SAN FRANCISCO (CN) - Disney and other major film studios could still be in hot water for using stolen technology to create lifelike animated characters in hit films, a federal judge indicated during a court hearing on Thursday.
At the hearing, U.S. District Judge Jon Tigar asked a Disney lawyer to imagine himself in a studio where stolen software is being used to turn a live actor's facial performance into an animated scene.
"Is any infringement taking place?" Tigar asked.
Disney lawyer Kelly Klaus, of Munger Tolles & Olson in San Francisco, circled around the question, insisting that the owner of a software program, like Microsoft Word, cannot lay claim to a work of art, such as a book, that was created using the program.
"You're giving me an example of when someone is not liable," Tigar replied. "I'm asking if there's a situation where somebody is."
Disney is fighting in round two of a copyright and patent battle with San Francisco-based technology firm Rearden LLC.
Rearden sued Disney, Twenty-First Century Fox, Paramount Pictures and video game maker Crystal Dynamics in July 2017. The technology firm claims the studios knowingly contracted with a Chinese company that stole its facial motion capture technology to create top-grossing films and games.
Last year, Rearden asked Tigar to ban distribution of the allegedly infringing games and movies, including “Guardians of the Galaxy” (2014); “Avengers Age of Ultron” (2015); “Fantastic Four” (2015); “Terminator: Genisys” (2015); “Rise of the Tomb Raider” (2015); “Deadpool” (2016); “Beauty and the Beast” (2017); and others.
In February, Tigar dismissed copyright claims against the studios, finding that people – not software – perform the "lion's share" of creative work in making the productions.
Rearden shot back in March with an amended complaint accusing the studios of inducing copyright infringement and vicarious and contributory copyright infringement.
To make its case for secondary copyright infringement, Rearden must prove the studios directly benefitted financially from the infringement and that they had the legal right and practical ability to supervise and direct the infringement.
Rearden lawyer Mark Carlson, of Hagens Berman Sobol Shapiro in Seattle, insisted contracts the studios signed with technology firm Digital Domain 3.0, or DD3, which possessed the stolen software, allowed them to occupy DD3 studios where the alleged infringement occurred.
"They're right there," Carlson said. "They're watching the infringement unfold before their eyes."
Tigar challenged Carlson on that point, citing the lack of control an observer might have over a surgeon in an operating room.
But Carlson insisted the studios were not merely observing. They were "collaborating and participating," he said.
If a film director instructed someone to use the stolen software in a certain way, Tigar suggested that could support Rearden's secondary infringement claims.
"It doesn't strike me at all odd that a director would say to someone using software that ... I need you to do these other things so this part of their face gets brighter, or this happens to their mouth," Tigar said.
On claims of inducing patent infringement, Rearden must prove the studios knew DD3 was using an unlicensed version of its facial motion capture software when they hired the company.
Rearden says it knows Disney performs rigorous intellectual property reviews before entering into business contracts based on its past dealings with the company. It would be highly unlikely that the studios were unaware of Rearden's public legal battle over its technology with DD3, Carlson said.
"It was reported in all the Hollywood press, and all the Hollywood insiders knew about that," the Rearden lawyer told the judge.
In his last ruling, Tigar refused to dismiss the inducement of patent infringement claims.
The judge framed it as a tough call because the studios may possess evidence that they knew about the patent licensing issues. Such evidence could be revealed in discovery, despite the "speculative nature" of Rearden's claims, Tigar said.
After an hour of debate, the judge ended the hearing without issuing a ruling.
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