The case of Rearden LLC et al. v. The Walt Disney Company et al., Nos. 3:17-cv-04006, 04191 & 04192 (N.D. Cal.), has been covered more in the Hollywood Reporter than in legal publications, but it is both a “Hollywood story” and a case with intellectual property issues that cover the spectrum of patent, copyright and (to a lesser extent) trademark law. The case revolves around a technology called MOVA Contour Reality Capture technology (“MOVA Contour”) that is used to create 3D animated characters that appear more human than ever, as used in movies such as Guardians of Galaxy and many others. Some of Hollywood’s biggest studios hired a vendor, DD3, which used this 3D technology as part of the process of creating 3D characters in the movies. Rather than suing DD3 for any IP violations, however, the plaintiff, Rearden, decided to sue those Hollywood Studios for alleged copyright, patent and trademark infringement. The case thus illustrates various issues and considerations as to when a party can be liable for the acts of a vendor it hires, if the vendor is (allegedly) committing copyright and patent infringement.
For example, on the copyright side, because the Studios created CG characters and movies that were allegedly derivative works of the DD3 software’s output files, one question is whether, and under what circumstances, copyright protection of computer software can extend to the output files created using that software. Other copyright issues presented in this case include determining under what circumstances a party can be vicariously liable when it contracts with another company that infringes a copyright, or when this relationship can result in contributory copyright infringement.
With respect to patent infringement, the case raises a question as to whether a system claim can be found to be directly infringed by a party entering into a contract with a vendor, even when the vendor possesses all the elements of the claim since it owns and uses the requisite hardware and software. If only an indirect infringement claim is plausible for this situation, can knowledge of the patents and that the services constituted infringement be sufficiently pled by pointing only to general IP due diligence performed by the defendant?