Rearden, a high-powered computing company that has sought to establish its creative reputation in the movie industry with its special-effects work on some well-known films, now wants to become a legal innovator, too. It’s doing so by pursuing a complex lawsuit, a case that began when Rearden first sought to protect its legal rights over what it claimed was an unauthorized use of its technology by a Chinese-owned company, Digital Domain, aka DD3.

A federal judge recently ruled that DD3 behaved “fraudulently,” and ordered it to return disputed movie-making technology to Rearden (click on the photo above to play a TED video, in which a DD3 exec explains how the disputed system works).

But in February, a federal court in Los Angeles all but spit-roasted Rearden’s recent and related legal claims against the Disney Corp. and a host of other Hollywood studios that worked with DD3 on such such Hollywood its as Deadpool, Guardians of the Galaxy and The Curious Case of Benjamin Button.

And now Rearden is returning to court with an amended complaint that seeks to upend a notion that might be a part of basic law school classes on intellectual property.

Original claim

Citing a U.S. Ninth Circuit Court of Appeal decision in Design Data Corp. v. Unigate Enter., Inc., Rearden first argued that some courts have held that “the copyright protection afforded a computer program may extend to the program’s output if the program ‘does the lion’s share of the work’ in creating the output and the user’s role is so ‘marginal’ that the output reflects the program’s contents.” 847 F.3d 1169, 1173 (9th Cir. 2017) [quoting Torah Soft Ltd. v. Drosnin, 136 F. Supp. 2d 276, 283 (S.D.N.Y. 2001)].

In essence, the company broadly claimed its technology’s contribution was so substantial that it almost was akin to Microsoft saying it had rights to every document created in its Word software.

However, the court rejected the plaintiff’s assertion, finding a plausible claim that both actors and directors make huge contributions to movies, even in their role in special-effects created with Rearden tech. Without these creative contributors, the computer program would not be able to “take inputs and turn them into outputs,” the court said.

Amended claim

The company hopes now to persuade the courts about how much special-effects software can be protected not just by the usual method of a patent but also by copyright.

Because its claims of infringement — of patents, copyright and trademark — could have big effects on high-tech movie special-effects used in some big-money productions, lawyers may want to turn their minds inside out more than Benjamin Button reverse-aged to consider what Readen and its counsel are up to, especially because they already have shown they can get a court to buy in to a complex argument about how others have tried to pilfer their product.

In the amended complaint, Rearden asserts that the Contour program itself is an original literary work of authorship, and, thus a proper subject of copyright protection. Rearden further now argues that Disney MPG is vicariously liable for DD3’s infringement because  the studio had a substantial and continuing connection to DD3’s unauthorized use of Rearden technology.

The 112-page amended complaint itself illustrates the complexities of Rearden’s case, as it seeks to: outline the relationships among the parties (including DD3 and its overseas owners, as well as between Rearden and its onetime employees who then went to DD3); how the disputed technology works, including ample photographs of equipment (like the gear shown above) and actors prepped for software transformation; the timeline of the dispute; and the claims against the defendants, with details of the parties’ contested actions. (A tip of the hat, by the way, to the Hollywood Reporter Esq. for posting the suit online).

The courts will have plenty of material to chew over in this case, including Rearden’s assertion that, as a copyright protected item on a fixed medium (CDs, computer hard drives and more), its product was infringed each and every of the myriad times the studios flipped on and open its special-effects software. That damage claim, if accepted by the court, could add up, fast and big time.

As Hollywood keeps using special-effects more and more while also trying to slash costs, in part by off-shoring work and fueling runaway production, the Rearden case will be closely watched. It also may keep studios and Entertainment lawyers busier than ever in the clearance process, drilling down now on licenses and rights attached to underlying software used in movie production, especially special effects. And, will the floodgates be thrown open to more litigation over studios potential liability for vicarious or contributory copyright infringement for unauthorized technology in their movies?