While not many knew that there was a billion-dollar lawsuit against Disney over its Pirates of the Caribbean franchise, on Tuesday Disney narrowly secured a victory against author Royce Mathew at the 9th Circuit Court of Appeals.
Over the past 10 years, Mathew has been in and out of court alleging that the Johnny Depp lead films based on the popular Disney Land/World ride used his work to create the films. He first sued in 2005, but then withdrew the complaint after Disney presented old “theme park art” that predated his own and represented that it had independently created “the unique supernatural elements in the film.”
Despite Mathew signing a release form, he sued two more times and in his last complaint, he claimed that Disney had “altered and tampered” with the artwork and procured his release by fraudulent means. A district judge dismissed the complaint, ruling that Mathew had to properly rescind the release he signed, and the fact that he waited until the complaint was filed to do so was an inexcusable delay that prejudiced Disney. Today, two circuit judges at the 9th Circuit affirm that holding.
“While a finding of substantial prejudice is generally premature at the 12(b)(6) stage,” they write, referring to the stage of litigation where judges look at the plausibility of pleadings, “here the Second Amended Complaint alleges that since May 28, 2010, Disney has continuously exploited the Pirates of the Caribbean Franchise ‘in movies, television, on-line streaming, DVD’s, video games, merchandising and otherwise in connection with… public showings, distribution, licensing, and merchandising,’ released a fourth movie in the series, and worked on developing a fifth movie. These allegations are sufficient to hold that Disney suffered economic prejudice from Mathew’s delay in seeking rescission because, relying on its presumed rights, including the comprehensive Release obtained from Mathew, Disney expended significant resources in developing its Pirates of the Caribbean Franchise. Accordingly, Mathew cannot rescind the Release.”
“That Disney would not have pursued the Pirates of the Caribbean franchise if it had known of Mathew’s subsequent intent to try to rescind the Release is more than a little implausible,” he writes. “More to the point, that is a factual determination that cannot properly be made on a motion to dismiss based on the allegations contained in Mathew’s complaint. Substantial prejudice is a fact-intensive question that Disney had the burden to prove.”
“[T]he majority cites Petrella for the proposition that substantial prejudice exists whenever a defendant shows that it ‘invested money to expand its business or entered into business transactions based on its presumed rights’ during the delay,'” he writes. “Petrella made clear that the proposition quoted above only applied in instances of extraordinary delay, in that case of 18 to 19 years, where less proof of prejudice was required. The delay in our case was less than four years. That does not mean that Mathew’s delay should be disregarded, but it does mean that it cannot be presumed that Disney must have suffered prejudice so substantial that Mathew’s claim should be dismissed on a motion to dismiss.”
This is great news for Disney as it gets ready to ready to release the latest installment in the franchise, they no longer have to worry about any court appearances regarding the use of the Pirates franchise.
