Disney’s Nine-Figure VFX Headache: ‘Beauty and the Beast’ Profits at Stake in Trial

Winston Cho
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In March 2017, Disney’s live-action remake of Beauty and the Beast opened to a monstrous $357 million globally. It marked the seventh-largest domestic debut ever and the top start for a PG title, eventually finding its place on the list of the highest-grossing films of all time with lifetime box office earnings of $1.27 billion.

Leading up to the release, Disney said the movie represented a massive step forward in visual effects — playing up the CG rendering of Dan Stevens’ Beast — through the use of VFX technology called MOVA Contour Reality Capture. “When you see Beast onscreen, there is something so human about him,” said Emma Watson, who played Belle, at a press conference in Paris for the film, noting that the patented tech “really captures the subtlety of Dan’s facial expression.” She stressed, “I don’t think the world has seen anything like it before.”

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Praise for Beauty’s VFX work didn’t stop there, with Disney planning an Oscar campaign on the strength of a performance-capture-based Beast. Director Bill Condon, during that same press tour stop, said that MOVA “actually captured every pore of Dan’s skin and that’s why so much of him — this great performance — comes through.”

There was one problem, though: DD3, the company Disney teamed up with on the project, may not have owned the tech that the movie’s principal players attributed to its 10-figure success. A complicated chain of title, involving a bankruptcy and a fraudulent sale, effectively led to confusion around ownership and licensures of MOVA.

Five months after Beauty and the Beast opened, Disney was sued for improperly using MOVA in three movies, including Guardians of the Galaxy and multiple Avengers installments. The suit demanded an injunction barring distribution of the films.

On Wednesday, opening statements are slated to start in an Oakland federal courthouse in the long-running case at the intersection of Hollywood and Silicon Valley that threatens a portion of Disney’s profits for Beauty. At the core of the case is whether Disney should be held vicariously liable for DD3’s alleged infringement of MOVA, meaning it knew about and benefited from the pilfered tech owned by Rearden, a firm incubated by prolific inventor-entrepreneur Steve Perlman.

MOVA, which captures facial expressions to create photorealistic computer graphic effects, in 2008 made a splashy entrance in Hollywood by way of The Curious Case of Benjamin Button. The photorealistic reverse-aging of Brad Pitt’s face from an 87-year-old man was widely lauded as a VFX milestone, making Rearden’s tech the talk of the town.

It was subsequently used in an array of titles, including Paramount Pictures’ Transformers: Dark of the Moon, Sony Pictures’ The Amazing Spider-Man and Warner Brothers Studios’ Harry Potter and the Deathly Hallows: Part 1, on top of at least a dozen other major studio films that have collectively grossed roughly $9.5 billion at the box office. In 2015, MOVA was recognized by AMPAS with a technical achievement award. It was there that the legal saga first broke into the open, with Perlman taking issue with the award being given to Greg LaSalle, a former employee and longtime friend who was using the tech at VFX house Digital Domain.

“It is horrifying to see a decade of my life’s work credited to someone who was no more than a trainee of the end result,” Perlman wrote in a letter to the Academy.

Chaos ensued. In a 2016 prequel to the legal saga between Rearden and Disney, a federal judge froze Digital Domain’s licensures of MOVA in a preliminary injunction targeting Virtual Global Holdings, a British Virgin Islands-based firm that thought it owned MOVA and licensed it to DD3, and DD3 affiliate Shenzhen Haiticheng Science and Technology. U.S. District Judge Jon Tigar found that the companies had behaved “fraudulently” in transferring ownership of the tech among various Chinese firms. LaSalle in 2013 had signed a deal with SHST, which offered indemnity against any future legal action, purportedly selling MOVA for $25,000. SHST then licensed the software to Digital Domain and hired LaSalle to run the business. Tigar concluded in a bench trial that LaSalle never owned MOVA or possessed the authority to sell it. The order set the stage for Rearden to go after various studios that used the tech, including Disney, which declined to comment for this story.

In the trial set to start Wednesday, Disney will have to contend with that adverse decision. The court on Sunday concluded that the jury should be given a special instruction notifying it of the previous order finding that Rearden owned MOVA and that DD3 was blocked from further using the tech.

Working in Disney’s favor is an instruction telling jurors that the company wasn’t a party to the case and isn’t legally bound by the final judgment, which is aimed at striking a balance between awareness of the ruling and the fact that Disney didn’t get to present a defense in the original dispute between SHST and Rearden. Disney had urged the court to consider an instruction explicitly telling jurors that the company didn’t know that DD3 was infringing on Rearden’s intellectual property when the movie was being made. According to court filings, Disney plans to present evidence that LaSalle was taking steps to legally acquire MOVA when it learned that Rearden no longer owned the tech.

Rearden, on the other hand, will have to grapple with the court siding with Disney on the exclusion of portions of testimony from Philip Fier, a production exec and owner of a Hollywood consulting firm who was set to tell the jury that roughly 8 to 11 percent of profits for Beauty are attributable to the alleged infringement of MOVA. Fier based his expert report on audience exit poll data, which recorded viewers’ reasons for seeing the movie. Tigar found that his conclusions “lack any methodological foundation.”

On that issue, the jury will only hear from Disney’s damages expert, whose testimony wasn’t challenged as inadmissible by Rearden. The expert is expected to testify, in part, that MOVA was just one cog in a large VFX apparatus and that it was a small part of the movie’s success. Still, the jury can award damages for disgorgement of profits in excess of what Disney’s expert says and more in line with what Fiers would’ve testified in favor of, which comes out to between roughly $100 million to $139 million.

Disney, over the course of more than six years of litigation and 600 court filings, has also succeeded in whittling down the scope of the case. According to a sealed summary judgment order issued in October that was subsequently attached to court filings for proposed redactions, Tigar dismissed contributory infringement and trademark claims. He found that Disney “did not know, or have reason to know, of DD3’s alleged infringement before the court held that Rearden owned MOVA” in 2017 — a decision that turned on “intensely factual issues” concerning the transfer of MOVA assets.

Rearden cited evidence it argued showed Disney was aware it was contributing to and profiting off of DD3’s infringement, including a 2013 letter from Rearden’s attorneys to LaSalle informing him that he didn’t own MOVA, which allegedly caused Disney to back out of acquiring the tech for itself. But the court found that notice to Disney that Rearden owned the tech was given before LaSalle sold it to SHST in 2013. The order stated, “Disney entered into its contract with DD3 on March 31, 2015. Beauty and the Beast opened on March 17, 2017, and this Court did not hold that Rearden owned MOVA until August 11, 2017, nearly five months after the film opened.”

As for the trademark claim, Tigar questioned why the use of the MOVA mark in promotional materials for Beauty would “inherently imply Rearden’s sponsorship or endorsement.”

The sole claim the jury will decide is whether Disney is liable for vicarious infringement. According to court documents, it’s expected to argue that it lacked the practical ability to “directly observe” DD3’s alleged infringement and couldn’t recognize that the VFX firm was infringing on Rearden’s intellectual property. DD3 was “one of four visual effects companies and over a hundred vendors” that Disney, which “used over 20 different software tools other than MOVA just for its work on the Beast’s face,” worked with on Beauty, Disney argued.

The trial is expected to last a week, with each side getting 16 hours to present its case. Regardless of the outcome, a sequel to the case may come in the form of another trial over Avengers: Infinity War and Avengers: Endgame, which were released after that 2017 decision and have collectively grossed more than $6 billion.

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