Star Wars production company Lucasfilm has taken legal action to forestall the threat of intellectual property (IP) lawsuits, following the rescue from bankruptcy of special effects house Digital Domain.
Founded in 1993 by film director James Cameron and special effects guru Stan Winston, Digital Domain quickly made a name for itself as a rival to Lucasfilm’s in-house effects unit Industrial Light and Magic (ILM). After supplying effects work for Cameron’s films True Lies (1994) and Titanic (1998), the company was sold on several times, but shrunk in the face of increasingly stiff competition from – among others – ILM, and New Zealand-based company Weta.
In September 2012, Digital Domain filed for Chapter 11 bankruptcy protection – a process that insiders predicted would take months to finalise. However, just weeks later the company was unexpectedly bought out for $30 million by the US arm of Chinese media outlet Beijing Galloping Horse Inc. As part of the conditions for its takeover, Galloping Horse ordered a fire sale of Digital Domain’s expendable IP assets, including a range of technology patents developed in partnership with other organisations.
This immediately raised the prospect that the sale would include a 3D-imaging tool which Digital Domain branch In Three agreed to develop for Lucasfilm in 2006. In its legal papers, Lucasfilm sought declaratory assurance that the imaging tool’s future rights holder will not subsequently wield the asset in lawsuits against Lucasfilm, which already has extensive use of the technology tied up in an unnamed, and as-yet unreleased, project. The legal action demonstrates a high degree of IP acumen within the company, and its desire to steer clear of legal difficulties as it adjusts to new ownership.
Global media empire Disney purchased Lucasfilm from founder George Lucas in late October for $4.05 billion – instantly acquiring a rich and diverse IP portfolio. Among the assets that Lucasfilm has developed in the course of its history are videogame franchise The Sims, the Indiana Jones film series, its Young Indiana Jones Chronicles TV spin off – and the blockbusting multimedia phenomenon Star Wars. Central to the deal was an agreement for Disney and Lucasfilm to work together on Star Wars Episode VII for release in 2015.
Digital Domain, meanwhile, has found itself on firm footing in the wake of intense uncertainty. Chief executive Ed Ulbrich added that the deal ‘allows us to expand our capacity and to grow our business offshore. We have immense gratitude to our new ownership’. H Jeffrey Schwarz of global law firm Brown Rudnick LLP, who chaired the company’s creditors’ committee, said that the Galloping Horse buyout was ‘beyond what anyone expected’.
Stormtroopers image courtesy of Michael Winston Rosa / Shutterstock.com
Blockbuster factory takes evasive manoeuvres to avoid infringement proceedings in wake of special effects company’s IP auction