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OFF BEAT: Epic battle between Marvel, Stan Lee ends in court

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In the comic book world, it’s not uncommon for characters to suddenly re-emerge after lying dormant for years and turn a storyline on its ear.

For Marvel Enterprises Inc. and legendary creator Stan Lee, a panel of 2nd U.S. Circuit Court of Appeals judges was disinclined this week to allow that sort of thing in a real-world battle over the copyrights to some of Mr. Lee’s most recognizable characters, according to court documents.

Los Angeles-based Stan Lee Media Inc., an Internet-based production company that Mr. Lee co-founded after leaving Marvel, had hoped to vacate a 2005 settlement between Mr. Lee and Marvel Comics regarding the assignment of copyrights to several prominent characters, including the Incredible Hulk, Spider-Man, the X-Men and Iron Man, according to court documents.

SLMI argued twice before the U.S. District Court for the Southern District of New York—in 2009 and again in 2010—that it legally controlled Mr. Lee’s copyright claim because his employment contract never was properly terminated when he left SLMI in 2001.

Both lawsuits were rejected on the grounds that SLMI lacked standing to challenge the 2005 settlement, and that too much time had passed for it to assert a copyright claim.

In its unanimous March 21 decision, the 2nd Circuit upheld the lower court’s decision to toss SLMI’s claim.

“SLMI primarily argues that the fraud on the court here was that Mr. Lee and Marvel litigated and resolved (his) interest in the 10% stake of Marvel’s television and movie profits without including SLMI,” Chief Appellate Judge Dennis Jacobs wrote in the court’s ruling. Even under SLMI’s theory that it was entitled to money owed to Mr. Lee under the terms of his employment agreement with Marvel, that would not mean that he and Marvel had perpetrated a fraud on the court, which the court would require in order to set aside the settlement.

The judges also noted the exceptionally long stretch of time that had passed between the settlement and SLMI’s lawsuit.

“SLMI did not seek to vacate this judgment until more than five years after final judgment,” Judge Jacobs wrote. “Much shorter periods of time have been held unreasonable.”