Disney entity asks court to stay former Digital Domain patent sale

By Caroline Salls

Pittsburgh, Jan. 7 - Walt Disney Studios Motion Picture Production asked a federal court to stay the sale of DDMG Estate, formerly Digital Domain Media Group, Inc., patents, according to a Jan. 4 filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Walt Disney Co. entities Walt Disney Studios Motion Picture Production, Briar Rose Productions, Ltd. and Extinction Productions, Ltd. filed an appeal on Dec. 28 of a Dec. 10 ruling that DDMG Estate can sell its patents for creating three-dimensional motion pictures and that Disney holds no option to buy the rights.

In his Dec. 10 ruling in the dispute, Judge Brendan L. Shannon wrote that Disney should have exercised its option before In Three, Inc. sold the patents to Digital Domain.

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.

Absent a stay pending appeal, the Disney entities said they cannot be assured that a higher court will be able to resolve the question of whether DDMG's interests in the patents they purchased are subject to and limited by pre-existing licenses.

The Disney entities said this would require any subsequent sale of the patents in bankruptcy to remain subject to the pre-existing licenses.

In a stay motion objection filed Monday, DDMG said Disney could not establish a strong likelihood of success on its appeal and that there would be no irreparable harm to Disney if the stay is not granted.

In addition, DDMG said a stay "would be disastrous to the debtors' ongoing liquidation efforts and their pending sale of the patents at issue."

The company said the parties have agreed not to close the sale until the court hears the stay motion.

"If a stay were granted, the debtors could lose a sale that is the result of a highly competitive auction and is expected to yield the debtors' estates a purchase price of $5.45 million in cash," the objection 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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