Stan Lee's daughter ducks $1 mln sanction blow in POW! IP fight

The World Premiere of “Spider-Man: Homecoming”  – Arrivals – Los Angeles
The World Premiere of “Spider-Man: Homecoming” – Arrivals – Los Angeles, California, U.S., 28/06/2017 - Spider-Man co-creator Stan Lee. REUTERS/Mario Anzuoni
  • J.C. Lee sued over father's name, likeness rights
  • District court said issue already decided, claims frivolous
  • But 9th Circuit says J.C. Lee not involved in previous disputes

(Reuters) - J.C. Lee, the daughter of comic-book legend Stan Lee, convinced a U.S. appeals court on Monday to toss a $1 million sanction against her for bringing frivolous claims over her late father's IP rights.

The 9th U.S. Circuit Court of Appeals said the record didn't support a finding that J.C. Lee's claims against POW! Entertainment Inc were "clearly frivolous, legally unreasonable, or brought for an improper purpose."

However, the 9th Circuit affirmed the district court's decision to dismiss the claims, finding earlier cases resolved that Stan Lee Media doesn't own the rights to his name and likeness.

POW's attorney Chaz Rainey of Hamrick & Evans said in an email that he and the company were happy with the decision to dismiss, but disappointed in the sanctions decision.

"This case was patently frivolous and never should have been filed," Rainey said.

J.C. Lee's attorney Jonathan Freund of Freund Legal said in an email that he and his client were pleased with the sanctions decision, but still believe her claims have merit. He said they will "do all we can to make sure that Ms. Lee's rights and interests are well served."

J.C. Lee sued POW in 2019, alleging its founders, former partners of Stan Lee, had manipulated him into transferring his rights to the company. She sought a declaration that Stan Lee Media owns the rights.

U.S. District Judge Otis Wright dismissed the complaint last year and fined Lee and her attorneys $1 million, finding the issue had been decided in several earlier court rulings and that the complaint was meant to drum up negative publicity for Pow.

Wright also said Lee had recently inherited between $50 million and $70 million from her father, and the size of the sanction was necessary to deter her from suing again.

But a three-judge 9th Circuit panel wrote in a joint opinion that this wasn't the "rare" case where such sanctions would be justified.

The appeals court noted that J.C. Lee wasn't involved in the earlier disputes over Stan Lee's rights, and said POW's claims that she and her lawyers inflamed the press were overblown.

"The existence of a single article reporting the filing of the action was insufficient evidence of 'fueling the media fire,'" the court said.

U.S. Circuit Judges Marsha Berzon and Johnnie Rawlinson, joined by U.S. District Judge John Antoon II of Florida, sitting by designation, wrote the opinion.

The case is Lee v. Pow Entertainment Inc, 9th U.S. Circuit Court of Appeals, No. 20-55928.

For Lee: Jonathan Freund and Craig Huber of Freund Legal, Ian Shelton of Eversheds Sutherland

For Pow: Chaz Rainey of Hamrick & Evans

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Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets, for Reuters Legal. He has previously written for Bloomberg Law and Thomson Reuters Practical Law and practiced as an attorney. Contact: 12029385713