Claims Involving Ownership of Comic Book Heroes Lacked Standing, Barred By Doctrine of Don’t Wait A Decade To Assert Rights

In Abadin v. Marvel Entm’t, No. 09-0715 (S.D.N.Y. Mar. 31, 2010), Judge Crotty of the U.S. District Court for the Southern District of New York dismissed an eight-count complaint filed on behalf of Stan Lee Media, Inc. shareholders against Marvel and Stan Lee, creator of several iconic comic book super heroes including Spider Man, Hulk, Iron Man, and X-Men.

The complaint consisted of the following eight causes of action: (1) copyright infringement; (2) violation of the Lanham Act; (3) breach of contract; (4) tortious interference with contract; (5) breach of fiduciary duty; (6) aiding and abetting breach of fiduciary duty; (7) constructive trust; and (8) accounting of profits. The dispute centered on Stan Lee’s 1998 transfer to Marvel of rights in many valuable comic characters, claiming shareholders of Stan Lee Media, Inc. owned such rights and had been harmed by the wrongful transfer.

At the outset, the court held the plaintiffs lacked standing to bring a derivative suit because the transfer of rights occurred in 1998 and plaintiffs did not acquire shares until 1999, more than a year after the purported illegal transfer. In addition, the applicable statute of limitations barred each claim, and the court worked laches and estoppel into some of its analysis.

This opinion drives home at least one principal point: “Plaintiffs cannot wait a decade to enforce their rights,” especially when the complaint acknowledges that “defendants’ violations have been open and notorious.”