Digital Domain case judge rejects Disney claim to 3D movie technology

By Jim Witters

Wilmington, Del., Dec. 10 - DDMG Estate, formerly Digital Domain Media Group, Inc., can sell its patents for creating three-dimensional motion pictures without regard to claims by Walt Disney Co. entities that they hold an option to buy the rights, a judge ruled on Dec. 10.

Disney should have exercised its option before In Three, Inc. sold the patents to Digital Domain, judge Brendan L. Shannon wrote in a letter to DDMG and Disney entities Marvel Entertainment, LLC, Iron Works Productions III LLC, Iron Works Productions Canada III Inc. and MVL Film Finance LLC, Walt Disney Studios Motion Picture Production, Briar Rose Productions, Ltd. and Extinction Productions, Ltd.

In Three held the patent on technology to transform two-dimensional digital images to three-dimensional images.

Digital Domain bought the patents from In Three and is seeking to sell the rights to the highest and best bidder at auction.

Disney attorney Lisa Hill Fenning argued at a Dec. 4 hearing that any purchaser of the patent must assume the obligation of honoring the option that Disney was granted in its In Three contract for use of the technology in the film G-Force. The technology also was used in Disney's Alice in Wonderland and Tron.

Disney retains the right to the use of the technology in those three movies, judge Shannon wrote in his letter.

"Because Disney did not exercise its option (while In Three held the patents), it does not possess any further rights in the In Three patents," the judge wrote.

DDMG attorney Robert J. Feinstein had sought a ruling on Disney's assertion because the existence of the claim would cast a pall over bidding at an auction.

The Dec. 5 bidding deadline for the In Three intellectual property was adjourned.

The Dec. 7 auction was canceled.

A new bid deadline and auction date will be determined, Feinstein said.

Digital Domain, a Port St. Lucie, Fla.-based media company, filed for bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on Sept. 11. The Chapter 11 case number is 12-12568.

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