| Former type | Public Delisted |
|---|---|
| Industry | Entertainment |
| Founded | October 1998 |
| Founder(s) | Stan Lee, Peter F. Paul |
| Defunct | December 19, 2000 |
| Headquarters | Beverly Hills, California, USA |
| Key people | Jose Abadin, Chairman; John Petrovitz, President, SLM Studios |
| Services | internet and motion picture animation studio |
| Subsidiaries | Stan Lee Media Studios |
Stan Lee Media (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. Its 165-man animation production studio was based in Los Angeles, California from 1998-2001. It won the 2000 Web Award for the best Entertainment Portal on the World Wide Web, but the company failed in the same year and the corporate shell has been involved in numerous lawsuits in the years since. The company has been characterized as "a sleazy Internet start-up that could function as the poster child for the excesses of the turn-of-the-century era."[1]
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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, and through its reverse merger Stan Lee Media became a publicly traded company under the symbol SLEE.[2]
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.[3] With SLM stock price falling below the sale agreement level, Conan Properties, Inc. stock a legal battle ensued between with the previous owners,Baums, LSDC, Arthur Lieberman and the de Camps.[4]
The company ran out of operating capital during the dot com meltdown and closed operations entirely by December 19, 2000.[5]
Near the end of 2000, investigators began a review of stock transactions by co-founder Peter Paul and corporate officer Stephan Gordon.[6] Paul fled to São Paulo, Brazil to avoid prosecution,[7][8] 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.[9][10] 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.[11]
The company has since been the subject of numerous lawsuits, discussed below.
Some of Stan Lee Media's most important projects included the animated Web series The 7th Portal (where Stan Lee himself voiced the character Izayus), The Drifter, and The Accuser. The 7th Portal characters were licensed to an interactive 3-D movie attraction in four Paramount theme parks.[12]
The 7th Portal became the first ever web animation series to succeed as a 3D ride attraction and to be developed for a $150 million dollar movie by Paramount with producer Mark Canton.
The first public use of the word Webisode is attributed to the marketing and promotion of The 7th Portal. It is a portmanteau formed by the words 'web' and 'episode'.
The 7th Portal premiered on the new animation hub Shockwave, on February 29, 2000 when its global launch overwhelmed Macromedia's servers.[13] It became the most successful web originated animated series, being picked up by Fox in mid run, for distribution on TV in South America and Europe.[14] Twenty-two episodes were made, of which the first twenty were shown on-line before the website went bankrupt. The final two episodes were only visible on television. All 22 episodes are on Youtube.
Other productions included the Evil Clone —a purported attempt to clone Stan Lee as a cartoon that wackily criticized many aspects of the media, including happy endings, the StanLeeMedia.net website—, and The Backstreet Project, a project including the Backstreet Boys. Different editions on The Backstreet Project comic books were released on the market. Six webisodes were also released in 1999 via StanLeeMedia.net.
Starting in 2007, 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.
The suits actually started with a preemptive strike by Stan Lee in January 2007, when Lee sued SLMI and Jim Nesfield, who was then running the company, claiming the company was committing $50 million worth of trademark infringement.[15]
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.[16]
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.[17] In July, they filed suit in California.[18]
On July 27, 2007 Stan Lee Media Studios, Inc. was formed in Delaware.
In June 2008 Barrons published the article "The Rage Offstage at Marvel"[19] raising questions about Marvel Entertainment's title to its billion-dollar character franchises including Spiderman, Fantastic Four and the Incredible Hulk.
September 2008, Nesfield's suit from March 2007 was dismissed without prejudice.[15] It would be replaced by a largely similar suit, again in New York, in January 2009.[18]
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)[20] 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, 2009, 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.[21]
On March 17, 2009, 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.[22][23]
In September 2009, Garbus, complaining of "irreconcilable differences with his clients" was replaced as lead counsel by Oliver Armas at Chadbourne & Parke,[24] and the new firm sought to amend Garbus's original complaint.[25]
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.[26]
On May 27, 2010 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 July 26, 2010 SLMI moved to substitue SLMI as the real party of interest and to file a complain relating to November 2002 Order to Settle.
On September 10, 2010 New York attorney Lillian Laserson filed her "Declaration and Expert Opinion" Regarding Stan Lee Media concluding that "SLMI did not lose its rights of ownership under the October 1998 Assignment merely by the fact that it did not react to or challenge Lee's termination." Additionally on September 10, 2010 Attorney Raymond J. Dowd wrote a letter to Judge Paul Crotty requesting an "indicative ruling pursuant to Rule 12.1 of the Federal Rules of Appellate Procedure that SLMI's Motion To Vacate and Clarify Lack of Subject Matter Jurisdiction Over Non-Party SLMI ('Motion to Vacate') pursuant to Rule 60(b) of the Federal Rules of Civil Procedure raises a substantial issue."
On September 15, 2010 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.
On October 18, 2010 the Colorado Supreme Court denied Stan Lee's appeal to reverse the Colorado Court decision of March 17, 2009 and announced its conclusion that there is no reasonable doubt of the validity of the shareholder's proxy appointment. Additionally on October 18, 2010 Raymond J. Dowd representing intervenor Stan Lee Media, Inc, sent a letter to United States District Judge United States District Court of New York Hon. Robert W. Sweet in regard to SLMI motion to intervene and unseal records of July 14, 2010. At this point, SLMI had an apparently valid board of directors for the first time since the bankruptcy filing. The company then 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[27] They are seeking a jury trial over the question of whether or not they actually own the characters that Lee created.[28]
On August 21, 2011 the day the Conan movie opened, SLMI sued Paradox Entertainment, Conan Sales Co., Arthur Lieberman and other over the rights to Conan as they claim Conan was improperly transferred to Conan Sales Co. and sold to Paradox.[29]