Disney Sues to Keep its 3D Rights

Walt Disney Studios is caught up in a legal battle as it fights for its rights to distribute 3D movies.  The studio is engaged with the Digital Domain Media Group (DDMG), a 3D movie conversion company who technology is often licensed out to major studios.  Disney had gotten its license to use certain 3D conversion technology from a company called In-Three, which DDMG had bought in 2010.  Disney wants to make sure the licenses it bought before that sale survive DDMG’s bankruptcy, which will force DDMG to sell off all its patent and intellectual property rights to keep the company alive, mainly the 3D conversion software.

“The real dispute appears to concern the Disney Entities’ broader rights to use the In Three Patents to create new films and for other purposes — rights that arise from the G-Force Agreement.” – statements from Disney’s legal team

Disney's 2010 live-action Alice in Wonderland was a feature 3D movie.

Disney is actually worried it will have problems with movies it’s already produced, filmed and converted.  For example, Alice in Wonderland.  DDMG had filed lawsuits against companies for using the conversion tech without have a DDMG-agreed license, despite licenses made with In-Three.  That leveraged new licensing agreements how of companies like Samsung and Reliance MediaWorks.  DDMG has claimed in the past it isn’t bound by In-Three’s agreements with other companies, giving it the ability to sue.

The Avengers was historically successful primarily because of its 3D conversion. (image: Wikimedia Commons)

Here is a list of things their patents cover, making it very difficult to avoid the company if a studio wants to license 3D movie-making tech:

1. Method for minimizing visual artifacts converting two-dimensional motion pictures into three-dimensional motion pictures
2. Method of hidden surface reconstruction for creating accurate three-dimensional images converted from two-dimensional images
3. Method for conforming objects to a common depth perspective for converting two-dimensional images into three-dimensional images
4. Image processing system and method for converting two-dimensional images into three-dimensional images
5. Method and system for creating realistic smooth three-dimensional depth contours from two-dimensional images
6. System and method for ‘dimensionalization’ processing of images in consideration of a predetermined image projection format

(summary from studiodaily.com)

Star Wars Episode VII is planned to be released in 3D (image: Wikimedia Commons)

Disney entered negotiations with DDMG despite the arguments, and had at least a draft agreement in place for a new license when the company filed for bankruptcy.  If a judge were to rule in favor of DDMG, Disney might be liable for massive royalty payments to the bankrupt company for the movies like Alice in Wonderland that have been long finished and on the DVD shelves.

“In effect, Debtors appear to contend that the proposed sale of the In Three Patents can cut off or impair the Disney Entities’ rights to distribute, modify, and otherwise exploit their own films, including among others Tron Legacy and Alice in Wonderland, just because those Works incorporate 3D VFX that were created using the In Three Patents — VFX work that was previously commissioned and paid for by the Disney Entities.”  - Disney

If you ask me, the whole thing seems like a suspicious two-step by a company who was already facing financial trouble, deciding to use what remaining assets it had to buy a company with some important patents and leverage those patents to muscle new licensing agreements out of the major studios.  But what do you think of the case?  Does DDMG have a leg to stand on?

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