MARVEL VS. SONY: "THE MOTHER OF ALL CONTRACT SUITS"

**MattBrady** · 04-08-2003, 06:38 AM

Tentatively agreeing to a motion filed by Daily Variety and the Los Angles Daily Journal, a judge has ruled to open the record in the licensing dispute between Marvel and Sony which was filed in February. Upon reviewing the documents, Judge Alexander Williams called the case “the mother of all contract suits.”

According to Variety, Marvel was not opposed to the seal being broken, while Sony opposes the unsealing. According to the trade, the suit states that Marvel seeks to terminate its license agreement with Sony following the completion of Spider-Man 2, which is slatred for a 2004 release. The suit also filed claims against Sony for “cross-promoting” Spider-Man with other Sony features.

Variety reported that the dispute between the companies began last fall when Sony became concerned that Marvel was using inappropriate accounting methods to lessen Sony of its share of payments from Marvel’s exploitation of Spider-Man. According to the trade, “Sony then withheld $1.5 million from a participation payment made to Marvel and announced it would begin an audit in January.”

After that, Sony’s papers allege that Marvel attempted to force an unjustified renegotiation of the license agreement. Sony also claims that Marvel executives have “repeatedly expressed their unhappiness with the 1999 license agreement, particularly their participation in the film's box office and home entertainment receipts.”

Despite efforts to resolve the dispute privately, Sony alleges that Marvel filed an “inflammatory complaint” with sensitive and confidential documents attached as exhibits to force Sony to renegotiate. According to Variety, the two documents that Sony wants to keep sealed are the license agreement between Marvel and Sony over the Spider-Man character, and an internal marketing document, which, according to Sony, contains extremely detailed information about revenue projections and licensing rates for the first Spider-Man film. Variety reported that Sony feels that if this information is made public, it will jeopardize the studio’s ability to make licensing agreements on the sequel.

At the original filing of the suit in February, Marvel said that the suit itself was not an attempt to stop production on the Spider-Man sequel, or to alter any merchandising or licensing deals that are in place.

The news related to the suit against Sony comes at the same time the company is announcing it's biggest-ever licensing deal, this one centered around the upcoming Hulk movie coming from Universal.

The move of Spider-Man back to the courtroom is almost fitting in a way, as it is where the marriage between Sony and Marvel began in the first place. When the deal between the two was announced in 1999, Sony CEO John Calley called Spider-Man the "jewel in the crown of Sony's franchise vision."

Going back to the original agreement, it was announced in ’99 that, as part of the joint venture between Marvel and Sony, the studio would get merchandising rights, but Marvel would get the lion's share because it will also manufacture any Spider-Man toys through Toy Biz.

According to the original Variety story in 1999: “Spider-Man's tortured journey to film began in 1985 when Marvel granted the defunct Cannon group the right to make a live-action Spider-Man movie. Those rights eventually landed with 21st Century film, which, strapped for cash, sold home video rights that were ultimately acquired by Sony and tv exhibition rights eventually picked up by Viacom.

“In 1991 Carolco made a new agreement with Marvel, buying the rights with the intention that James Cameron would write, produce and direct. Cameron was reportedly paid $3 million, and he wrote a detailed treatment, but money troubles prevented Carolco from going forward.

“Litigation began in 1993 among 21st Century, Carolco, Sony and Viacom. MGM entered the fray in 1994, having purchased rights from 21st Century and Carolco, both now bankrupt.”

Marvel re-entered the Spider-Man rights picture in 1998 when it was emerging from bankruptcy, and claimed that it had the exclusive right to make a Spider-Man film and that all the rights claimed by the above parties had expired. From there, the battle went to court where all parties save Sony, were denied rights to the franchise.

OcCaM · 04-08-2003, 07:13 AM

Not very surprising, since it's the revenue from the Spidey movie keeping Marvel afloat, that they'd want a bigger piece of the pie....

AForceOfOne · 04-08-2003, 10:30 AM

It's not surprising that alot of people, including fanboys, are going to comment on this thread yet know next to nothing about legal rules and regs.

Let the Marvel bashing commence. It's what is going to happen anyway.

Graeme McMillan · 04-08-2003, 10:33 AM

A genuine question: A quick cursory glance at the above suggests that, essentially, this is all coming from Marvel getting greedy and thinking it deserves more money from the deal. Am I misreading? What am I missing?

DrDoom · 04-08-2003, 10:36 AM

After the MOAB the MOACS

Barry · 04-08-2003, 10:42 AM

quote:
Originally posted by AForceOfOne:
It's not surprising that alot of people, including fanboys, are going to comment on this thread yet know next to nothing about legal rules and regs.

Like you?

John Osen · 04-08-2003, 10:50 AM

quote:
Originally posted by AForceOfOne:
It's not surprising that alot of people, ...
Let the Marvel bashing commence. It's what is going to happen anyway.

It's not surprising you're constipated again. Take a laxative and let your bowels commence. It's what is going to happen anyways.

John Osen · 04-08-2003, 10:51 AM

quote:
Originally posted by Barry:
[/qb]

Like you?[/QB][/quote]

LMAO

dogisred · 04-08-2003, 11:09 AM

I think my signature (if it is used) says it all.

dogisred · 04-08-2003, 11:13 AM

quote:
Originally posted by dogisred:
I think my signature (if it is used) says it all.

See...for some reason it isn't displayed every time...

the greedy people
(as if as can yes)
they sell and they buy
and they die for because

That's what it is supposed to say.

EDIT: oh, sure, now they display it.

exlax · 04-08-2003, 11:17 AM

quote:
Originally posted by dogisred:

quote:
Originally posted by dogisred:
I think my signature (if it is used) says it all.
See...for some reason it isn't displayed every time...

the greedy people
(as if as can yes)
they sell and they buy
and they die for because

That's what it is supposed to say.

EDIT: oh, sure, now they display it.

English please.

Nathan Jewell · 04-08-2003, 12:09 PM

With the rumor of Sony possibly buying Marvel making the rounds even more recently, then almost seems like an attempt by Marvel to FORCE sony's hand and buy the company rather than pay a really large settlement fee.

I am not a lawyer or a mathmatition, so I dont know the rules behind such a move or the costs involved.

Thanks

Nathan

Hdefined · 04-08-2003, 12:14 PM

I don't hate Marvel lately just because it's Marvel, I just hate Marvel lately because every single thing they're involved with, be it court cases, new launches, new formats, new policies, is blatantly about money. Not that it's never been about money, I mean it is a business, but they're hardly subtle about their motivations anymore. So, I'm not going to be subtle about booing them.

pah25 · 04-08-2003, 12:50 PM

Fony should be stopped from getting any money from Spiderman. Stan Lee should start to demand his share of SM money from the total - before anything taken off. Fony should loose any SM licence from 2004 onwards.

wilsinga · 04-08-2003, 12:53 PM

It's funny. Stan Lee sues Marvel over a contract dispute, and he's some sort of champion for the little guy, and it's all Marvel's fault.

Marvel sues Sony over a contract dispute and they're just being unreasonable and greedy, and it's all Marvel's fault.

Makes perfect sense to me.

riotgear · 04-08-2003, 01:09 PM

Actually, this means Marvel might have been telling the truth when they told Stan Lee they didn't owe him any money from the box office, because Marvel didn't any either.

Graeme McMillan · 04-08-2003, 01:20 PM

quote:
Originally posted by riotgear:
Actually, this means Marvel might have been telling the truth when they told Stan Lee they didn't owe him any money from the box office, because Marvel didn't any either.

Is that really what's happening, though? Look at the article: Sony say they withheld an amount (which may or may not have been the full amount - does anyone know what Marvel's share woudl have been?) of a payment from Marvel because they thought that "Marvel was using inappropriate accounting methods to lessen Sony of its share of payments from Marvel’s exploitation of Spider-Man" - which isn't the same thing as Sony not giving Marvel any money.

Graeme McMillan · 04-08-2003, 01:27 PM

quote:
Originally posted by wilsinga:
It's funny. Stan Lee sues Marvel over a contract dispute, and he's some sort of champion for the little guy, and it's all Marvel's fault.

Marvel sues Sony over a contract dispute and they're just being unreasonable and greedy, and it's all Marvel's fault.

Makes perfect sense to me.

The common thread in both cases seem to be that Marvel are accused of using creative accounting to make their income look smaller so that they don't have to pay so much on contract-agreed payouts, though... From what I understand of the above, it's this creative accounting that led Sony to withhold payment, leading to this lawsuit (and perhaps the Stan Lee one also?).

wilsinga · 04-08-2003, 01:37 PM

Actually, Marvel contends they don't owe Stan any money because all the money they have received from Spider-Man was accounted as licensing money. Licensing money is not included in Stan's 10% of "profits" amount. So there are no "profits" for Stan to participate in.

Is Marvel correct? That's for a judge to decide. But personally I think that Marvel is right. Marvel has no ownership rights regarding Spider-Man the movie. Therfore, any money they receive from the movie, is a licensing fee, and exempt.

Now if the Punisher movie (or any other movie under the Artisian deal, the deal in which Marvel owns 50% of the movie) is relatively successful, and they try this crap, I'd side with Stan.

On the Sony Deal...who knows who's right, because everything is sealed (for now)...but the fact that Sony is the company that wants to keep it sealed, makes me think Marvel has a better case.

By the way in interest of full disclosure, I own shares of Marvel, so maybe this clouds my judgement.

Graeme McMillan · 04-08-2003, 02:10 PM

quote:
Originally posted by wilsinga:
Actually, Marvel contends they don't owe Stan any money because all the money they have received from Spider-Man was accounted as licensing money. Licensing money is not included in Stan's 10% of "profits" amount. So there are no "profits" for Stan to participate in.

Marvel are saying that ALL the money they received from Spider-Man counts as licensing money? Interesting. What about the (and I don't know if this really happened) bump in comic sales for the Spiderline from the movie?

quote:
Originally posted by wilsinga:
On the Sony Deal...who knows who's right, because everything is sealed (for now)...but the fact that Sony is the company that wants to keep it sealed, makes me think Marvel has a better case.

Sony want to keep the seal because "Marvel filed an “inflammatory complaint” with sensitive and confidential documents attached as exhibits" including "two documents that Sony wants to keep sealed... the license agreement between Marvel and Sony over the Spider-Man character, and an internal marketing document, which, according to Sony, contains extremely detailed information about revenue projections and licensing rates for the first Spider-Man film. Variety reported that Sony feels that if this information is made public, it will jeopardize the studio’s ability to make licensing agreements on the sequel."

(Both quotes from the main article.)

Sounds to me that Marvel were trying to force Sony to renegotiate so that these didn't become public, as opposed to actually having a better case (Not that they may not have a better case, just that Sony wanting to keep it private doesn't mean that Sony have a weaker case. Or something).

AForceOfOne · 04-08-2003, 02:18 PM

first of all i didn't comment on the actual article if you people would have actually read my post. I never said wether or not I thought Marvel was right or wrong. Every time I come here the boards are filled with Anti-Marvel posts and nothing more. That is what I was saying. I didn't even comment on the Stan Lee suit and I never said he was a champion for his cause.

I don't know a thing about the legalities so I choose not to comment on them. On any related article. If people didn't post for things they knew nothing about comics, and comic messageboards in general might be a little bit better off. In the past there's been articles that have been nothing but great for the industry but because it was Marvel people would bring up anything Anti-Marvel. I guess it makes them feel big...maybe they'll get noticed and get to work in the industry. Not likely.

wilsinga · 04-08-2003, 02:41 PM

Graeme:

Comic Books, and Spider-Man the Movie toys (only the MOVIE toys) are the only thing that Marvel actually PRODUCES themselves. I'm not sure about Stan getting a percentage of comic books, but he should be entitled to any "profits" from Spider-Man the Movie toys.

However, before the movie came out, Marvel was a debt ridden company on the verge of bankruptcy again. So it's easy to see how any net income from the toys could be eaten up by interest expense. Therefore there would be no "profit". For example, despite selling well, Marvel lost $5 million on the Fellowship of the Ring toys.

If there are in fact any profits from Spider-Man, the Movie toys, Stan should get them...however, there's no way in hell Marvel made $100 in profit off the Spider-Man toys. (Stan's suing them for $10 million.)

You're right about the Sony part. I guess I'm just giving my company the benefit of the doubt. They've been involved in so many lawsuits, I just don't think they would willingly enter another one, unless they were comfortable with their position.

Graeme McMillan · 04-08-2003, 02:46 PM

quote:
Originally posted by wilsinga:
Comic Books, and Spider-Man the Movie toys (only the MOVIE toys) are the only thing that Marvel actually PRODUCES themselves. I'm not sure about Stan getting a percentage of comic books, but he should be entitled to any "profits" from Spider-Man the Movie toys... If there are in fact any profits from Spider-Man, the Movie toys, Stan should get them...however, there's no way in hell Marvel made $100 in profit off the Spider-Man toys. (Stan's suing them for $10 million.)

I seem to remember reading that the $10 million figure wasn't what Stan thought he was actually owed, just what he was suing for. Can't remember where I read that, though, so I could be wrong. I agree with what you're saying, mind you... Why don't you include comics in his percentage, though?

wilsinga · 04-08-2003, 03:05 PM

Graeme:

It's been a while since I've gone over Stan's contract, but I guess I didn't include Comic Books because I was under the impression that only movie and t.v. related items were included in 10% "profit" participation. I guess I would include any comic book adaptations that were sold.

fistofkhonshu · 04-08-2003, 03:20 PM

Sounds to me like Sony heard Marvel was cooking the books so to speak. Then said "oh yeah well we'll hold back some cash too"

quote:
I don't hate Marvel lately just because it's Marvel, I just hate Marvel lately because every single thing they're involved with, be it court cases, new launches, new formats, new policies, is blatantly about money. They're hardly subtle about their motivations anymore. So, I'm not going to be subtle about booing them.

Yeah thats the whole thing I can't stand about Marvel right now and what causes red flags to pop up when I read the Epic deal. But thats another topic entirely. Does anyone remember Quesada saying they were going to kill some Xbooks about three years ago? Because there were going to be about 15 coming out in the next six months? Count the X titles now. There are more than ever! But totally back to them being blatantly about money... They are doing multiple covers, rediculous hype up to stuff that doesn't pan out (my fault for believing it, I know), double monthly books, double sized books, relaunch upon relaunch. They purposely have two creative teams for some books. WHY? The only reason I can see is to get out two issues a month. But they are also doing the 25 cent issues.