9th Circuit Upholds Penders/Sega/EA Case Dismissal

9th Circuit Upholds Penders/Sega/EA Case Dismissal

by October 24, 2013

Six in One, ½ Dozen In the Other

Former Sonic comic writer Ken Penders had a long, hard battle with Archie Comics over the validity of his copyright claims and what, if anything, he was entitled to from his former employer with those copyrights.  Years of fighting eventually led to a settlement between the two parties earlier this year, with Penders’s copyrights intact.  It now appears Penders will have a similarly long haul as he seeks damages from Sega and Electronic Arts regarding alleged unauthorized use of those stories, characters, and other consultation related to Sonic Chronicles: The Dark Brotherhood.

TSSZ has learned through public record that a panel of three judges on the United States Court of Appeals for the Ninth Circuit in San Francisco upheld yesterday a lower court ruling dismissing Penders’s suit against Sega and EA.  Counsel for Penders argued that the lower court improperly applied what’s called the First to File rule and that the case should have been stayed rather than dismissed.  Understand this second case was happening on the west coast as Archie v. Penders continued to evolve on the east coast, where the latter’s direction could significantly impact the former.

“The district court properly exercised its discretion when it applied the first-to-file rule,” the two page decision reads in part.  “Penders failed to apprise the district court why dismissal would negatively impact his potential monetary award. Because the district court was not informed of this, it did not abuse its discretion when it chose to dismiss without prejudice, rather than stay, the Second California Action.”

The ruling follows a nearly 45 minute oral argument session earlier this month between counsel for Penders and an attorney representing both Sega and EA before the three judges.

The decision does not mean this matter is over.  The case can still be appealed to a higher court.  What’s more, the original case in California’s second district court was dismissed without prejudice, which theoretically means Penders can re-file in district court and essentially restart from square one if desired.  He still has significant reason to do so, as this latest ruling has no effect on Penders’s still valid copyrights on file.  In short, there remain options.  Whether Sega and/or EA want to attempt a good faith settlement, especially given the embarrassing outcome of Archie v. Penders, is anyone’s guess.  Keep in mind arguments from that aforementioned case which indicated Archie was on the hook for any legal costs Sega incurred, so the longer this drags on, the more it will impact Archie.

We will continue to bring you any developments on this front as needed.