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Digital Domain Media Group Sells 3D Patents to RealD for $5.45 Million

Stereo-Conversion Patents Are Last of DDMG's Major Assets to Be Sold

Tying up one loose thread from the bankruptcy of Digital Domain Media Group (DDMG) earlier this year, the company sold its portfolio of patents covering 2D-to-3D-conversion technology to 3D-exhibition specialist RealD for $5.45 million.

The 3D conversion patents represent the last major DDMG asset to be auctioned, bringing the most expansive chapter in the VFX giant's history to date to an awkward close. Longtime executive Ed Ulbrich is now heading up what he calls "Digital Domain 3.0" — the continuation of DD's core VFX services business on the West Coast, which is now owned by China's Galloping Horse and India's Reliance MediaWorks. DD's 37.5 percent equity share in Ender's Game, now in post-production, remains with DD 3.0.

DDMG purchased the 3D-conversion patents from stereoscopic technology pioneer In-Three late in 2010, then created a stir when it began claiming that substantially all 3D movies used its patented processes. This year, DDMG's former CEO, John Textor, started threatening legal action to collect licensing fees for the technology.

It's not clear how aggressively RealD plans to pursue a licensing program, but the portfolio could be quite valuable. Disney filed an objection with the court, claiming that agreements it had with DDMG, as well as another that dated to the days of In-Three, resulted in "an unlimited, non-exclusive, perpetual worldwide license" for its use of the technology that should endure through the sale. However, the bankruptcy court disagreed, allowing only that Disney has a limited license to continue using the former In-Three patents in relation to its films G Force and Alice in Wonderland.

In a December 21 letter to the court, Disney signaled its intention to appeal the decision, which will stretch the legal proceedings into 2013.

Separately, Lucasfilm had asserted its own limited license related to a 2006 agreement it made with In-Three for 3D conversion of The Nightmare Before Christmas. The court said whatever rights Lucasfilm secured from In-Three would not be affected by DDMG's sale of the patents to RealD.

The future of the Digital Domain Institute, which was set up in collaboration with Florida State University (FSU), is still up in the air, according to The Palm Beach Post, which reports that the city of West Palm Beach is considering kicking in additional financial support to help convince FSU to keep the classrooms open despite the collapse of plans to build a large VFX school there. According to a stipulation approved by the bankruptcy court, FSU has assumed responsibility for the currently occupied office and classroom spaces. FSU, which has 28 students in the program, is expected to make a decision about the film program's future in January, the Post reported.

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