Marvel, Sony Entangled in Licensing Suit

Even as a sequel to the blockbuster “Spider-Man” begins production, a sticky web is being spun over disputed merchandising profits from the lucrative movie franchise.

Comic book giant Marvel Enterprises Inc. claims that it is being shortchanged by Sony Pictures Entertainment in a lawsuit moving its way through Los Angeles Superior Court.

Sony, in turn, is questioning Marvel’s accounting practices, and has withheld $1.5 million in licensing payments as a result. The Culver City-based film studio, which is demanding an audit of Marvel’s books, also alleges that the suit is nothing more than a multimillion-dollar shakedown.

“This is a pathetic attempt to renegotiate their ‘Spider-Man’ agreement with Sony,” said Patricia L. Glaser, who represents the studio.

But Carole E. Handler, a lawyer for New York-based Marvel, said, “This is not a renegotiating ploy. Instead of living up to the provisions of the contract and treating Marvel as its partner, Sony has tried to take ‘Spider-Man’ for itself in merchandising to the detriment of Marvel.”

Details of the dispute remain sketchy, in part because most court documents are under seal pending a Monday hearing. Both sides said they expect the filings to be made public.

Documents released to date show the two companies have been at odds over merchandise money since last fall.

Under its contract with Marvel, Sony oversees the sale of merchandise arising from the film, passing an undisclosed share of profit on to the comics firm. Marvel continues to sell its classic “Spider-Man” characters unrelated to the film, but cuts Sony in on profits, on the theory that sales are boosted by the movie’s success. Sony, however, alleges that Marvel has failed to pay at least $1.5 million.

In a 66-page complaint filed in February, Marvel goes so far as to ask the court to consider, as one remedy, scrapping its entire film and merchandise licensing agreement with Sony -- but not until after the sequel is released in July 2004. Sony argues that Marvel is prohibited from doing that.

Court papers also show Marvel is alleging that the 59-page license agreement signed in 1999 was “induced by fraud.”

But Sony counters in papers that the deal was hammered out over nearly three months, went through numerous drafts and that Marvel was represented “by highly regarded outside counsel at the very top of their field.”

As Hollywood’s biggest-grossing film last year, “Spider-Man” has been especially lucrative for studio parent Sony Corp., the Japanese consumer electronics and entertainment giant. “Spider-Man” grossed $821.7 million worldwide, and a DVD version of the film rang up more than $190 million in sales during its first week alone.

The movie likewise has been a windfall for Marvel. In its 2002 financial documents filed with the Securities and Exchange Commission, the comics company said revenue for its Toy Biz marketing division soared by 69% to $155 million, mainly from the sale of action figures and accessories related to the film.

The documents also said Marvel’s licensing revenue nearly doubled to $79.6 million, including $10.4 million it shared from box-office, DVD and video revenue, as well as a $5-million advance from Sony to begin production on the sequel.

Marvel Chief Executive Avi Arad, also a “Spider-Man” producer, said the suit won’t hurt the sequel, which started production in New York on Saturday.

The dispute notwithstanding, Marvel and Sony still plan several other non-”Spider-Man” movies, and are even negotiating one now.

“That’s Hollywood,” Arad said. “People make records, make movies and sue all at the same time. It’s the nature of the beast.”