Stan Lee Media, Inc. (SLM) was an Internet-based creation, production and marketing company that was founded in 1998, filed for Chapter 11 bankruptcy protection in 2000, and ultimately dismissed from bankruptcy in November 2006. In its early years, the company created Stan Lee branded super hero franchises for applications in all media including the standout series the 7th Portal. Its 165-man animation production studio was based in Los Angeles from 1998 to 2001. It won the 2000 Web Award for the best Entertainment Portal on the World Wide Web, but the company failed in the same year. Stan Lee himself cut ties with the company long before his death.
History The company was founded by Stan Lee (Spider-Man, X-Men, Iron Man, The Hulk, and Fantastic Four co-creator) with his then-friend, Peter F. Paul in 1998 as Stan Lee Entertainment. Stan Lee Entertainment merged with Stan Lee Media, Inc. of Delaware in April 1999. In July 1999, SLM of Delaware acquired Boulder Capital Opportunities, Inc., a publicly traded company, in a reverse merger structured by investment banker Stan Medley, and through this reverse merger Stan Lee Media became a publicly traded company under the symbol SLEE.
The company won the Best of Show Web Award in November 2000, as the best Entertainment Portal on the internet, beating Warner Bros and Disney's portals.
The company launched the first new team of superheroes to be created by Stan Lee in thirty years, The 7th Portal, at a $1 million gala hosted by Dick Clark at Raleigh Studios on February 29, 2000. The first high concept 'webisode' to be broadcast on the internet, The 7th Portal'''s worldwide debut crashed the servers of Macromedia's Shockwave web site with millions of viewers.
The President of Sony Digital studios was hired away to become the CEO of Stan Lee Media in June 2000, and a joint venture with the largest anime manga company in Japan resulted in production and distribution deals over the internet, on television and in theme parks in Europe, South America and Asia.
SLM used $4.3 million in stock to purchase Conan Properties Inc., owner of Conan the Barbarian. Plans for a third Conan movie and webisodes were made. With SLM stock price falling below the sale agreement level, a legal battle ensued between with the previous owners, Baums, LSDC, Arthur Lieberman and the de Camps.
Bankruptcy The company ran out of operating capital during the dot-com meltdown and closed operations entirely by December 19, 2000.
Near the end of 2000, investigators began a review of stock transactions by co-founder Peter Paul and corporate officer Stephan Gordon.SEC Litigation Release No. LR-18828, August 11, 2004. Paul fled to São Paulo, Brazil to avoid prosecution,"Stan Lee Holder Peter Paul Flees to South America, According to Cohort's Affidavit", Inside.com, March 5, 2001"Accusations Against Peter Paul Retracted and Corrected in Court Filing", MarketWatch.com, May 7, 2001 and the company filed for Chapter 11 bankruptcy protection on February 11, 2001. Paul was extradited back to the U.S. after the US Attorney in New York indicted him for violating SEC Rule 10b-5, a securities regulation felony. Paul pleaded guilty.United States Attorney's Office, "Peter Paul, co-founder of Stan Lee Media, Inc., pleads guilty to securities fraud; Fraud scheme caused $25 million in losses to investors and financial institutions" , press release, March 8, 2005.April Witt, "House Of Cards: What do Cher, a Hollywood con man, a political rising star and an audacious felon have in common? Together they gave Bill and Hillary Clinton a night they'll never forget – no matter how hard they may try", The Washington Post, October 9, 2005, p. W10 He was sentenced to ten years in jail, and was incarcerated in October 2009.
During the Chapter 11 debtor in possession proceedings, Stan Lee assigned the major character franchises he created to his new public company, POW! Entertainment, without the knowledge or approval of the Bankruptcy court. Courts later determined that Lee and his new partner Arthur Lieberman failed to disclose the existence and value of the Rights Assignment Lee made to the company when he founded it.The Rage Offstage, and Motley Fool's Is Marvel a Villain Barrons, July 2008.Federal Judge Rules Stan Lee and Arthur Lieberman Violated Bankruptcy Laws by Unlawfully Taking Assets from Stan Lee Media, Inc." PR Newswire, January 27, 2009
Lawsuits Various parties, including some connected to co-founder Peter Paul, sought to take control of Stan Lee Media Inc of Colorado (SLMI), a successor company to Stan Lee Media, and to sue Stan Lee, Marvel Entertainment, and other parties, for intellectual property owned by Lee, his later company Pow Entertainment, or Marvel Comics, claiming that this property belonged in fact to Stan Lee Media Inc of Colorado. For clarity below, Stan Lee Media Inc of Colorado is referred to as SLMI, as opposed to the original Stan Lee Media, which is referred to as SLM.
In January 2007, Lee sued SLMI and Jim Nesfield, who was then running the company, claiming the company was committing $50 million worth of trademark infringement."Bam! Whap! Marty Garbus Joins the Tortured Legal History of Stan Lee; Marvel," AM Law Daily, January 29, 2009
On March 15, 2007, Nesfield, representing shareholders of SLMI, filed a lawsuit in New York against Marvel Entertainment for $5 billion, claiming that Stan Lee's assignment of all of his creative rights to SLM made SLMI a co-owner of the characters that Lee created for Marvel.
On April 7, 2007, pursuant to a Resolution of the board of directors of Stan Lee Media Inc. of Colorado John Petrovitz was elected to the board of directors of the Company and appointed President of Stan Lee Media Studios, Worldwide. On June 9, 2007, Peter Paul and his associates filed suit against POW Entertainment, Stan Lee, and other former executives of Stan Lee Media, accusing them of improperly transferring assets from SLM's bankruptcy to start POW Entertainment in November 2001 without the knowledge of the Bankruptcy Court or creditors of SLM. In July, they filed suit in California."Federal Judge Dismisses Claims By Stan Lee Media Shareholders," Eriq Gardner, THR, Esq, April 1, 2010 On July 27, 2007, Stan Lee Media Studios, Inc. was formed in Delaware.
In September 2008, Nesfield's suit from March 2007 was dismissed without prejudice. It would be replaced by a largely similar suit, again in New York, in January 2009.
On January 20, 2009, Martin Garbus held a press conference in New York announcing a new suit against Marvel Entertainment, Inc., in which he represented Nelson Thall and John Petrovitz against Marvel Enterprises, Inc., Marvel Characters, Joan Lee (Stan Lee's wife), Joan C. Lee (Stan Lee's daughter), Isaac Perlmutter (Marvel executive), Avi Arad (Marvel executive) and Arthur M. Lieberman (Marvel executive) for recovering more than $750,000,000 in profits owed by Marvel to Stan Lee Media since 1998. In the press conference Garbus explained his theory that Stan Lee retained an interest in his early characters by virtue of having been a 'co-creator' of those characters, and that he had assigned these to SLM in an October 15, 1998 agreement. Garbus believes that Marvel's claim to the characters rests on a similar agreement signed a month later, by which time Lee had nothing left to assign (having already given the characters to Stan Lee Media). Garbus believes that high levels of compensation given to Stan Lee by Marvel after a 2005 lawsuit indicate that Marvel acknowledged Stan Lee's co-creator status, and that this acknowledgment probably appears in the settlement agreement between the two (the agreement was sealed by the court). On January 27, Judge Stephen Wilson ruled that Lee and POW Entertainment had illegally transferred the rights to the characters The Drifter, The Accuser and Stan's Evil Clone from SLM, without the knowledge or consent of the Bankruptcy Court.Law360 summary, January 27, 2009 On March 17, A Colorado court gave a victory to Stan Lee, denying efforts by P.F.P. Family Holdings, a company affiliated with Peter Paul, to reconvene the December 2008 SLMI shareholder meeting. The plaintiffs had hoped to use the meeting to install themselves or their allies as directors of SLMI, but the court determined that there had been no quorum and thus no meeting to reconvene. Lee, POW v Nesfield, Belland- Garbus Status Report to J Wilson April, 2009 Belland Status Report conceding that nobody seems to have authority to sue on behalf of SLMI
In September 2009, Garbus, complaining of "irreconcilable differences with his clients" was replaced as lead counsel by Oliver Armas at Chadbourne & Parke,"Chadbourne, Giuliani Lawyer Join Marvel Litigation," AM Law Daily, September 8, 2009 and the new firm sought to amend Garbus's original complaint.
On March 31, 2010, Judge Paul Crotty dismissed the New York lawsuit against Marvel, Stan Lee, and others, citing lack of standing, expiration of statute of limitations, and other causes.Case 1:09-cv-00715-PAC Document 41 Filed 03/31/2010 Crotty ruled that a "lifetime" agreement Lee had signed violated California labor law. On May 27, the Colorado Court of Appeals issued an order to reverse the Colorado Court decision of March 17, 2009, having determined that a sufficient number of shares were represented at the 2008 board of directors meeting to establish a quorum and elect the board of directors. On September 15, Raymond J. Dowd moved to substitute SLMI as the real party of interest and filed "Memorandum of Law in Reply and Further Support for Motion to Unseal and Motion to Substitute" in United States District Court Southern District of New York.
In 2011, investor Michael Wolk organized a group to finance SLMI's legal actions against Walt Disney. His primary investor is Elliott Management.Hedge Fund Elliott Management Is Backing Stan Lee Media's Spider-Man Lawsuit Against Disney Forbes Online, February 1, 2013 SLMI hired new counsel, who petitioned Judge Wilson to lift his stay on the California proceedings. This was granted, and they filed a new, consolidated complaint in February 2011"Stan Lee Media vs. Stan Lee: Lawsuit Back On, This Time For Real (Exclusive)", Hollywood, Esq, Eriq Gardner, February 16, 2011 They sought a jury trial over the question of whether or not they actually own the characters that Lee created."Stan Lee Fights Legal War to Save Spider-Man, Iron Man, Thor (Exclusive Documents)", Hollywood, Esq, Eriq Gardner, April 11, 2011 Hearings were scheduled for March 8, 2012."Stan Lee Media Fails to Reclaim 'Conan the Barbarian' Rights", HollywoodReporter.com
On August 21, 2011, the day the Conan the Barbarian opened, SLMI sued Paradox Entertainment, Conan Sales Co., Arthur Lieberman and others over the rights to Conan, as they claim Conan was improperly transferred to Conan Sales Co. and sold to Paradox. On February 9, 2012, Judge Stephen Wilson dismissed all of SLMI's claims.
By 2012, the proceedings in California courts were placed on hold until the New York suits were decided (to be placed permanently on hold if the New York court affirmed the matter were res judicata). On March 21, the New York court tossed out SLMI's claims but without deciding res judicata, thus allowing proceedings against Stan Lee in California to proceed."Appeals Court Denies Stan Lee Media's Bid For Rights to Spider-Man," HollywoodReporter.com, March 21, 2012 SLMI brought suit in California the next day,Namesake company revives case vs. Stan Lee, Variety, March 22, 2012 but the suit was dismissed by U.S. federal judge Stephen Wilson."Stan Lee Triumphs Over Stan Lee Media in California Court. A decade-long battle between the comic book genius and the company he left in ruin appears to be nearing the finish line as a California judge throws out another lawsuit." Eriq Gardner, The Hollywood Reporter, July 10, 2012 SLMI filed a notice of appeal on September 21, 2012.