Rearden LLC et al v. The Walt Disney Company et al

Filing 304

Order by Judge Jon S. Tigar granting 300 Motion for Reconsideration.(bns, COURT STAFF) (Filed on 6/8/2022)

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA

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REARDEN LLC, et al.,

ORDER GRANTING MOTIONS FOR
RECONSIDERATION

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Plaintiffs,
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v.

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THE WALT DISNEY COMPANY, et al.,

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Defendants.

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REARDEN LLC, et al.,

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Plaintiffs,

United States District Court
Northern District of California

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Case No. 17-cv-04006-JST
Re: ECF No. 300

Case No. 17-cv-04191
Re: ECF No. 257

v.

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TWENTIETH CENTURY FOX FILM
CORPORATION, et al.,

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Defendants.

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Before the Court are Defendants’ motions for reconsideration in Rearden LLC v. The Walt

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Disney Co., Case No. 17-cv-04006 (N.D. Cal.) and Rearden LLC v. Twentieth Century Fox Film

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Corp., Case No. 17-cv-04191 (N.D. Cal.). ECF No. 300 (Case No. 17-cv-04006-JST); ECF No.

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257 (Case No. 17-cv-04191). Defendants seek partial reconsideration of the Court’s August 17,

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2021, summary judgment order. ECF No. 297.1 The Court will grant the motions.

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I.

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BACKGROUND
The factual and procedural background of this case is summarized in the Court’s prior

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orders addressing Defendants’ motions to dismiss and motions for summary judgment. ECF Nos.

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60, 85, 297. Plaintiffs Rearden LLC and Rearden Mova LLC (“Rearden”) bring this case against

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Defendants alleging copyright, trademark, and patent infringement claims based on the alleged use

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For the remainder of this order, the Court uses the docket numbers from Rearden v. The Walt
Disney Co., Case No. 17-cv-04006. Identical copies of the declarations, briefs, and other related
materials were filed on the docket in Rearden v. Twentieth Century Fox Film Corp., Case No. 17-cv04191.

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of Rearden’s MOVA Contour Reality Capture Program (“MOVA Contour” or “MOVA”) in the

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production of Defendants’ major motion picture films. ECF No. 1.
Defendants previously moved for summary judgment on the issue of causal nexus, alleging

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that Rearden could not show the required causal nexus between Defendants’ alleged infringement

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and the profits from their films under 17 U.S.C. § 504(b). ECF No. 249. The Court granted the

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motion as to the films Terminator: Genisys, Avengers: Age of Ultron, Night at the Museum: Secret

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of the Tomb, and Fantastic Four, but denied it as to the films Beauty and the Beast, Guardians of

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the Galaxy, and Deadpool. ECF No. 297.
Now before the Court is Defendants’ motion for reconsideration regarding the Court’s

United States District Court
Northern District of California

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order denying summary judgment as to Guardians of the Galaxy and Deadpool. ECF No. 300.2

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Rearden filed an opposition to the motion, ECF No. 301, and Defendants replied, ECF No. 302.

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II.

The Court has jurisdiction pursuant to 28 U.S.C. § 1331.

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JURISDICTION

III.

LEGAL STANDARD

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Motions for reconsideration are governed by Local Rule 7-9, which states,

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(a) before the entry of a judgment adjudicating all of the claims and
the rights and liabilities of all parties in a case, any party may make
a motion before a Judge requesting that the Judge grant the party
leave to file a motion for reconsideration of any interlocutory order
on any ground set forth in Civil L.R. 7-9(b). No party may notice a
motion for reconsideration without first obtaining leave of Court to
file the motion.

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Defendants bring the motion under Local Rule 7-9(b)(3), alleging “[a] manifest failure by

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the Court to consider material facts or dispositive legal arguments which were presented to the

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Court before such interlocutory order.”

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IV.

DISCUSSION
Defendants’ motion centers on Rearden’s claims concerning Defendants’ “indirect profits,”

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which “arise when the alleged infringer does not sell the copyrighted work itself but rather uses

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the copyrighted work to sell another product.” Masterson Mktg., Inc. v. KSL Recreation Corp.,

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495 F. Supp. 2d 1044, 1049 n.5 (S.D. Cal. 2007) (citing Andreas v. Volkswagen of America, Inc.,

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Defendants do not challenge the grant of summary judgment as to Beauty and the Beast.
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336 F.3d 789 (8th Cir. 2003)). Defendants allege that Rearden cannot show a causal nexus

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between any alleged infringement and Defendants’ profits.

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In the Ninth Circuit, “to survive summary judgment on a demand for indirect profits

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pursuant to § 504(b), a copyright holder must proffer sufficient non-speculative evidence to

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support a causal relationship between the infringement and the profits generated indirectly from

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such an infringement.” Mackie v. Rieser, 296 F.3d 909, 916-17 (9th Cir. 2002). The question

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here is whether Rearden provided “sufficient non-speculative evidence” to create a triable issue of

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fact regarding a causal link between the alleged MOVA infringement and profits generated by the

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movies Guardians of the Galaxy and Deadpool.

United States District Court
Northern District of California

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Two Ninth Circuit cases illustrate “what suffice[s] to establish a causal connection between

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copyright infringement and an infringer’s indirect profits.” Griffo v. Oculus VR, Inc., No. SA CV

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15-1228-DOC (MRWx), 2018 WL 6265067, at *10 (C.D. Cal. Sep. 18, 2018) (citing Mackie,

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supra, and Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700 (9th Cir. 2004)). In Mackie,

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plaintiff Mackie created a series of sidewalk installations in Seattle depicting the basic steps of

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various popular dances. 296 F.3d at 911-12. He sued the Seattle Symphony Orchestra Public

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Benefit Corporation for copyright infringement, alleging that it had used an image from his

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installation in its “Pops” promotional materials. Id. at 912. Following discovery, the Symphony

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moved for partial summary judgment on Mackie’s claim for the Symphony’s indirect profits. Id.

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at 913. The district court granted summary judgment, and the Ninth Circuit affirmed. Id. at 916.

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The court held that a plaintiff seeking to recover indirect profit damages for copyright

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infringement “must proffer some evidence . . . [that] the infringement at least partially caused the

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profits that the infringer generated as the result of the infringement,” and that Mackie had failed to

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offer such evidence. Id. at 911. Notably, the plaintiff’s own expert stated that “he could not

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‘understand’ how it would be possible to establish a causal link between the Symphony’s

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infringing use of ‘The Tango’ and any Pops series revenues generated through the inclusion of the

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collage in the direct-mail literature.” Id. at 916. The Ninth Circuit observed that many factors

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could have contributed to an individual’s decision to subscribe to the Symphony, and that “in the

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absence of concrete evidence,” Mackie’s attempt to attribute a patron’s decision to subscribe to the
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United States District Court
Northern District of California

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use of his copyrighted image was speculative. Id.

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In Polar Bear, defendant Timex paid plaintiff Polar Bear Productions to make a

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whitewater kayaking movie called “PaddleQuest,” showing equipment bearing the Timex logo,

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which movie Timex then had the right to use in its promotional materials for a period of one year.

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384 F.3d at 703-04. When Timex used footage from the movie after the one-year mark, Polar

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Bear sued. Id. The evidence showed that Timex used the movie at its trade shows; in a

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promotional campaign for the soft drink Mountain Dew; and in videos used to train salespeople at

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a large national retailer. Id. at 704. The jury awarded Polar Bear $2,415,00.00 in actual damages

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and $2.1 million in indirect profits related to Timex’s infringements. Id. at 705. On appeal, the

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Ninth Circuit found a sufficient nexus between Timex’s profits and its use of the copyrighted

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images at trade shows and in the Mountain Dew campaign. Id. at 712-13. First, the film footage

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was used at twelve different trade shows and an expert testified that 10-25 percent of the sales at

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the trade shows resulted from the excitement created by the booth promotion of which the

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infringing materials were a substantial part. Id. at 712. Second, images from the footage were

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used in a Mountain Dew Booklet and the plaintiff “demonstrated a sufficient causal nexus through

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evidence that the Mountain Dew booklet contained an advertisement featuring the infringing

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material, that customers who ordered Times Expedition watches through the Mountain Dew

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promotion would have seen the advertisement, and that Timex profited from the promotion.” Id.

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The court ultimately vacated the jury’s award profits because the plaintiff failed to provide a

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causal link as to “the overwhelming bulk of the indirect profits claim,” id. at 713, but its

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conclusions regarding the causal nexus to the Timex trade shows and Mountain Dew campaign

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provide useful guidance.

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Turning to the present case, Rearden’s evidence of causal connection as to Guardians of

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the Galaxy consists of (1) a draft press release for the movie, and (2) an online interview of Kevin

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Feige, the president of Marvel Studios. The press release does refer to the technology at issue –

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Marvel refers to a “relatively new, hi-fidelity facial capture system called Mova,” noting that

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“[u]nlike traditional gridded methods, the Mova system makes use of UV reactive particulate in a

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make up [sic] base to give us thousands of trackable points on the surface.” ECF No. 263-17 at 2.
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United States District Court
Northern District of California

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But there is no evidence that this draft press release was ever released to the public, and the Court

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can only speculate that it had any effect on viewership or Defendant’s gross revenues. “When an

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infringer's profits are only remotely and speculatively attributable to infringement, courts will

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deny recovery to the copyright owner.” Polar Bear, 384 F.3d at 711 (citation omitted). In the

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online interview, Feige highlights the importance of “[u]tilizing technology” for characters like the

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one called Thanos and explains that “the reason we were comfortable moving forward with seeing

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as much Thanos as we do in Guardians is because we had a great actor who was willing to put the

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dots on his face and do the performance.” ECF No. 264-4 at 4. But even assuming generously

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that Feige’s use of “the dots” was a reference to MOVA technology, “[t]here is no evidence

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showing that sales resulted from” the reference to MOVA in the interview. Thale v. Apple Inc.,

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No. C-11-03778-YGR, 2013 WL 3245170, at *8 (N.D. Cal. June 26, 2013); see Polar Bear, 384

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F.3d at 715 (“Here, too many question marks remain between the promotional infringement, the

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purported enthusiasm generated among wholesalers and retailers by the advertising, the increased

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prices, and Timex’s ultimate profits.”); Apulent, Ltd. v. Jewel Hosp., Inc., No. C14-637RSL, 2015

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WL 630953, at *2 (W.D. Wash. Feb. 12, 2015) (“plaintiff’s evidence is insufficient to support

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anything other than a guess whether any customer’s decision to book the venue was influenced by

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the two photographs at issue in this action”).

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As evidence that Defendants promoted MOVA’s use in Deadpool, Rearden relies on a 19-

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second excerpt from an 80-minute promotional featurette that “appeared on a Blu-ray, DVD, or

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stream of the film.” ECF No. 301 at 9. The featurette describes the use of “a great system called

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‘MOVA,’ which is a facial capture system. You paint on the face and it creates thousands and

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thousands of little tracking markers. At that point, you get a piece of geometry that captures

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movement and acting of the actor.” ECF No. 264-2, Ex. 22. There is no evidence that the

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featurette was used to promote the movie; instead, it could be seen only by someone who had

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already purchased or rented the film. Rearden asserts a “likelihood that a purchaser of a Blu-ray,

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DVD, or stream may [have] view[ed] the featurette and be[en] motivated to see Deadpool again in

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a theater.” ECF No. 301 at 9. But Rearden provides no evidence, expert or otherwise, that this

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ever happened or was likely to have happened. As stated above, a claim for indirect profits
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United States District Court
Northern District of California

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requires more than mere speculation regarding causal nexus. Polar Bear, 384 F.3d at 710.

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The evidence regarding these two films stands in stark contrast to the evidence regarding

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Beauty and the Beast. First, the Beauty and the Beast trailer included at least nine clips based on

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MOVA technology, and the trailer set a new record for views in the first 24 hours after release.

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ECF No. 263-4 at 18-19; ECF No. 263-9 at 18-19. Rearden cited studies showing that film trailers

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are the top source of discovery of a film by moviegoers; that they are the most trusted source of

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information about a movie; that they are the primary source of information used by parents to

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determine if a movie is appropriate; and that trailer exposure correlates with theatrical attendance.

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ECF No. 263-4 at 18-19; ECF No. 263-18 at 54-55. Rearden also provided deposition testimony

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and declarations, confirming that trailers motivate people to see a movie and substantiating the

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correlation between trailer views and box office gross revenue. ECF No. 263-6 at 6; ECF No.

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264-10 ¶¶ 10-11, 21, 28. Rearden provides no similar evidence concerning causation for either

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Guardians of the Galaxy or Deadpool.

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Rearden’s alternative argument is that there is a triable issue of fact regarding causal nexus

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because the use of MOVA lowered Defendants’ costs and thereby boosted profitability indirectly.

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ECF No. 301 at 6; see Charter Sch. Capital, Inc. v. Charter Asset Mgmt. Fund, L.P., No. CV 14-

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3385-GW (PLAx), 2016 WL 5921062, at *3 (C.D. Cal. Apr. 1, 2016) (“A trier of fact could

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reasonably conclude that Defendants avoided increased costs – and therefore enjoyed increased

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profits, at least initially – because they were able to simply adopt the copyrighted language

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Plaintiff and its attorneys had prepared.”). To support this argument, Rearden cites the testimony

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of two expert witnesses. First, Rearden cites the testimony of Defendants’ expert, Dr. Hao Li,

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who stated that “[t]he main advantage of using high-resolution capture data over alternative

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animation techniques, such as physical simulation or keyframing, is that realistic and complex

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surface dynamics come for free.” ECF No. 263-21 at 3. Rearden also cites a declaration from Dr.

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Angela Tinwell, in which she finds that hand animation is “significantly more labor intensive than

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dense motion capture technologies,” and agrees “with Dr. Lee that even a window of three months

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would not provide sufficient time for artists using traditional techniques to produce CG animation

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of the same level of quality that high density facial performance capture technology such as
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United States District Court
Northern District of California

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MOVA Contour inherently provides.” ECF No. 264-16 ¶¶ 104, 107.
Defendants respond that a reduction in costs is not sufficient to establish causal nexus,

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because Polar Bear requires a showing of “gross revenue duly apportioned to relate to the

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infringement,” Polar Bear, 384 F.3d at 711 (citation omitted) (emphasis added), which is not the

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same as a reduction in costs. ECF No. 302 at 5. The Court need not reach that question, however,

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because even if Rearden is correct that decreased costs are a proper substitute for increased gross

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revenue, Rearden has not shown that the use of MOVA actually decreased costs for Guardians of

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the Galaxy or Deadpool. The declarations Rearden cites merely establish that technology such as

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MOVA inherently provides a better-quality facial performance than traditional techniques. But

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they say nothing about the actual costs of using MOVA versus another technology, much less

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show that Defendants saved costs by using MOVA in either Guardians of the Galaxy or

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Deadpool. See Mackie, 296 F.3d at 915-16 (“a copyright holder must proffer sufficient non-

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speculative evidence to support a causal relationship between the infringement and the profits

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generated indirectly from such an infringement”).

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CONCLUSION

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For the foregoing reasons, the Court erred in denying summary judgment as to both

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Guardians of the Galaxy and Deadpool. Defendants’ motions for reconsideration are therefore

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granted.

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IT IS SO ORDERED.
Dated: June 8, 2022
______________________________________
JON S. TIGAR
United States District Judge

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