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Article posted: 1/5/2013 7:18 AM

Disney seeks to halt bankruptcy sale of 3-D movie technology

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By Bloomberg

WILMINGTON, Del. -- A Walt Disney Co. unit has asked a federal judge to block a bankruptcy court ruling that would allow another company to sell patents related to three- dimensional movies.

Walt Disney Studios Motion Picture Production's rights to use the technology to convert traditional films into 3-D movies will be harmed, the company said in its appeal in U.S. District Court in Wilmington, Del.

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The dispute involves the shell company left in bankruptcy by the collapse of Digital Domain Media Group Inc., the provider of special effects for the movies "Transformers" and "Titanic." That shell, known as DDMG Estate, held an auction for the patents last month that was won by RealD Inc.

Disney claims it has the right to use the technology because of agreements it signed with the original patent holder in 2008 and 2009. The agreements allowed Disney to use the 3-D conversion patents on the films "Alice in Wonderland" and "G- Force."

The "G-force" agreement granted Disney the right to keep using the 3-D patents, Burbank, California-based Disney claims in its appeal.

In a Dec. 10 ruling, U.S. Bankruptcy Judge Brendan Linehan Shannon disagreed with Disney's position. The dispute raised the question of whether Disney could "use that technology, gratis, in perpetuity," Shannon said in his ruling. He ruled the company could not.

After his ruling, RealD won the auction with a bid of $5.45 million and Shannon later approved the sale, which hasn't yet closed.

U.S. District Judge Sue L. Robinson agreed to hold a telephone hearing Friday so Disney can try to persuade her to overturn Shannon's ruling and temporarily prevent DDMG from closing the sale.

DDMG lawyer Debra Grassgreen, with the law firm Pachulski, Stang, Ziehl & Jones, declined to comment on Disney's filing.

The other assets of Digital Domain were sold at a separate auction in September for more than $30 million to a partnership of Chinese and Indian film companies.

Digital Domain's special-effects artists have won multiple Academy Awards, including one for the Brad Pitt movie, "The Curious Case of Benjamin Button."

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