Court for the Southern District of New York, filed on April 29, Attached hereto as Exhibit 2 is a true and correct copy of The Walt Disney Company's Reply Memorandum of Law in Further Support of its Motion to Dismiss the Amended Complaint filed by defendant The Walt Disney Company in connection with Stan Lee Media, Inc. v. The Walt Disney Company, 1:12-cv WJM-KMT before the United States District Court for the District of Colorado, filed February 25, I declare under penalty of perjury that the foregoing facts are true and correct. Melanie A. Miller Signed this / 4'1 day of, 2014 in Philadelphia, PA. 2

34 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 4 of 63 EXHIBIT 1

35 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 5 of 63 ::Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 1 of 46 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK JOSE ABAD1N and CHRISTOPHER BELLAND, derivatively on behalf of STAN LEE MEDIA, INC., a Colorado Corporation, 09 Civ (PAC) -against- Plaintiffs, VERIFIED AMENDED SHAREHOLDERS DERIVATIVE COMPLAINT MARVEL ENTERTAINMENT, INC., a Delaware Corporation, MARVEL ENTERPRISES, INC., STAN LEE, and ARTHUR M. LIEBERMAN, Defendants. JURY TRIAL DEMANDED Plaintiffs Jose Abadin and Christopher Belland ("Plaintiffs"), derivatively on behalf of Stan Lee Media, Inc. ("SLM"), by its attorneys, Eaton & Van Winkle LLP, for its Verified Amended Complaint (the "Amended Complaint") against Defendants, hereby allege as follows: JURISDICTION AND VENUE 1. Plaintiffs bring this action as a derivative action pursuant to Rule 23.1 of the Federal Rules of Civil Procedure on behalf of SLM and all other shareholders of SLM that are similarly situated and SLM seeks a declaratory judgment, pursuant to 28 U.S.C. 3. This Court has jurisdiction over the copyright infringement claims pursuant to the Copyright Act of 1976, 17 U.S.C. 101 et seq., the Lanham Act claims pursuant to 15 U.S.C. 1121, 28 U.S.C and 28

36 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 6 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 2 of 46 U.S.C. 1338(a), and all other claims by virtue of 28 U.S.C. 1338(b) and pendent jurisdiction. 4. Venue in this District is proper under 28 U.S.C and 1391(b) and (c) because a substantial part of the activities and events occurred within this district and the defendants are conducting business, have principal office locations and/or are residents within this district. PARTIES 5. Plaintiff Christopher Belland is a resident of Florida and Plaintiff Jose Abadin is a resident of California. 6. SLM is a corporation organized and existing under the laws of the State of Colorado. 7. SLM is the successor in interest to Stan Lee Media, Inc., a Delaware Corporation, which was the successor in interest to Stan Lee Entertainment, Inc., a Delaware Corporation which was established on or about October 13, Defendant, Marvel Entertainment, Inc., is a successor entity of and/or formerly known as Marvel Enterprises, Inc., and is a corporation organized and existing under the laws of the State of Delaware, and at all times material and relevant hereto has regularly and continually conducted business and had a principal office located within the Southern District of New York. 9. Marvel Enterprises, Inc. changed its name to Marvel Entertainment, Inc. in 2005 but continues to do business under both names, and is hereinafter described as "Marvel." 2

37 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 7 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 3 of Defendant Stan Lee ("Lee") is a resident of the State of California. 11. Lee regularly conducts business within the Southern District of New York, and did so at the time the events in this Amended Complaint occurred, and the claims against him arose out of such business. 12. Defendant Arthur M. Lieberman ("Lieberman") is a resident of New York, and has a principal place of business in New York, New York, located within the Southern District of New York. FEDERAL RULE 23.1 PLEADING REQUIREMENTS 13. Plaintiff Jose Abadin has continuously been a shareholder of SLM since on or about December 1999, which includes the time of the transactions complained of in this Amended Complaint, to and including the date hereof, and currently holds 29,386 shares of common stock of SLM for which he paid more than $200, Plaintiff Christopher Belland has continuously been a shareholder of SLM since on or about November 17, 1999, which includes the time of the transactions complained of in this Amended Complaint, to and including the date hereof, and is currently the record holder of 330 shares of common stock of SLM as custodian for his minor son Wesley Belland and is also the holder, by assignment, of 4.7 million shares of common stock of SLM. 1 1 The assignments are from P.F.P Family Holdings, L.P. of 2,668,300 shares; Continental Entities, Inc. of 705,500 shares; Celebrity Enterprises, Inc. of 629,633 shares; Hollywood Holdings Corp. of 416,306 shares; Global Brand Holdings, Inc. of 82,500 shares; The Medici Group, LLC of 82,500 shares; Global Language Solutions, Inc. of 55,000 shares; World Network, Inc. of 42,350 shares; and Excelsior Productions, Inc. of 26,500 shares. 3

38 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 8 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 4 of This action is not a collusive one to confer jurisdiction that the Court would otherwise lack. 16. A demand upon SLM's board of directors to obtain the corporate action desired is impossible and would thereby be futile because, at the time the within lawsuit was commenced, SLM had no duly constituted board of directors. 17. Prior repeated efforts to have a board of directors for SLM elected and seated so that SLM could, inter alia, resume business (such business to include the bringing of the within claims against Lee and other defendants) have been successfully thwarted by Lee, as established by the following facts: (a) A Colorado State Court proceeding was first commenced by Plaintiff Christopher Belland in 2007 in the District Court for the City and County of Denver (Belland v. SLM et al., Case No. 07 CV 7536) (the "Colorado State Court '07 Proceeding") in order to hold a court-ordered shareholders' meeting so that SLM could become reinstated under Colorado law, elect directors and resume business; (b) In the Colorado State Court '07 Proceeding, a Special Master was court-appointed to conduct the shareholder's' meeting in accordance with Colorado law; (c) After the quorum number of SLM shareholders was reached to conduct the shareholders' meeting and directors 4

39 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 9 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 5 of 46 were elected, Lee made a successful motion in the District Court which prevented the seating of the elected directors; (d) A second Colorado State Court procepding was commenced in 2008 (P.F.P. Family Holdings, L.P. v. SLM et al., Case No. 08 CV 8584) (the "Colorado State Court '08 Proceeding") for the same purpose, namely to hold a shareholders' meeting so that SLM could become reinstated, elect directors and resume business, such business to include the bringing of the within claims against Lee and other defendants; (e) A notice of shareholders' meeting (and form of proxy appointment) was sent by the same Special Master to a list of record and beneficial shareholders of SLM prepared by the Special Master, (0 After the quorum number of SLM shareholders was reached to conduct the shareholders' meeting, Lee, as the sole and exclusive intervenor in the Colorado State Court '08 Proceeding, frustrated the attempt to reach a quorum by raising various objections to the sufficiency of certain proxy appointments issued by SLM shareholders in connection with the noticed shareholders' meeting; (g) On the basis of Lee's objections, the Special Master disallowed certain proxies which resulted in a finding by the Special Master that the necessary quorum of SLM shareholders for 5

40 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 10 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 6 of 46 a shareholders' meeting had not been attained and/or was not present; and (h) The Special Master's report, finding that a quorum of SLM shareholders was not present, was adopted and affirmed by Order of the Colorado State Court dated March 17, No formal demand has been made on the shareholders of SLM by Plaintiffs to commence this litigation, for such a demand would have been futile because SLM shareholders cannot achieve a quorum in order to authorize such a suit, by reason of the fact that: (a) SLM shareholders have been unable to seat a Board of Directors to authorize such actions notwithstanding two annual meetings called by Plaintiffs acting on behalf of all shareholders since 2007; (b) After the Colorado Court supervised the election of a Board and then seated a duly elected Board in 2007, which Lee was unable to thwart, he made a collateral attack on the Board before a new judge and managed to have that Board unseated without a hearing; and (c) When Plaintiffs obtained another court ordered and supervised annual meeting for an election in December 2008, Lee frustrated the 2008 meeting with technical objections to certain proxies presented and thwarted the quorum by successfully 6

41 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 11 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 7 of 46 contesting some of the votes present to deny the participating shareholders a quorum. 19. No formal demand has been made on each shareholder of SLM by Plaintiffs to participate in this litigation because, as found by the Special Master in the Colorado State Court '07 Proceeding, the shareholders. have already been apprised that "Mr. Belland is attempting to recover what he believes to be assets of SLMI through various lawsuits against Mr. Lee and his affiliates. If Mr. BeIland's slate [of directors] is not elected, the SLMI shareholders likely will have nothing because no one else appears to be pursuing the lawsuits." Report of Special Master Cathy S. Krendl, Esq., dated February 2, 2008, rendered in Colorado State Court '07 Proceeding, at No formal demand has been made on each shareholder of SLM by Plaintiffs to participate in this litigation because the shareholders have already been apprised, in the notice of shareholders' meeting sent by the Special Master in 2008 in connection with the Colorado State Court '08 Proceeding, that Plaintiffs Jose Abadin and Christopher Belland have been and are attempting to recover assets of SLM through lawsuits against Lee and his affiliates necessitated by Lee's alleged improper actions and transfers. 21. Despite the fact that the shareholders have already been specifically apprised, in the context of both the Colorado State Court '07 Proceeding and the Colorado State Court '08 Proceeding, that Plaintiffs have been attempting to recover assets of SLM through various lawsuits against Mr. 7

42 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 12 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 8 of 46 Lee and his affiliates, no shareholders other than Plaintiffs have volunteered or elected to participate in the within lawsuit. 22. Upon information and belief, Lee will continue to litigate in Colorado, New York, California and elsewhere to try to try to thwart the shareholders from successfully seating a Board of Directors that will authorize the pursuit of SLM's claims against him and Marvel. 23. Plaintiffs will fairly and adequately represent the best interests of the shareholders" of SLM similarly situated and SLM in enforcing herein the rights of SLM, having been the only active shareholders since SLM was dismissed from Chapter 11 Debtor in Possession protection to protect all shareholders through litigation in New York, California and Colorado. THE NATURE OF THIS ACTION 24. This is an action brought by Plaintiffs, derivatively on behalf of SLM, against all defendants regarding certain property of SLM, including (but not limited to) assets, claims, copyright and trademark claims and rights, and other intellectual property rights and interests, including a right, title and interest to the use of the name and trademark of "Marvel" and the likeness, name and image of Stan Lee, to obtain an accounting and award of damages for the unlawful and unauthorized use of SLM's property, and to obtain a judgment for damages as against Lee for breach of contract. 25. Upon information and belief, Marvel and Lee have for nearly 20 years been developing, producing, marketing and selling characters in various media which were initially created by Lee, Lee's interest in which has been 8

43 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 13 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 9 of 46 assigned and belongs to SLM, including all of his interest in the name "Marvel." Most of Marvel's financial success derives from characters initially created by Lee that are the subject of this lawsuit. 26. Upon information and belief, Marvel's net sales from its exploitation of various world famous characters created by Lee, from 2003 to the present alone, now exceed $2,000,000,000 and in the future will exceed a multiple of that number. These sales include a share in the profits from monies earned from "Marvel" movies ("X-Men," "Spider Man 1, 2 and 3", "The Incredible Hulk," "Fantastic Four," "Iron Man" and "Daredevil"). The measure of SLM's damages includes the value of all of Lee's interest in the exploitation of these characters, as well as a share in the profits from additional assets Upon information and belief, Marvel, along with Lieberman, knowing of an assignment from Lee to SLM dated October 15, 1998, and knowing that by that assignment Lee transferred, among other things, all his interest in the Marvel characters and his interest in the name and trademark "Marvel" to SLM, decided to ignore that assignment. 28. Upon information and belief, Marvel and Lieberman conspired to and have otherwise engaged in tortious interference with Lee's assignment to SLM dated October 15, 1998 and aided and abetted Lee in breaching his fiduciary duty of care and loyalty owed to SLM. FACTS COMMON TO ALL CAUSES OF ACTION 29. Upon information and belief, from 1941 through approximately November 9, 1942, Lee was employed by Timely Comics. 9

44 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 14 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 10 of Upon information and belief, from approximately November 9, 1942 until on or about September 29, 1945, Lee was on active duty in the United States Army. 31. Upon information and belief, during the time that Lee was on active duty with the United States Army, he wrote scripts on a freelance basis for comic books for Timely Comics and was paid by Timely Comics on a per page basis for said scripts. 32. Upon information and belief, from on or about November 9, 1945 through the autumn of 1968, Lee was employed by Timely Comics Upon information and belief, throughout the years of 1945 through the autumn of 1968, Timely Comics operated and distributed its comic books under several names, including "Timely Comics", "Atlas Comics" and.ultimately "Marvel Comics" (collectively referred to herein as "Timely/Atlas/Marvel"). 34. Upon information and belief, between 1945 and the autumn of 1968, a span of approximately twenty-three (23) years, Lee did not have a written contract of any kind with Timely/Atlas/Marvel. 35. Upon information and belief, between 1945 and the autumn of 1968, Lee was employed in the capacity as an "editor-in-chief" and "art director," but was not employed as a writer of Timely/Atlas/Marvel. 36. Upon information and belief, between 1945 and the autumn of 1968, Lee's employment and compensation for his work as "editor-in-chief" 10

45 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 15 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 11 of 46 and "art director" did not include any duties of conceiving of, creating or developing new characters. 37. Upon information and belief, Lee, while employed by Timely/Atlas/Marvel, engaged in freelance writing and creative work for Marvel and others outside of work, for which he was paid separately. 38. Upon information and belief, Lee's freelance writing and creative work during the course of his employment at Timely/Atlas/Marvel included the conception, creation and development of new comic book characters that were subsequently reduced to pages published in comic books with the assistance of artists supervised by Lee. 39. Upon information and belief, all of Lee's conceptions, creations and development of new characters were performed by him during his spare time and were not within the scope.of his salaried positions. 40. Upon information and belief, Timely/Atlas/Marvel compensated Lee with both a salary for his work in Timely/Atlas/Marvel's office as Editor and Art Director, and with a separate income for his interest in each of the characters he conceived, created and developed, which were subsequently copyrighted and trademarked by Marvel. 41. Upon information and belief, Lee's characters were not "works for hire" by Lee for any person or entity. 42. Upon information and belief, Lee's characters were not commissioned works for any person or entity. 43. Upon information and belief, Lee's characters include: 11

46 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 16 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 12 of 46 (1) Spider-Man; (2) The Fantastic Four; (3) Mr. Fantastic; (4) The Invisible Woman; (5) Human Torch, a/k/a Johnny Storm; (6) The Thing; (7) The Incredible Hulk; (8) X-Men; (9) Daredevil; (10) Silver Surfer; (11) Ant-Man, a/k/a Yellowjacket, Giant-Man, Goliath; (12) Iron Man; (13) Doctor Strange; (14) The Avengers; (15) Thor; (16) Doctor Doom; (17) Magneto; (18) Colonel Nicholas Joseph "Nick" Fury; (19) Galactus; (20) Green Goblin; (21) Doctor Octopus; (22) The Vulture; (23) Mysterio; (24) John Jonah Jameson, a/k/a J. Jonah Jameson, J.J., and J.J.J; (25) The Lizard; (26) The Rhino; (27). The Shocker; (28) Mary Jane, a/k/a Mary Jane Watson-Parker; (29) Gwen Stacy; (30) The Sandman; (31) Electro; (32) Kraven the Hunter; (33) MACH-IV, a/k/a Beetle, MACH-1, 2 and 3; (34) The Chameleon; (35) Boomerang; (36) Blacklash a/k/a Whiplash; (37) Kingpin; (38) Baron Wolfgang von Strucker; (39) Mentallo; (40) Fixer; (41) Hawkeye; (42) Wonderman; (43) The Wasp; (44) Scarlet Witch; (45) Quicksilver; 12

47 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 17 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 13 of 46 (46) Odin; (47) The Absorbing Man; (48) Mangog; (49) Ulik; (50) Fandral, a/k/a Fandral the Dashing; (51) Hogan, a/k/a Hogun the Grim; (52) Volstagg; (53) Balder the Brave; (54) Skurge, The Executioner; (55) Enchantress; (56) The Mandarin; (57) Power Man, a/k/a Atlas, Smuggler, Goliath, Erik Josten; (58) Black Bolt; (59) Medusa; (60) Karnak; (61) Gorgan; (62) Triton; (63) Crystal; (64) Lockjaw; (65) Maximus, a/k/a Maximus the Mad; (66) The Inhumans; (67) The Skrulls; (68) Captain Marvel, a/k/a Captain Mar-vell; (69) Toad; (70) Mastermind; (71) Blob; (72) Cyclops; (73) Marvel Girl, a/k/a Jean Grey, Phoenix; (74) Iceman; (75) Angel, a/k/a Archangel, Warren Kenneth Worthington HI; and (76) Beast. 44. Upon information and belief, after the autumn of 1968, Lee worked for and was employed by a number of different companies, including Perfect Film and Chemical Corporation (specifically, Lee was employed by its subsidiary, Magazine Management Co.), Cadence Industries (which changed the name of Magazine Management Co. to Marvel Comics Group), New World Entertainment, Marvel Entertainment Group, Inc., Marvel Enterprises, Inc., and Marvel Entertainment, Inc. 13

48 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 18 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 14 of Marvel Entertainment, Inc. is the successor in interest to Marvel Entertainment Group, Inc. 46. Upon information and belief, from the date that Marvel Entertainment Group, Inc. became Lee's employer until approximately August of 1998, pursuant to a written employment agreement, Marvel paid Lee both a salary for Lee's exclusive services and extra compensation for Marvel's right to use, develop and exploit Lee's interest in the characters he had previously conceived, created and developed. 47. On or about August of 1998, Marvel Entertainment Group, Inc. terminated Lee's employment agreement, but such termination did not extinguish Lee's rights and interest in the characters he had previously conceived, created and developed. 48. Upon information and belief, Marvel has recognized Lee's rights and interest in the characters he had previously conceived, created and developed and Marvel has compensated Lee for Marvel's use and exploitation of such characters. 49. On or about October 15, 1998, Lee entered into an agreement with Stan Lee Entertainment Inc., the predecessor to SLM, concerning both his employment and his assignment, then and in the future, of his "Property" and "Rights", as such terms are described and defined therein. That agreement is hereinafter referred to as the "Lee-SLM Agreement,"and the capitalized terms "Property" and "Rights" as hereinafter used shall have the meanings ascribed to them in Paragraph 4(a) of the Lee-SLM Agreement. 14

49 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 19 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 15 of The Lee-SLM Agreement states, in pertinent part, as follows: 4(a) I [Stan Lee] assign, convey and grant to [Stan Lee Entertainment, Inc.] forever, all right, title and interest I may have or control, now or in the future, in the following: Any and all ideas, names, titles, characters, symbols, logos, designs, likenesses, visual representations, artwork, stories, plots, scripts, episodes, literary property, and the conceptual universe related thereto, including my name and likeness (the "Property") which will or have been in whole or part disclosed in writing to, published, merchandised, advertised, and/or licensed by [Stan Lee Entertainment, Inc.], its affiliates and successors in interest and licensees (which by agreement inures to [Stan Lee Entertainment, Inc.] benefit) or any of them and any copyrights, trademarks, statutory rights, common law, goodwill, moral rights and any other rights whatsoever in the Property in any and all media and/or fields, including all rights to renewal or extensions of copyright amid make applications or institute suits therefore (the "Rights"). [emphasis added] 4(c) Subject to a material breach of this agreement, I will never file with the U.S. Copyright or Patent and Trademark Office or any governmental or public agency, and will never assert or assist others in asserting on my behalf or in claiming rights through me, any claim to ownership or the Rights in the Property, or in making any objection to [Stan Lee Entertainment, Inc.'s] complete and unrestricted right to use and exploit said Property or Rights in any form, manner or medium [Stan Lee Entertainment, Inc.] may desire. 51. Lee had retained his rights and interest in all his characters, which were encompassed within the Property and Rights and other interests of Lee that were assigned to Stan Lee Entertainment Inc. in the Lee-SLM Agreement. 52. In return for Lee's all encompassing assignment made to Stan Lee Entertainment Inc. by reason of the Lee-SLM Agreement, including Lee's name and likeness, Stan Lee Entertainment, Inc. conveyed to Lee 51% of the shares in the companies, agreed to pay and did, in fact, pay to Lee 15

50 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 20 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 16 of 46 approximately $250, per year in salary, bonuses and other compensation, and also provided certain other items of consideration as set forth therein, including over 3.5 million shares in Stan Lee Media stock, in addition to options and other compensation. 53. Lee also became Chairman of the Board of Directors and Chief Creative Officer of Stan Lee Entertainment, Inc. 54. The Lee-SLM Agreement required that Lee's services be exclusive to Stan Lee Entertainment, Inc. with only one stated exception: those part-time services provided under a new lifetime non-exclusive agreement with Marvel Enterprises, Inc., which could require no more than an average of hours per week on its behalf. 55. The Lee-SLM Agreement provided that Stan Lee Entertainment, Inc. was entitled to the benefits and proceeds of all other services performed and intellectual property then held or to be created by Lee both directly for Stan Lee Entertainment, Inc. and for any other entity. 56. At the time the Lee-SLM Agreement was executed, Lee had full authority and right to convey the Property and Rights to Stan Lee Entertainment, Inc. 57. At the time the Lee-SLM Agreement was executed, Lee was not a party to any contract with any other person or entity with regard to any of the Property or Rights. 16

51 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 21 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 17 of The Lee-SLM Agreement expressly required that Lee obtain the written consent of Stan Lee Entertainment, Inc. prior to performing any services of any kind for any other entity. 59. SLM is currently the rightful owner and holder of the Property and Rights assigned by Lee to Stan Lee Entertainment, Inc. pursuant to the Lee- SLM Agreement, as SLM is the ultimate successor in interest to Stan Lee Entertainment, Inc. 60. At no point in time has Stan Lee Entertainment, Inc. or SLM ever provided to Lee any form of written consent for him to perform any services of any kind for any other entity. 61. Upon information and belief, Lee continues to own and retain SLM shares that were issued to him (either individually and/or through the Lee Family Trust) and has never tendered them back to SLM. 62. The Lee-SLM Agreement was ratified by Lee over a year after it was executed, on or about October 19, 1999, in an Amendment. The Amendment contained express representations by Lee that the Amendment was being signed after consultation with his financial consultants and legal counsel. 63. Except as provided in the immediately preceding paragraph, the Lee-SLM Agreement has never been modified and remains in full force and effect. 64. Upon information and belief, Lieberman and Marvel knew about the creation, existence and effect of the Lee-SLM Agreement and all defendants knew that Lee was no longer free to dispose of the Property and 17

52 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 22 of 63 Case 1:09-cv PAC Document 12 Filed 04/29109 Page 18 of 46 Rights, including his interest in the Marvel characters, since he had already done so by virtue of the Lee-SLM Agreement. 65. On or about November 17, 1998, Lee, in exchange for present and future consideration, and Marvel executed an agreement that purported to convey to Marvel the very "Property" and "Rights" that the Lee-SLM Agreement transferred to Stan Lee Entertainment, Inc. (hereinafter called the "Lee-Marvel Agreement"). 66. Upon information and belief, Lieberman represented Lee in his negotiation of the Lee-Marvel Agreement and supervised Lee's execution of the Lee-Marvel Agreement. 67. Upon information and belief, thereafter, Marvel paid monies to Lee that rightfully belonged to SLM and its shareholders and Lee used his fiduciary control position as Chairman and major shareholder of SLM to conceal from SLM the nature and extent of his breaches of fiduciary duty of care and loyalty. 68. Upon information and belief, Lee was aided and abetted in his concealment by Lieberman, who became a partner or member with Lee in one or more business entities, including POW! Entertainment LLC, and a shareholder in SLM, and served as SLM's intellectual property lawyer in respect of various copyright and trademark registrations and also represented Lee in his dealings and negotiations with SLM. 69. Since October 15, 1998, Lee, while employed by SLM, created, as works for hire, certain characters, copyrights and trademarks and 18

53 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 23 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 19 of 46 intellectual properties, which, by the express terms of the Lee-SLM Agreement, comprise a portion of the Property and Rights in which Lee had a financial interest and an intellectual property interest, and which inured to the benefit and ownership of SLM. They include, but are not limited to, the following: (a) Stanlee.NET web site and portal (b) The Accuser (c) The Drifter (d) Stan's Evil Clone (e) Chrvsallis (f) The Stone Giant (g) Battle School Tranquility (h) Lee Schultz Partnership (i) DC Comics/Stan Lee Project (j) Scuzzle Project and Scuzzle Design Project 70. Pursuant to the terms of the Lee-SLM Agreement, SLM was entitled to all assets and revenues from all services performed by Lee, with the exception only of compensation from Marvel Enterprises, Inc. to Lee for those services of hours per week, from November 1998 forward; To the extent that Lee obtained any other compensation for any services or other things beyond the hours per week of work for Marvel Enterprises, Inc., SLM was entitled to 100% of such income and an interest in any after-arising Property or Rights pursuant to the express provisions of the Lee-SLM Agreement. 71. Upon information and belief, Lee receives royalties directly from publishers and others on a variety of projects and publications, for which he has participated as a writer, producer and/or in some other capacity or affiliation. The Lee-SLM Agreement assigned all such royalties to SLM generated by such projects as are encompassed within the Property and Rights assigned to SLM. 19

54 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 24 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 20 of Upon information and belief, Lee has, before and after the Lee-SLM Agreement, performed work for companies, including, but not limited to, Marvel Characters B.V., QED Productions, LLC and POW! Entertainment, Inc., has created additional Property and Rights and other intellectual property interests, and has obtained payment for services and the use of his name, likeness and slogans and for his interest in the name and trademark of Marvel, and other things, to all of which SLM is entitled. 73. Upon information and belief, Lee purported to assign certain of the Property and Rights to QED Productions, LLC and/or POW! Entertainment, Inc, entities which Lee owns or over which he exerts dominion and control. 74. The Lee-SLM Agreement was recorded on behalf of SLM on or about November 28, 2006 with the United States Copyright Office. 75. Upon information and belief, the Lee-Marvel Agreement has not been recorded with the United States Copyright Office. 76. Upon information and belief, at all times material and relevant hereto, all of the defendants had actual and/or constructive knowledge of the continuing existence, validity and enforceability of the Lee-SLM Agreement. 77. At all times material and relevant hereto, SLM, as well as its predecessors in interest, did all things required of them pursuant to the Lee-SLM Agreement in order to retain exclusive ownership of the Property and Rights. 78. Upon information and belief, Marvel since November 1998 and up until the present time has paid or promised to pay third parties and Stan 20

55 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 25 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 21 of 46 Lee, and has obligated itself to pay Joan Lee and Joan C. Lee monies, rather than SLM. 79. Upon information and belief, defendants thereafter continued a course of action which diverted funds properly owed to SLM pursuant to the Lee-SLM Agreernent, including keeping secret settlement terms and a settlement document dated on or about April 2005 in the United States District Court for the Southern District of New York in an action entitled Stan Lee v. Marvel Entertainment, 02 CV 8945 (the "Lee v. Marvel Suit"), an action then pending before Judge Robert Sweet, in which Lee had alleged entitlement to profit sharing pursuant to the Lee-Marvel Agreement, for which Marvel was given a conditional assignment of "Lee's rights in his many world famous and hugely popular characters". Lee v. Marvel Suit, Complaint dated November 12, 2002, Para Upon information and belief, a settlement was made between Lee and Marvel on Lee's claims and those settlement terms were sealed at the request of Marvel and Lee, for they knew, among other things, that the full terms of the settlement would show that Marvel acknowledged SLM's Property and Rights, and that Lee intentionally breached the Lee-SLM Agreement and Marvel tortiously interfered with the Lee-SLM Agreement. 81. Upon information and belief, if all the sealed documents were released, along with all the other details leading to the settlement and all details of that litigation, they would not only reveal information regarding Lee's breaches of duties owed, but the terms of the settlement would show that 21

56 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 26 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 22 of 46 defendants have previously taken positions, and presently take positions, that contradict each other. 82. Upon information and belief, those sealed documents would also prove that Marvel has always recognized Lee's rights and interest in Marvel characters, as well as his intellectual property interests in the Marvel name and trademark. 83. In violation of SLM's ownership rights to the Property and Rights, the defendants have used, marketed, licensed, merchandised, promoted, advertised and otherwise exploited the Property and Rights for their own financial benefit, and without the participation, authority and consent of SLM. 84. In violation of SLM's ownership of the Property and Rights, the defendants have not paid to SLM the income, proceeds and profits from defendants' unauthorized use, marketing, licensing, merchandising, promotion, advertising and exploitation of the Property and Rights. 85. As the defendants have received income, proceeds and profits from the defendants' use, marketing, licensing, merchandising, promotion, advertising and exploitation of the Property and Rights, the defendants have a duty to account to and pay to SLM. 86. The defendants have utilized Stan Lee's name, likeness, persona, and signature slogans, which they are not entitled to utilize for any purpose because they are encompassed within the Property and Rights Lee assigned to SLM. 22

57 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 27 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 23 of Defendants have attempted to use Stan Lee's interest in the Marvel name and trademark, which are encompassed within the Property and Rights Lee assigned to SLM, while failing to account to SLM. COUNT I: COPYRIGHT INFRINGEMENT; UNFAIR COMPETITION; AND DECLARATORY JUDGMENT RELIEF jas Against Lee] 88. SLM repeats and realleges each and every allegation contained in paragraphs 1 through 87 above as if fully set forth herein. 89. Upon information and belief, Lee, a United States citizen, is the original creator and author of various works. law. 90. Lee's original works are copyrightable under United States 91. Upon information and belief, original works of Lee have been registered with the United States Copyright Office in accordance with the Lee- SLM Agreement and the Copyright Act and Lee (or entities owned by him or over which he exercises dominion and control) has received certificates of registration for such original works including, but not limited to: (a) Title: Accuser Artwork i. Authorship on application: SLM ii. Registrant: QED Productions, LLC iii. Registration No: VA iv. Date of Registration: January 8, 2007 (b) (c) Title: Accuser webisodes i. Authorship on application: SLM ii. Registrant: QED Productions, LLC iii. Registration No: PA iv. Date of Registration: January 8, 2007 Title: Drifter artwork I. Authorship on application: SLM 23

58 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 28 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 24 of 46 II. Registrant: QED Productions, LLC iii. Registration No: VA iv. Date of Registration: January 8, 2007 (d) Title: Stan's evil clone webisodes i. Authorship on application: SLM ii. Registrant: QED Productions, LLC iii. Registration No: PA iv. Date of Registration: January 8, By reason of the Lee-SLM Agreement, SLM is the valid assignee of the copyrights to all original works of Lee, including but not limited to those set forth in the immediately preceding paragraph relating to the Drifter, the Accuser and Stan's evil clone. 93. The Lee-SLM Agreement, which is the instrument of transfer of the original works of Lee to SLM, has been recorded with the United States Copyright Office in accordance with the Copyright Act. 94. On or about July 31, 2006, Lee effected the filing of an assignment of copyright with the United States Copyright Office purporting to assign SLM's copyrights in the Drifter, the Accuser and Stan's evil clone to QED Productions, LLC. 95. The Lee-SLM Agreement remains in all respects valid, proper, existing, executory and enforceable. 96. The Lee-SLM Agreement predates and supersedes any purported assignment of rights to QED Productions, LLC and, in any event, any purported assignment of rights to QED Productions, LLC was unauthorized and unapproved. 24

59 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 29 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 25 of Lee had actual, constructive and/or inquiry notice of the existence of the Lee-SLM Agreement as of the date of its execution. 98. QED Productions, LLC had actual, constructive and/or inquiry notice of the existence of the Lee-SLM Agreement, and knowing of facts sufficient to put it on notice of inquiry into the possibility that there might be another assignment superior to its assignment, was not a bona fide purchaser, in good faith, in respect of any purported assignment of rights and properties. 99. At all times material and relevant hereto, SLM, as well as its predecessors in interest, did all things required of it pursuant to the Lee-SLM Agreement in order to retain ownership as assignee of Lee's rights in his original works By the Decision and Order of the Hon. Stephen V. Wilson, District Judge for the U. S. District Court for the Central District of California (CV ) ("Judge Wilson's Decision"), dated January 20, 2009, in an action brought by Lee, QED Productions, LLC and POW! Entertainment, Inc., Judge Wilson found that QED Productions, Inc. never acquired any assets from SLM, such assets necessarily including copyrights in the Drifter, the Accuser and Stan's evil clone From and including 1999, Lee has infringed and intends to infringe SLM's copyrights in Lee's original works by certain acts, including but not limited to copying, developing, exhibiting, licensing, pursuing syndication, distributing. or otherwise exploiting such works as the Drifter, the Accuser and Stan's evil clone, in such media as webisodes, macromedia flash-based 25

60 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 30 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 26 of 46 interactive games, paper-based medium calendars, trading cards, envelopes, greeting cards, and developing a television script The acts of Lee were performed without the agreement or consent of SLM, and said acts constitute acts of copyright infringement under U.S.C. Title Lee continues to infringe the aforementioned copyrights and further has engaged in unfair trade practices and unfair competition in connection with his infringing acts, thereby causing irreparable damage Based upon the foregoing, SLM seeks judgment declaring it the copyright owner of such characters as the Drifter, the Accuser and Stan's evil clone and demands that Lee account for and pay as damages all profits and advantages gained from unfair trade practices, unfair competition, and infringing SLM's copyrights (but no less than the statutory minimum) for a period of not less than three years prior to the commencement of this lawsuit. COUNT II: VIOLATION OF SECTION 43(a) LANHAM ACT [As Against Lee and Marvell 105. SLM repeats and realleges each and every allegation contained in paragraph 1 through 104 above as if fully set forth herein SLM is the assignee of Lee, pursuant to the Lee-SLM Agreement, of any and all of Lee's creations and characters, Sian Lee's name, likeness, signature, symbols, logos, designs, and visual representations, as well as any trademarks including Stan Lee's interest, if any, in the Marvel trademark, and the trademarks STAN LEE PRESENTS (which was registered in the U.S Patent and Trademark Office ("USPTO") on December 18, 2007 [Reg. No. 26

61 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 31 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 27 of 46 3,357,243]), The Drifter (which was registered in the USPTO on December 23, 2008 [Reg. No. 3,553,108]), Excelsiorl (which was registered in the USPTO on September 30, 2008 [Reg. No. pending]), Accuser (which was registered in the USPTO on December 23, 2008 [Reg. No. 3,552,112]) As held in Judge Wilson's Decision, Lee, QED Productions, Inc., and POW! Entertainment, Inc. never acquired any assets from SLM, such assets necessarily including trademarks in STAN LEE PRESENTS, The Drifter, Excelsior!, and Accuser Neither Lee nor Marvel has any right of any kind to use the name, likeness, signature, symbols, logos, designs, and visual representations of Stan Lee or any trademarks including or evidencing the same,.such as STAN LEE PRESENTS SLM is protected by Section 43(a) of the Lanham Act as assignee of Lee Lee and Marvel have and continue to use, market, merchandise, promote, advertise, license and exploit the name, likeness, signature, symbols, logos, designs, visual representations of Stan Lee, as well as trademarks (including the Marvel Trademark and STAN LEE PRESENTS), including and evidencing the same, for their financial benefit Lee and Marvel have used, marketed, merchandised, promoted, advertised, licensed and exploited the name, likeness, signature, symbols, logos, designs and visual representations of Stan Lee, as well as trademarks (including the Marvel trademark and STAN LEE PRESENTS) 27

62 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 32 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 28 of 46 evidencing the same, without any authority from SLM and in violation of Section 43(a) of the Lanham Act Upon information and belief, Lee and Marvel have derived a financial benefit from utilizing Stan Lee's name, likeness, signature, symbols, logos, designs and visual representations, as well as trademarks (including the Marvel trademark and STAN LEE PRESENTS) evidencing the same, in the manner described in this cause of action Lee and Marvel, in connection with goods and services, have used false designations of origin, false or misleading descriptions of fact, false or misleading representations of fact which are likely to cause confusion or mistake or to deceive as to the affiliation, connection or association of Stan Lee with Marvel Lee and Marvel, in connection with goods and services, have used false designations of origin, false or misleading descriptions of fact, false or misleading representations of fact which misrepresent the ownership, nature, characteristics, qualities or geographic origin of Lee's creations and characters, Stan Lee's name, likeness, signature, symbols, logos, designs, and visual representations, as well as any trademarks Lee's and Marvel's false claims regarding their rights in and to Stan Lee's name, likeness, signature, symbols, logos, designs and visual representations, as well as trademarks (including the Marvel trademark) evidencing the same, constitute a false or misleading description of fact or a false or misleading representations of fact. Lee's and Marvel's misrepresentations 28

63 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 33 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 29 of 46 falsely characterize and describe the ownership and control of the aforementioned Property and Rights in violation of the Lanham Act By engaging in the conduct alleged herein, Lee and Marvel have deprived SLM of its right to receive the goodwill and value that it otherwise would receive as the sole and exclusive owner and assignee of any and all rights to Stan Lee's name, likeness, signature, symbols, logos, desibns and visual representations, as well as trademarks, including the Marvel trademark. Such recognition would enhance SLM's name, reputation and goodwill and create opportunities for future business Ond future economic benefit. Lee and Marvel have unjustly and intentionally deprived SLM of these rights, interests and benefits for defendants' own financial gain As a direct and proximate result of defendants' wrongful 'conduct as alleged herein, SLM has been damaged in an amount not yet ascertained but in excess of the jurisdictional minimum of this Court Lee's and Marvel's infringement was willful and intentional, having had actual, constructive and/or inquiry notice of the existence of the Lee- SLIM Agreement and knowledge of facts sufficient to put them on notice of inquiry into the possibility that there might be another assignment superior to any purported rights transferred by reason of the Lee-Marvel Agreement Pursuant to 15 U.S.C. 1117, SLM is entitled to receive a judgment equal to three times the amount of Lee's and Marvel's profits or to recover the amount of SLM's actual damages, whichever is greater, plus costs of 29

64 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 34 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 30 of 46 suit, prejudgment and post-judgment interest on all amounts awarded, and reasonable attorneys' fees The acts and omissions of Lee and Marvel were willful and malicious, and done with an intent to injure SLM and with full knowledge of the adverse effects such acts would have on SLM, and with a conscious disregard of SLM's rights and willful and deliberate disregard for the consequences to SLM, such as to constitute oppression, fraud or malice thus entitling SLM to exemplary and punitive damages in an amount appropriate to punish or set an example of defendants and to deter such conduct in the future A monetary award, alone, is not adequate to Compensate SLM with regard to this cause of action. SLM, therefore, also seeks a permanent injunction under 15 U.S.C. 1125(c) and other applicable law prohibiting defendants from continuing to wrongfully violate SLM's rights as set forth herein. COUNT III: BREACH OF CONTRACT [As Against Lee] 122. SLM repeats and realleges each and every allegation contained in paragraphs 1 through 87 above as if fully set forth herein The Lee-SLM Agreement is a valid, existing, executory contract between SLM, as successor in interest to Stan Lee Entertainment, Inc., and Lee The Lee-SLM Agreement has no durational term and imposes continuing and ongoing obligations upon Lee Pursuant to the terms of the Lee-SLM Agreement, Stan Lee Entertainment, Inc. and/or its successors in interest conveyed to Lee shares in 30

65 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 35 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 31 of 46 the companies, paid Lee approximately $250, per year in salary, bonuses and other compensation, and also provided certain other items of consideration as set forth therein SLM at all relevant times did perform and/or was ready, able and willing to perform all of its obligations under the Lee-SLM Agreement and/or was prevented from further performance by the actions and conduct of Lee Pursuant to the terms of the Lee-SLM Agreement, Lee has an ongoing and continuing obligation to assign, convey and grant to SLM, as successor in interest to Stan Lee Entertainment, Inc., all right, title and interest he had or has in past, present or future Property and Rights Pursuant to the terms of the Lee-SLM Agreement, Lee has an ongoing and continuing obligation to provide enumerated services exclusively to SLM, as successor in interest to Stan Lee Entertainment, inc. (with the exception of hours of services per week provided by Lee to Marvel) Pursuant to the terms of the Lee-SLM Agreement, Lee has an ongoing and continuing obligation to refrain from filing anything with the U.S. Copyright or Patent and Trademark Office or any governmental or public agency, and to refrain from asserting or assisting others in asserting on Lee's behalf or in claiming rights through Lee, any claim to ownership or rights in past, present or future Property and Rights, or in making any objection to SLM's complete and unrestricted right to use and exploit the Property or Rights in any form, manner or mediu m. 31

66 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 36 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 32 of Lee has breached his contractual obligations to SLM, and continues to breach his contractual obligations to SLM, by failing to, among other things, effect necessary assignments, conveyances and/or grants of his interests in all Property and Rights to SLM, provide exclusive, enumerated services to SLM or refrain from making governmental filings or otherwise claiming ownership or rights or assisting others in claiming ownership or rights in the Property and Rights Lee has breached his contractual obligations to SLM, and continues to breach his contractual obligations to SLM, by various acts and omissions which are tantamount to taking the Property and Rights from SLM as well as the revenues, profits and payments realized from the- Property and Rights As a result of Lee's successive breaches of his continuing and ongoing contractual obligations, SLM has suffered and is currently entitled to damages for each successive breach by Lee, Including all revenues, profits and payments realized from the Property and Rights in an amount to be determined at trial, for a period of not less than six years prior to the commencement of this lawsuit SLM. COUNT IV: TORTIOUS INTERFERENCE WITH CONTRACT [As Against Marvel & Lieberman] 133. SLM repeats and realleges each and every allegation contained in paragraph 1 to 87, through above as if fully set forth herein SLM, as successor in interest to Stan Lee Entertainment, Inc., has a valid, existing agreement with Lee, namely the Lee-SLM Agreement. 32

67 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 37 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 33 of Upon information and belief, Marvel and Lieberman knew of the terms and existence of the Lee-SLM Agreement as of the date of its execution and/or before execution of the Lee-Marvel Agreement Without reasonable or economic justification or excuse, Marvel and Lieberman knowingly and intentionally induced, caused and/or procured the continuing and successive breaches of the Lee-SLM Agreement by Lee The actions of Marvel and Lieberman in causing Lee's breach of the Lee-SLM Agreement constitutes tortious interference with contract SLM has suffered damages as the direct and proximate result of the tortious interference of Marvel and Lieberman As the direct and proximate result of the tortious interference of Marvel and Lieberman, each is jointly and severally liable to SLM for the damages it has incurred and will incur, in an amount to be determined at trial. COUNT V: BREACH OF FIDUCIARY DUTY OF CARE AND LOYALTY [As Against Lee] 140. SLM repeats and realleges each and every allegation contained in paragraph 1 to 87 through above as if fully set forth herein At all times material and relevant to this cause of action, until at least December 5, 2006 (which is the date SLM's Chapter 11 bankruptcy proceeding, filed with the U.S. Bankruptcy Court for the Central District of California [Case No. SV KL] [the "Bankruptcy Proceeding"], was dismissed), Lee was a director and officer of SLM. 33

68 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 38 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 34 of At all times material and relevant to this cause of action, until at least December 5, 2006, Lee owed a fiduciary duty to SLM, which is the highest standard of duty implied by law At all times material and relevant to this cause of action, until at least December 5, 2006, Lee owed a duty to SLM to act in the best interests of SLM, subordinating his own personal interests to those of SLM Upon information and belief, at no time prior to December 6, 2006 did Lee ever repudiate or otherwise purport to terminate his fiduciary relationship with SLM Upon information and belief, at all times material and relevant to this cause of action through until at least December 5, 2006, SLM reasonably relied upon Lee's skill and reposed trust and confidence in Lee in his role as a fiduciary to SLM While Lee was required to be acting as a director and officer of SLM, he intentionally failed to perform his duties as director and officer, so that the Property and Rights of SLM were mismanaged, wasted, and diverted to himself and to Marvel, and SLM's copyright and trademark interests were infringed upon and ignored At all times material and relevant to this cause of action, Lee owed a duty (a) to truthfully, completely and accurately disclose and describe to the Bankruptcy Court in the Bankruptcy Proceeding, any and all potential assets of SLM that might be subject to administration by the Bankruptcy Court; (b) to provide fair and accurate representations as to the market value of any and all 34

69 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 39 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 35 of 46 potential assets of SLM that might be subject to administration by the Bankruptcy Court; (c) to correct any inaccuracies in any previous filings and/or disclosures immediately upon becoming aware of such inaccuracies; (d) to protect the assets of SLM for the benefit of the creditors and shareholders of SLM; and (e) to act with candor at all times when making submissions to the Bankruptcy Court, creditors and shareholders of SLM, the debtor-in-possession Upon information and belief, while Lee was required to be acting as a director and officer of SLM, he intentionally failed to perform his duties as director and officer, so that at no time during the Bankruptcy Proceeding did Lee ever disclose to the Bankruptcy Court the fact that SLM had a contractual assignment to the Property and Rights pursuant to the Lee-SLM Agreement Upon information and belief, during the Bankruptcy Proceeding, Lee failed to make adequate disclosures to the Bankruptcy Court or to potential bona fide third party purchasers in an effort to liquidate assets to satisfy creditors and legitimate offers for the purchase of the disclosed assets were intentionally ignored Upon information and belief, throughout the entirety of the Bankruptcy Proceeding, Lee acted for his own personal financial gain and in disregard of the best interests of SLM, its creditors and its shareholders by, among other things, establishing new companies, such as QED Productions, LLC and POW! Entertainment, Inc., that he would own and manage in order to acquire assets (including certain of the Property and Rights) of SLM at the same 35

70 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 40 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 36 of 46 time that Lee represented to the Bankruptcy Court that he would not financially benefit Upon information and belief, during the Bankruptcy Proceeding, without due authority or approval from the Bankruptcy Court, Lee purported to convert or otherwise divert assets of SLM to his own use and/or personal benefit by, among other things; (a) effecting the filing, on or about May 18, 2005, of the application for registration of the service mark STAN LEE PRESENTS in the name of POW! Entertainment, LLC with the USPTO; (b) effecting the filing, on or about July 11, 2006, of the application for registration of the character mark THE DRIFTER in the name of QED Productions, LLC with the USPTO; (c) effecting the filing, on or about July 12, 2006, of the application for registration of the character mark ACCUSER in the name of QED Productions, LLC with the USPTO; (d) effecting the filing, on or about July 31, 2006, of a purported assignment of SLM's copyrights in the Drifter, the Accuser and Stan's evil clone to QED Productions, LLC with the United States Copyright Office; and (e) exploiting these and other copyrights and trademarks through to the date of the filing of the Amended Complaint. 36

71 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 41 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 37 of By reason of the foregoing, SLM has suffered great loss, the value of SLM's stock and dmdends has suffered great loss, and its shareholders have been similarly damaged Upon information and belief, Lee has also been unjustly enriched as the result of Lee's intentional failure to perform his duties as director and officer of SLM. at the expense of SLM By reason of the foregoing, Lee has been unjustly enriched 155. By reason of the foregoing, Lee has obtained and retained monies under such circumstances that in equity and good conscience he should not retain By reason of the foregoing, SLM is entitled to a judgment against Lee, in an amount to be determined at trial, for the amounts by which (a) SLM has been damaged, and (b) Lee has been unjustly enriched. COUNT VI: AIDING AND ABETTING AND/OR CONSPIRACY TO BREACH FIDUCIARY DUTY OF CARE AND LOYALTY [Against Lee, Marvel and Lieberman] 157. SLM repeats and realleges each and every allegation contained in paragraphs 1 through 87 and 140 through 156 above as if fully set forth herein At all times material and relevant hereto, Marvel has been in direct competition with the business of SLM Upon information and belief, while Lee was required to be acting in his fiduciary capacity as a director and officer of SLM, he entered into a 37

72 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 42 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 38 of 46 corrupt agreement with Marvel and Lieberman, as part of a plan and/or common scheme, to wrongfully cause the Property and Rights to be assigned to businesses in direct competition with SLM, infringed upon and otherwise exploited Defendants did not have the right or legal authority to do so Upon information and belief, while Lee was required to be acting in his fiduciary capacity as a director and officer of SLM, he conspired with Marvel and Lieberman, each of whom aided and abetted Lee and intentionally undertook overt acts in furtherance of and as part of a plan and/or common scheme to exploit SLM's Property and Rights for Lee's, Marvel's and Lieberman's financial benefit, all the while knowing that these other entities had no legal authority to be in possession of such Property and Rights, and that SLM, its creditors and shareholders would suffer great financial harm as a result Upon information and belief, beginning on or about November 1998 and at various other times thereafter, Lee, Lieberman and Marvel (through Isaac Perlmutter) met, joined together, planned, and conspired to take the Property and Rights of SLM, and convey them to defendants, Marvel and other entities for the financial benefit of all defendants, and to the detriment of SLM, its shareholders and creditors All of the defendants agreed or understood that the purpose of their meetings and agreements was as described in the preceding paragraph, understood that both their purpose and their methods of achieving this purpose were improper, fraudulent, unlawful and tortious, and would result in injury to 38

73 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 43 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 39 of 46 SLM, its shareholders and creditors, and agreed and understood that each would act in concert with the others to achieve this purpose Upon information and belief, in furtherance of the conspiracy described herein, Lee caused entities to be formed and convinced and caused former principals of SLM to thereafter make false representations in written agreements Upon information and belief, defendants have fraudulently transferred, concealed, and dissipated many of the Property and Rights, including copyrights and trademarks they received, and they continue to dissipate the Property and Rights Defendants undertook the acts described herein for their own financial gain Lee also engaged in the acts described herein while purportedly acting in his capacity as agent, fiduciary, officer and director of SLM Marvel and Lieberman conspired with Lee to continue to market, distribute, produce and sell Marvel characters Based upon the totality of his actions, Lee has breached his fiduciary duty as a director and officer of SLM, and he was induced, aided and abetted to so breach his fiduciary duty by virtue of the wrongful, knowing and intentional actions, participation and substantial assistance of Marvel and Lieberman As a direct result of Lee's breach of his fiduciary duty to SLM and his conspiracy with Marvel and Lieberman, SLM has thereby suffered great 39

74 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 44 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 40 of 46 loss and damages, the value of SLM's stock and dividends has suffered great loss, and its shareholders have been similarly damaged Upon information and belief, all defendants have also been unjustly enriched as the result of Lee's actions, including Lee's intentional failure to perform his duties as director and officer of SLM By reason of the foregoing, all defendants have been unjustly enriched at the expense of SLM By reason of the foregoing, all defendants have obtained and retained monies under such circumstances that in equity and good conscience they should not retain By reason of the foregoing, SLM is entitled to a judgment against all defendants, in an amount to be determined at trial, for the amounts by which (a) SLM has been damaged, and (b) Lee, Marvel and Lieberman have been unjustly enriched. COUNT VII: CONSTRUCTIVE TRUST [As Against All Defendants] 175. SLM repeats and realleges each and every allegation contained in paragraph 1 through 174 above as if fully set forth herein Based upon the foregoing, the defendants have knowingly and wrongfully used, marketed, licensed, merchandised, promoted, advertised and exploited the Property and Rights, of which SLM is the rightful and legal owner At all times material and relevant hereto, the defendants have had actual and constructive notice Stan Lee's interest in his characters and 40

75 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 45 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 41 of 46 creations, and Lee's assignment to SLM of the Property and Rights pursuant to the Lee-SLM Agreement All defendants have been unjustly enriched as the result of their actions All defendants have been unjustly enriched as the result of Lee's intentional failure to perform his duties as director and officer of SLM By reason of the foregoing, all defendants have been unjustly enriched at the expense of SLM By reason of the foregoing, all defendants have obtained and retained monies under such circumstances that in equity and good conscience they should not retain Equity and justice require that defendants be deemed to hold any and all income, proceeds and profits from the defendants' use, marketing, merchandising, promoting, advertising and exploitation of the Property and Rights in constructive trust for SLM SLM seeks the imposition of a constructive trust over the entirety of the income, proceeds and profits from the defendants' use, marketing, merchandising, promoting, advertising and exploitation of the Property and Rights With regard to those equitable aspects of this cause, SLM has no adequate remedy at law. 41

76 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 46 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 42 of 46 COUNT VIII: DEMAND FOR ACCOUNTING OF PROFITS [As Against All Defendants] 185. SLM repeats and realleges each and every allegation contained in paragraphs 1 through 184 above as if fully set forth herein This is an action in equity seeking a damages award against defendants for certain income, proceeds and profits, obtained by defendants by and through defendants' unilateral and unauthorized use, marketing, licensing, merchandising, promotion, advertising and exploitation of the Properties and Rights At all times material and relevant hereto, the defendants had no entitlement or right of any kind to the Property and Rights owned by SLM and the Properties and Rights assigned in the Lee-SLM Agreement Contrary to SLM's exclusive ownership rights to same, the defendants have used, marketed, licensed, merchandised, promoted, advertised and otherwise exploited the Property and Rights for their own financial benefit, and without the participation, authority or consent of SLM Contrary to SLM's ownership rights to same, the defendants have not paid to SLM the income, proceeds and profits from defendants' use, marketing, licensing, merchandising, promotion, advertising and exploitation of the Property an.d Rights The defendants have a duty to account to and pay to SLM the income, proceeds and profits derived from defendants' use, marketing, licensing, merchandising, promotion, advertising and exploitation of the Properties and Rights. 42

77 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 47 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 43 of Equity and justice require that defendants account to SLM for any and all income, proceeds and profits from the defendants' use, marketing, licensing, merchandising, promotion, advertising and exploitation of the Property and Rights Equity and justice require that defendants account for and pay to SLM, and that this Court enter an award of damages in favor of SLM, an amount equal to any and all income, proceeds and profits derived from the defendants' use, marketing, licensing, merchandising, promotion, advertising and exploitation of the Property and Rights With regard to those equitable aspects of this cause, SLM has no adequate remedy at law. PRAYER FOR RELIEF WHEREFORE, SLM requests judgment On the First Cause of Action For judgment declaring it the copyright owner of such characters as the Drifter, the Accuser and Stan's evil clone and for actual damages sustained by SLM and profits in excess of $750,000,000 derived from defendants and not less than the minimum statutory damages alllowable, and attorneys' fees and costs; On the Second Cause of Action For an amount to be determined by the Court, including prejudgment and post-judgment interest, and attorneys fees and costs; On the Third Cause of Action For an amount to be determined by the Court; 43

78 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 48 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 44 of 46 by the Court; the Court; the Court; On the Fourth Cause of Action For an amount to be determined On the Fifth Cause of Action For an amount to be determined by On the Sixth Cause of Action For an amount to be determined by On the Seventh Cause of Action The ImpOsition of a Constructive Trust against all defendants; deem just and proper. On the Eighth Cause of Action An Accounting of Profits; And for such other legal and equitable relief that the court may DEMAND FOR JURY TRIAL SLM, by and through its undersigned counsel, hereby demands a jury trial on any and all issues so triable. Dated: New York, New York April 27, 2009 EATON & VAN WINKLE LLP Martin Garbus 3 Park Avenue New York, New York (212) Attorneys for Jose Abadin, and Christopher Be!land, derivatively on behalf of Stan Lee Media, Inc. 44

79 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 49 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 45 of 46 VERIFICATION Christopher Be!land, pursuant to the provisions of 28 U.S.C declares and states as follows: I am a shareholder of Stan Lee Media, Inc., and have brought the within action in my derivative capacity as such shareholder. I have read the foregoing Verified Amended Complaint, and know the contents thereof and the allegations are true to my own knowledge, except as to matters stated to be upon information and belief, which I believe to be true. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct, and that this declaration is executed at Key West, Florida on April 27, Christopher Be!land 45

80 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 50 of 63 Case 1:09-cv PAC Document 12 Filed 04/29/09 Page 46 of 46 VERIFICATION dose Abadin, pursuant to the provisions of 28 U.S.C declares and states as follows: Formattech Font: 12 pt I am a shareholder of Stan Lee Media, Inc., and have brought the within action in my derivative capacity as such shareholder. I have read the foregoing Verified Amended Complaint, and know the contents thereof and the allegations are true to my own knowledge, except as to matters stated to be upon information and belief, which I believe to be true. I declare under penalty of periury under the laws of the United States of America that the foregoing Is true and correct, and that this declaration is executed at4eityl-etettet_onapril_21_2009 iteyetiy 14;111; Co:1;4MA

81 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 51 of 63 EXHIBIT 2

82 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 52 of 63 Case 1:12-cv WJM-KMT Document 46 Filed 02/25/13 USDC Colorado Page 1 of 12 Civil Action No. 1:12-cv WJM-KMT STAN LEE MEDIA, INC. IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO V. THE WALT DISNEY COMPANY, Defendant. THE WALT DISNEY COMPANY'S REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF ITS MOTION TO DISMISS THE AMENDED COMPLAINT The Walt Disney Company ("TWDC") respectfully submits this reply memorandum of law in further support of its motion to dismiss Plaintiff's Amended Complaint (the "Motion").' I. PLAINTIFF HAS FAILED TO ESTABLISH JURISDICTION OVER TWDC TWDC's motion papers provided sworn testimony refuting the allegations of the Amended Complaint that purport to establish personal jurisdiction over TWDC. In the face of this showing, it was incumbent upon the Plaintiff to come forward with "competent proof of the supporting facts." Rosenberg v. Deutsche Bank A.G., 2012 U.S. Dist. LEXIS at *5 (D. Colo. Aug. 28, 2012) (Martinez, J.) (quoting Pytlik v. Prof'l Res., Ltd., 887 F.2d 1371, 1376 (10th Cir. 1989)) (emphasis added). Plaintiff cannot create a factual dispute about jurisdiction ' Plaintiff's "evidentiary objections" are entirely without merit. The Declaration of Marsha Reed was based on personal knowledge as well as knowledge obtained in her capacity as an officer of TWDC. See Declaration of Marsha L. Reed dated January 14, 2013 ("Reed Decl.") II 1. Moreover, the Declaration of Randi W. Singer, which simply presents judicially noticeable documents to the Court, need not authenticate the documents or demonstrate personal knowledge of the underlying facts. See Ray v. Aztec Well Serv. Co., 748 F.2d 888, 889 n.2 (10th Cir. 1984). Plaintiff's counsel so acknowledged by filing an affidavit attaching documents from an action in which Plaintiff claims it was not involved. Declaration of Robert S. Chapman in Support of Plaintiff's Opposition to TWDC's Motion to Dismiss ("Chapman Decl."). There is, accordingly, no basis for striking any portion of the declarations or exhibits submitted in support of the Motion. US_ACTIVE: \ \

83 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 53 of 63 Case 1:12-cv WJM-KMT Document 46 Filed 02/25/13 USDC Colorado Page 2 of 12 simply by resting on the allegations of its own Amended Complaint; rather, it must submit actual proof, in the form of "affidavit or other written materials." OMI Holdings, Inc. v. Royal Ins. Co. of Can., 149 F.3d 1086,1091 (10th Cir. 1998). Plaintiff has utterly failed to carry that burden. Plaintiff's Opposition attempts to sidestep the problem by asserting that the Declaration of Marsha Reed TWDC did not "specifically deny" the Amended Complaint's allegation that "distribution of [Marvel's] The Avengers and the licensing of infringing merchandise for sale in Colorado was undertaken by defendant [TWDC] itself." Plaintiffs Opposition to TWDC's Motion ("Opp.") at 5. In fact, that declaration encompasses those very matters: "TWDC does not produce, market or distribute any motion pictures or other productions featuring any Marvel character or property in Colorado or elsewhere." Reed Decl. 9 (emphasis added). Ms. Reed also averred that "TWDC conducts no business activities other than those of a public holding company," negating the proposition that it licenses or distributes any merchandise or other products alleged to be infringing. Id To dispel any remaining doubt, and to address literally what the above-quoted averments attest to generally, Ms. Reed's reply declaration, submitted herewith, confirms that "TWDC does not own or license the intellectual property at issue in this action," that TWDC did not distribute the film Marvel's The Avengers in Colorado, and that "TWDC does not license, and has never licensed, such intellectual property for use in motion pictures, theatrical productions or print media in Colorado or elsewhere" and "does not license, and has never licensed this intellectual property for any merchandise." Reply Declaration of Marsha L. Reed ("Reed Reply Decl.") TT 'Plaintiff's authorities are inapposite, as in those cases it was not disputed that the defendant itself had engaged in the conduct alleged. See Keeton v. Hustler Magazine, Inc., 465 U.S. 770 (1984) (defendant distributed magazines in New Hampshire); Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218 (9th 2 US_ACTNE: \ 7\

84 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 54 of 63 Case 1:12-cv WJM-KMT Document 46 Filed 02/25/13 USDC Colorado Page 3 of 12 Plaintiff cannot overcome its failure of proof simply by citing its own domicile in this forum. Opp. at 6. The "mere fortuity" that Plaintiff is incorporated in Colorado does not confer personal jurisdiction over TWDC, particularly when the unchallenged evidence demonstrates it undertakes no actual activities in this forum. See Mot. at 7 n.10 (citing cases). None of Plaintiff's cited cases holds to the contrary. See Washington Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668 (9th Cir. 2012) (defendant committed intentional act aimed at forum); Penguin Group (USA) Inc. v. Am. Buddha, 640 F.3d 497 (2d Cir. 2011) (conduct was within long-arm statute because situs of injury was New York). Additionally, Plaintiff's new contention that TWDC is subject to general jurisdiction in Colorado because three indirect subsidiaries identified for the first time in their Opposition 3 are registered to do business here also fails, based as it is on yet more unsubstantiated assertions, such as that "Disney dictates the policies and practices of the entire corporate conglomerate from its position at the top of the corporate pyramid" and "uses centralized departments to actively control the day-to-day operations of its subsidiaries' legal affairs, personnel decisions, and finances, including its subsidiaries in Colorado." Opp. at 7. These assertions, fashioned fi-om general statements from TWDC's annual report and careers website wrenched from their contexts, are insufficient to demonstrate the degree of dominion and control required to pierce Cir. 2011) (defendant operated interactive website with numerous contacts in California); Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 (9th Cir. 2002) (defendant distributed albums in California). 3 Ms. Reed's declaration explained that TWDC observes all formalities with respect to the subsidiaries that were readily identifiable from the Amended Complaint. Plaintiff belatedly identified three indirect subsidiaries registered to do business in Colorado, and then argued that because TWDC "does not deny" allegations that these subsidiaries are controlled by TWDC, somehow those facts are now "established for purposes of this motion." Opp. at 7. This position is untenable, for none of the three Buena Vista Home Entertainment, Disney Worldwide Services, Inc. and Disney Online, Inc. was named or even referenced in the Amended Complaint. Notwithstanding, the Reed Reply Declaration expressly refutes Plaintiff s jurisdictional allegations with respect to these subsidiaries. Reed Reply Decl US_ACTIVE:\ \

85 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 55 of 63 Case 1:12-cv WJM-KMT Document 46 Filed 02/25/13 USDC Colorado Page 4 of 12 the multiple corporate veils between TWDC and its subsidiaries. See Motion at 7-8 (collecting cases). What is more, they are expressly refuted in Ms. Reed's declarations, which establish that TWDC "does not manage or direct the operations or day-to-day affairs" of any of its subsidiaries, and maintains separate records and bank accounts from each of them. Reed Reply Dec ; see also Reed Decl These averments as a matter of law would require Plaintiff to have introduced competent evidence that the "separation[s] of the... entities has not been maintained," and that "injustice would occur to third parties if the separate entity were recognized." Quarles v. Fuqua Indus., Inc., 504 F.2d 1358, 1362 (10th Cir. 1974). No such showing has been or could be made. Finally, it is clear that the exercise of jurisdiction over TWDC in a forum where it has no contacts would be unreasonable. It simply is not the law that TWDC must submit to jurisdiction everywhere because it is alleged to be a "multi-billion dollar international media conglomerate." Opp. at 6-7; TH Agric. &Nutrition, LLC v. Ace European Group Ltd., 488 F.3d 1282, 1293 (10th Cir. 2007) (affirming dismissal for lack of jurisdiction on burden grounds even where defendants were "large companies engaged in business on a worldwide basis"). This position has been soundly rejected in numerous previous litigations against TWDC, and should be rejected here again. See Mot. at 6-8 (collecting cases). The Court should give no weight to what Plaintiff's alleged countervailing interest in convenient relief, since it has shown by its prior conduct that it is capable of litigating the issues presented here in other jurisdictions. 4 4 No jurisdictional discovery is needed where Plaintiff has not shown a lack of such discovery would "result[] in actual and substantial prejudice" particularly where the complaint has so many fatal infirmities that "there is a vely low probability that the lack of discovery [will] affect[] the outcome." Gynberg v. Ivanhoe Energy, Inc., 2012 U.S. App. LEXIS at *45-47 (10th Cir. July 12, 2012) (citations omitted). 4 US_ACTIVE:\ \7\

86 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 56 of 63 Case 1:12-cv WJM-KMT Document 46 Filed 02/25/13 USDC Colorado Page 5 of 12 II. THE AMENDED COMPLAINT FAILS TO CURE ANY OF THE FATAL DEFICIENCIES THAT REQUIRE DISMISSAL PURSUANT TO RULE 12(13)(6) A. Plaintiff's Copyright Claim Is Long Since Time-Barred Nothing in Plaintiff's Opposition surmounts the clear time-bar that precludes its claim. Unlike many infringement cases where the ownership prong of the claim is not disputed, "where, as here, a plaintiff's copyright ownership claim is not conceded..., copyright ownership, and not infringement, is the gravamen of the plaintiffs claim to which the statute of limitations is applied." s Kwan v. Schlein, 634 F.3d 224, 230 (2d Cir. 2011) (where ownership is dispositive issue and time-barred, attendant infringement claims fail even if brought within three years of allegedly unauthorized act). 6 The Amended Complaint and the Opposition both make clear that the fundamental premise of Plaintiffs infringement claim is that it owns the copyrights in certain pre-1998 Marvel characters based on an alleged assignment of rights from Stan Lee pursuant to the 1998 Agreement. E.g., Am. Compl. II 1 ("The true facts are that [Plaintiff] owns the copyrights to Stan Lee's creations."); Opp. at 3 ("The 1998 Agreement assigned all copyrights in Lee's comic Plaintiff argues that this rule does not apply here and that the statute of limitations instead runs from the time one or more asserted infringing acts occurred because certain of the cases establishing the rule arose in a co-ownership context. See Opp. at This argument is of no moment. Nothing in the holdings of those cases suggests that those factual circumstances warrant a different or special rule from other fact settings, such as that presented here. Plaintiff points to no such authority. Indeed, to impute such a limitation would invite perverse results enabling repeat harassing infringement cases to be brought against every claimed successor-in-interest to copyrights, notwithstanding the plaintiff's failure to have timely asserted its ownership claims against the predecessors. 6 To the extent Carrell v. Schubert Organization, Inc., 104 F. Supp. 2d 236 (S.D.N.Y. 2000), can be said to have held otherwise, a review of the applicable authority indicates it was an outlier when decided, and in light of the subsequent development of the law and recent Second Circuit holding in Kwan, it is likely no longer good law. The Second Circuit's decision in Stone v. Williams, 970 F.2d 1043 (2d Cir. 1992), also is of no support to Plaintiff, for it has consistently been held that Stone was decided on its own "highly idiosyncratic facts" and "does not insulate all civil actions under the copyright law from the general three-year statute of limitations." Merchant v. Levy, 92 F.3d 51, 56 (2d Cir. 1996). 5 US_ACTIVE: \ \ 7 \

87 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 57 of 63 Case 1:12-cv WJM-KMT Document 46 Filed 02/25/13 USDC Colorado Page 6 of 12 book characters...."); id. at 10 ("SLMI is the sole and exclusive owner of the copyrights, and has been since October 1998."). Given this foundational premise, and the fact that ownership of the subject copyrights in fact is contested, Plaintiff may proceed with its case only if it can show that it commenced this suit within three years of the date its ownership claims based on the 1998 Agreement first accrued. As already discussed, Motion at 12-14, Plaintiff is unable to do so. As prior litigations to which Plaintiff has been party have established, Plaintiff was on notice as of 1998 of Marvel's claims of ownership in the same pre-1998 characters it contends it owns pursuant to the 1998 Agreement. Abadin v. Marvel Entm'4 Ine., 2010 WL , at *6 & n.5 (S.D.N.Y. Mar. 31, 2010); see Declaration of Randi W. Singer dated January 14, 2013 ("Singer Decl.") Ex. A. It was again on notice of contested ownership claims to those characters as of 2001, when Stan Lee terminated the 1998 Agreement and any purported assignment of rights resulting therefrom. Id; Singer Decl. Ex. B. As a matter of law, Plaintiff should have asserted any copyright ownership claims it believed it had in the works claimed to be at issue in this case within three years from November 1998 (the date of Mr. Lee's employment agreement with Marvel) or, at the very latest, from January 30, 2001 (the date of Mr. Lee's termination letter). 7 Having failed to do so, the Copyright Act's statute of limitations bars Plaintiff s claims against a supposed successor-in-interest to an entity (Marvel) whose claims of copyright ownership in the identical works Plaintiff has been aware of for more than 14 years. 7 Instead, although Plaintiff now claims to own the exclusive copyright ownership rights over Marvel characters worth many billions of dollars, it failed even to mention those supposed rights in public statements and SEC documents filed shortly after the 1998 Agreement was executed. See Stan Lee Media Inc. Form 10KSB for 1 2/3 1 /99, available at 6 US_ACTIVE \ \

88 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 58 of 63 Case 1:12-cv WJM-KMT Document 46 Filed 02/25/13 USDC Colorado Page 7 of 12 B. This Latest in Plaintiff's History Of Repeat Litigations Fails To Survive A Motion To Dismiss Under The Doctrine Of Collateral Estoppel Plaintiff mischaracterizes TWDC's position in arguing that its claim is somehow not barred by the doctrine of collateral estoppel. It is not that Plaintiff's "ownership of the copyrights at issue in this action was litigated in Abadin r' and other prior litigations (Opp. at 12); rather, the issue that Plaintiff seeks to litigate for the fourth time is whether it can timely assert ownership rights to the Marvel characters that are the subject of the Amended Complaint arising from the 1998 Agreement. The answer, decided three times previously, is that it cannot. The relevant inquiry in collateral estoppel (as opposed to res judicata) is whether the previous litigation adjudicated an identical issue;.the extent of identity of the underlying cause of action is irrelevant. E.g., Allen v. McCurry, 449 U.S. 90, 94 (1980) ("Under collateral estoppel, once a court has decided an issue of fact or law necessary to its judgment, that decision may preclude relitigation of the issue in a suit on a different cause of action involving a party to the first case."); Park Lake Res., LLC v. U.S. Dep't of Agric., 378 F.3d 1132, 1136 (10th Cir. 2004) ("Issue preclusion bars a party from relitigating an issue once it has suffered an adverse determination on the issue, even if the issue arises when the party is pursuing or defending against a different claim."). Notwithstanding that Abadin I and the other preceding litigations did not, strictly speaking, involve copyright infringement claims, they incontestably did involve Plaintiff's efforts to prove its legal theories based on establishing the fact of ownership in the identical intellectual property that is in issue here derived from precisely the same underlying 1998 Agreement. The amended complaint in Abadin I alleges: Plaintiff "is the assignee of Lee, pursuant to the [1998] Agreement, of any and all of Lee's creations and characters" and that Marvel's use thereof constituted a violation of the Lanham Act. Chapman Decl. Ex. 31[1[ US_ACTIVE: \ V9593,0033

89 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 59 of 63 Case 1:12-cv WJM-KMT Document 46 Filed 02/25/13 USDC Colorado Page 8 of 12 Plaintiff obtained "certain property" through the assignment in the same 1998 Agreement at issue here, relating to, among other things, "various world famous characters created by Lee" that were incorporated into 'Marvel' movies ('X-Men,' `SpiderNMan 1, 2 and 3,"The Incredible Hulk,"Fantastic Four,"Iron Man,' and 'Daredevil')." Id , 26-27; see also id. 1147, 49, "Most of Marvel's financial success derives from characters initially created by Lee that are the subject of this lawsuit." Id IT 25. Marvel does not own the works because they "were not 'works for hire' by Lee for any person or entity." Id The Abadin I amended complaint also contains a detailed list of the nearly 80 characters at issue, including Spider-Man, The Fantastic Four, X-Men, The Incredible Hulk and Iron Man. 8 Id As noted, Plaintiff's efforts to assert these rights were repeatedly and uniformly rejected as untimely and barred by one or more statutes of limitation and doctrines of laches and estoppel. See Mot. at 3-4, In light of this record, Plaintiff's current assertion that Plaintiff's claimed rights in these characters were not at issue in Abadin I or in any other previous litigation is remarkable. 9 To the contrary, this Court faces the very same issue as did each of the previous courts in which Plaintiff and its representatives have litigated: whether Plaintiff, or those acting on its behalf, can assert any rights to the Marvel characters arising out of the 1998 Agreement. The Abadin I court 8 In Lee v. Marvel, SLMI sought to file an amended complaint with allegations about "some of the world's most popular and commercially successful characters and stories such as Spider-Man, The Incredible Hulk, Iron Man, X-Men and The Fantastic Four." Reply Declaration of Randi W. Singer, dated February 25, 2013 ("Singer Reply Decl.") Ex. A If 1; see also id , 59-62, 81-82, , 244, 246. Similarly, the consolidated complaint in the Central District of California alleged that the "1998 Assignment transferred to SLMI all intellectual property rights that Lee might have, 'now or in the future,' which includes... the following: (a) Lee's intellectual property rights in characters authored by Lee, such as Spider-Man, The Incredible Hulk, The X-Men, The Fantastic Four, Iron Man, Thor, Daredevil, and many others." Id. Ex. B II 2; see also id , 27, Both courts held Abadin I had preclusive effect, which necessarily means both determined the issues in all three cases were identical. 9 Indeed, the Amended Complaint itself includes allegations regarding the three previous litigations and concedes that Abadin I involved "an accounting for profits in connection with certain ownership rights involving the Characters." See Am. Compl. in US_ACTIVE: W \7\

90 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 60 of 63 Case 1:12-cv WJM-KMT Document 46 Filed 02/25/13 USDC Colorado Page 9 of 12 resolved that issue on the merits, and two separate courts found any subsequent claims arising from the same issue to be barred by the doctrine of res judicata. Plaintiff cannot resurrect its stale ownership claim by the device of suing TWDC in the place of Marvel, where such substitution of defendants does not alter the basis for Plaintiff's copyright ownership claims. Plaintiff does not dispute that all other collateral estoppel elements have been met. The Amended Complaint must therefore be dismissed. C. The Complaint Fails To State A Plausible Copyright Infringement Claim In response to TWDC's demonstration that it failed to state a plausible copyright infringement claim, Plaintiff incorrectly contends that TWDC seeks to hold it to a heightened pleading standard. The law is clear that to give proper notice of its claim, Plaintiff must allege at least the works whose copyrights were supposedly infringed and the nature of the infringing conduct. See Shell v. Am. Family Rights Ass 'n, 2012 WL at *13 (D. Colo. Sept. 28, 2012) (requiring copyright plaintiff to "specify each and every act of infringement"); see also Shepard's McGraw-Hill Inc. v. Legal Soft Corp., 769 F. Supp. 1161, (D. Colo. 1991); Cole v. John Wiley & Sons, Inc., 2012 U.S. Dist. LEXIS at *36-37 (S.D.N.Y. Aug. 1, 2012) (rejecting "conclusory and vague allegations.. as a substitute for allegations that specify the original works that are the subject of a copyright claim"). Plaintiff has failed to do so. Since the time the initial complaint was filed in this action, Plaintiff has failed to specify the copyrights allegedly infringed; 10 attaching to the Amended Complaint a certificate of I Plaintiff s cited allegations merely list certain comic book works as "among the best known comic book characters of all time," Am. Compl. 1, and contend that Lee assigned to Plaintiffs predecessor "the copyrights and all other rights in the comic book characters (the 'Characters') that he had previously created or would create in the future," id 4; see ii If 9 (alleging recordation of assignment of copyrights 9 US_ACTIVE:\ V

91 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 61 of 63 Case 1:12-cv WJM-KMT Document 46 Filed 02/25/13 USDC Colorado Page 10 of 12 recordation filed years after the 1998 Agreement that self-servingly names certain characters the rights to which supposedly were transferred to Plaintiff (but are not named in the agreement it claims effectuated the transfer) does not cure this deficiency. Moreover, Plaintiff's vague averment that the infringing acts consist of "(a) producing and distributing motion pictures featuring the characters; (b) licensing and selling merchandise based on the characters; and (c) exploiting the characters in print media," Opp. at 15, is insufficient to sustain its pleading burden. Nowhere does Plaintiff specify precisely which conduct forms the basis of its claim or identify in any way the various merchandising or print media uses it alleges infringed its rights) 1 See Shell, 2012 WL at *13 (plaintiff must allege "exactly how, when, and by whom... the alleged infringement occurred"). Having been on notice of the insufficiency of its allegations since at least the filing of TWDC's initial motion to dismiss in November 2012, see Docket No. 21, and having failed to remedy those deficiencies in its Amended Complaint, Plaintiff should not be given further leave to amend its claims. Shifrin v. Toll, 2011 U.S. Dist. LEXIS at *42 (D. Colo. July 1, 2011) (denying leave to amend where "Plaintiff has been provided ample notice and opportunity to amend and cure the complaint, but has failed to do so"). CONCLUSION For the foregoing reasons, as well as those set forth in TWDC's moving papers, the Amended Complaint should be dismissed with prejudice and without leave to amend. in "among other things... lists... Spider[-]Man, The Incredible Hulk, X-Men Fantastic Four, Iron Man, Daredevil, Silver Surfer [and] Dr. Strange"). ' 1 See Am. Compl. 19 (movies "includ[e] the 2012 blockbuster `[Marvers] The Avengers'), Ill (referring, without more, to "infringing merchandise" and "print works based on 'Marvel-branded franchises"); id. 37 (alleging exploitation "in other media and merchandising, including, but not limited to" Broadway productions, merchandise and print media). 10 US_ACTIVE: \ 7 \

92 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 62 of 63 Case 1:12-cv WJM-KMT Document 46 Filed 02/25/13 USDC Colorado Page 11 of 12 DATED this 25th day of February, Respectfully submitted, Is/ James W. Quinn James W. Quinn R. Bruce Rich Randi W. Singer WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, NY Tel: (212) Frederick J. Baumann Holly C. Ludwig ROTHGERBER JOHNSON & LYONS LLP One Tabor Center, Suite th Street Denver, CO Tel: (303) Fax: (303) Counsel for The Walt Disney Company 11 US_ACTIVE:

93 Case 5:13-cv JLS Document 64-1 Filed 03/11/14 Page 63 of 63 Case 1:12-cv W3M-KMT Document 46 Filed 02/25/13 USDC Colorado Page 12 of 12 CERTIFICATE OF SERVICE I hereby certify that on this 25th day of February, 2013, I filed electronically the foregoing THE WALT DISNEY COMPANY'S REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF ITS MOTION TO DISMISS THE AMENDED COMPLAINT PURSUANT TO RULES 12(b)(2) AND 12(b)(6) with the Clerk of Court, using the CM/ECF system, which caused automatic electronic notification of such filing upon the following: John V. McDermott BROWNSTEIN HYATT FARBER SCHRECK, LLP 410 Seventeenth Street, Suite 2200 Denver, Colorado Telephone: (303) jmcdermott@bhfs.com Robert S. Chapman Jon-Jamison Hill EISNER, KAHAN & GORRY 9601 Wilshire Boulevard, Suite 700 Beverly Hills, California Telephone: (310) rchapman@eisnerlaw.com jhill@eisnerlaw.com /s/ Holly C. Ludwig US ACTIVE: \7\

94 Case 5:13-cv JLS Document 64-2 Filed 03/11/14 Page 1 of 5 EXHIBIT B

95 Case 5:13-cv JLS Document 64-2 Filed 03/11/14 Page 2 of 5 Page 3 Certificate Inihb to &plight States of America Tkin..1*.j 0.4tCSi" the 1. Copyright Claimant(s) and Address(es): Name Address Name Address 1,j cittaenslifp'...afantiter: Citizenship -. Domiciled in U. Si A. 4. Publication: (a) Date.nf::PitbItcatian of This Issue: (b) Place f PubjlcOon of This Issue: ff-ok 5. Manufacture Outside. United States: (Name of country) (a) Portion of the Manufacturing Done Abroad: (c) :Country itif tiltiliafaciuriv, Complete all applicable spaces on nixt MCI

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