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Gary Friedrich Enterprises, LLC v. Marvel Enterprises

September 1, 2010

GARY FRIEDRICH ENTERPRISES, LLC. AND GARY FRIEDRICH, PLAINTIFFS,
v.
MARVEL ENTERPRISES, INC., MARVEL ENTERTAINMENT, INC., MARVEL STUDIOS, INC., MARVEL CHARACTERS, INC., HASBRO, INC., TAKE-TWO INTERACTIVE, COLUMBIA TRI-STAR MOTION PICTURE GROUP, COLUMBIA PICTURES INDUSTRIES, INC., CRYSTAL SKY PICTURES, RELATIVITY MEDIA LLC,: MICHAEL DELUCA PRODUCTIONS, INC., SONY PICTURES ENTERTAINMENT, INC. AND SONY CORPORATION OF AMERICA, DEFENDANTS.



The opinion of the court was delivered by: James C. Francis IV United States Magistrate Judge

MEMORANDUM AND ORDER

Plaintiffs Gary Friedrich Enterprises, LLC ("GFE") and its principal, Gary Friedrich, bring this action under the Copyright Act, 17 U.S.C. § 101 et seq.,*fn1 against the defendants, alleging that in producing the movie "Ghost Rider," they misappropriated characters and story elements owned by the plaintiffs. The defendants now move for an order directing the plaintiffs to file a bond for costs and attorneys' fees in the amount of $10,000.*fn2 For the reasons set forth below, the motion is denied. Background*fn3

A. Facts

Mr. Friedrich, who resides in Arnold, Missouri, claims to have created the Ghost Rider story and characters. (Declaration of Gary Friedrich dated June 14, 2010 ("Friedrich Decl."), attached as Exh. C to Affirmation of Joseph D. Schneider dated June 17, 2010 ("Schneider Aff."), ¶ 2). Mr. Friedrich wrote the first Ghost Rider comic in 1972, and Magazine Management, the predecessor to Marvel Enterprises ("Marvel"), published it as "Marvel Spotlight" Volume Number 5 (the "Spotlight Work"). (Complaint ("Compl."), ¶ 61; Friedrich Decl., ¶ 2). Mr. Friedrich was the author of the work, but Magazine Management retained the copyright by agreement. (Compl., ¶ 63).

Mr. Friedrich claims that the copyright on the Spotlight Work expired on December 31, 2000, at which point the rights to the work and all of its characters reverted to him. (Compl. ¶¶ 70, 73). He also asserts that the copyrights for subsequent Ghost Rider works that he wrote likewise transferred to him "by operation of law" on a rolling basis. (Compl., ¶ 74).

On February 16, 2007, defendant Sony Corporation of America released the film "Ghost Rider." (Compl., ¶ 120). Around this time, defendants Hasbro, Inc. and Take-Two Interactive produced and sold Ghost Rider merchandise. (Compl., ¶¶ 156-57). The film and related merchandise credited Marvel, not Mr. Friedrich, as the creator of Ghost Rider. (Compl., ¶¶ 204, 211, 217).

In February 2007, Mr. Friedrich applied to the United States Copyright Office to register his copyright. (Compl., ¶ 78). The Copyright Office confirmed him as the author of the Spotlight Work and holder of its copyright, and registered the copyright in Mr. Friedrich's name. (Compl., ¶ 79). Mr. Friedrich then created GFE, an Illinois limited liability company, and assigned his copyrights to the company. (Copyright Assignment and Intellectual Property Assignment dated March 29, 2007, attached as Exh. B to Schneider Aff.).

B. Procedural History

The plaintiffs filed their Complaint on April 4, 2007, in the United States District Court for the Southern District of Illinois. On September 26, 2007, upon the defendants' motion, the Honorable William D. Stiehl, U.S.D.J., ordered that the action be transferred to the Southern District of New York. The plaintiffs then twice requested that the case be transferred instead to the United States District Court for the Eastern District of Missouri. These requests were denied. Relying on representations made by the plaintiffs in connection with these motions, the defendants now seek an order pursuant to Rule 54.2 of the Local Rules of the United States District Courts for the Southern and Eastern Districts of New York ("Rule 54.2") directing the plaintiffs to file a bond for costs and attorneys' fees in the amount of $10,000. Discussion

A. Local Rule 54.2

Rule 54.2 provides that "[t]he court, on motion or on its own initiative, may order any party to file an original bond for costs or additional security for costs in such an amount and so conditioned as it may designate." In the event that a party fails to post bond as directed, "the court may make such orders in regard to noncompliance as are just, and among others the following: an order striking out pleadings or staying further proceedings until the bond is filed or dismissing the action or rendering a judgment by default against the non-complying party." Rule 54.2. "The primary purpose of the rule is to ensure that the prevailing party will be able to collect the costs and fees owed to it in situations where the other party is unlikely or unwilling to pay." Kensington International Ltd. v. Republic of Congo, No. 03 Civ. 4578, 2005 WL 646086, at *1 (S.D.N.Y. March 21, 2005). Furthermore, under Rule 54.2, security for costs may include security for attorneys' fees when a prevailing party is potentially entitled to those fees by statute. Bressler v. Liebman, No. 96 Civ. 9310, 1997 WL 466553, at *6 (S.D.N.Y. Aug. 14, 1997); Beverly Hills Design Studio (N.Y.) Inc. v. Morris, 126 F.R.D. 33, 36-37 (S.D.N.Y 1989).

While there are no set guidelines for applying Rule 54.2, courts generally consider the following factors in determining whether to require a party to file a bond [] pursuant to the rule: (1) the financial condition and ability to pay of the party who would post the bond; (2) whether that party is a non-resident or foreign corporation; (3) the merits of the underlying claims; (4) the extent and scope of discovery; (5) the legal costs expected to be incurred; and (6) compliance with past court orders.

RLS Associates, LLC v. United Bank of Kuwait PLC, No. 01 Civ. 1290, 2005 WL 578917, at *1 (S.D.N.Y. March 11, 2005) (internal quotation marks omitted); accord Sea Trade Co. v. FleetBoston Financial Corp., No. 03 Civ. 10254, 2008 WL 161239, at *1 ...


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