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FanX says $4M judgment would 'destroy' company, hurt Utah economy

By McKenzie Romero, KSL | Posted - Oct 10th, 2018 @ 9:40pm



SALT LAKE CITY — FanX is seeking an emergency intervention from the 9th Circuit Court of Appeals saying a California judge's order that the company pay its opponents' nearly $4 million legal bill would "destroy" the business and hurt Utah's economy.

In a motion filed Wednesday, Salt Lake City's comic and popular arts convention called on the appeals court to step in before it is required to pay the judgment later this month that would cover much of the cost San Diego Comic-Con International incurred in a trademark lawsuit over FanX's original name, Salt Lake Comic Con.

Though jurors found the Salt Lake convention had not willfully violated San Diego's "comic con" trademark and awarded just $20,000 of the $12 million San Diego sought at trial, U.S. District Judge Anthony Battaglia ruled in August that the case was "exceptional" because of Salt Lake's "unreasonable" legal strategy and public comments made by organizers.

The motion argues that while the company behind the Utah convention, Dan Farr Productions, "could have survived" the jury's verdict, "the district court transformed the judgment into a death sentence by declaring the case 'exceptional'" and handing down the $4 million award.

It's not possible to get a bond for the nearly $4 million in fees, the motion continues, and "immediate enforcement would destroy (Dan Farr Productions)."

The demise of FanX would ripple out to cost Utah's economy "millions of dollars," according to the motion.

The situation is "so dire," the motion states, that a declaration from Utah Attorney General Sean Reyes is included in the filing, saying the events "continue to be an important part of the cultural and economic fabric of Utah and ending them would have a negative impact on the public of the state."

The motion also refers to a statement filed by Salt Lake County Mayor Ben McAdams on Sept. 18 as FanX unsuccessfully sought a stay in U.S. District Court in San Diego.

"It has been estimated that the most recent convention had attendance of approximately 110,000, with nearly 25 percent of attendees coming from out of state. This activity and the influx of visitors benefits our economy and raises tax revenue, including through the purchase of hotel rooms, restaurant meals, alcohol, gasoline, taxis and other types of transportation, and goods purchased from vendors at the convention," McAdams wrote.

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The motion argues that San Diego Comic-Con, a longstanding and successful nonprofit organization with millions of dollars in the bank, is not dependant on the payout and could wait to receive the money until organizers have time to sell the company or sock away the $4 million in escrow. The motion estimates that, if sold, FanX could be valued at between $5 million and $12 million.

Because FanX's business relies on "human capital" as it woos celebrity guests and uses revenues from one convention to seed the next, if it is forced to pay now, according to the motion, it will be forced to fold, will be unable to pay the full $4 million and couldn't proceed with appealing the verdict.

"Thus, (San Diego Comic-Con's) ongoing, aggressive efforts to enforce the judgment reveal its true intentions — eliminating a competitor and impeding appellate review," the motion states.

The motion also claims San Diego has sought to register the judgment in Utah "so it can seize (Dan Farr Production's) operating capital and the homes and assets of its principals."

Peter Hahn, an attorney representing San Diego Comic-Con, declined to comment Wednesday while a response to the motion is prepared.

The motion from FanX also raises arguments against the verdict that brought about the costly judgment, including claiming attorneys representing the Utah company were wrongly barred from arguing at trial that the term "comic con" was being used generically long before San Diego secured rights to the phrase.

The motion additionally claims Battaglia's scathing order penalized FanX "for the type of advocacy attorneys typically employ, and should employ, in high-stakes litigation," and for public statements that the 9th Circuit Court confirmed were protected under the First Amendment when it struck down a gag order Battaglia had imposed barring the convention's organizers from talking publicly about the case.

With pop culture conventions in every state that call themselves comic cons, the case has a potentially far-reaching impact, the motion states.

"Producers of other cons want this appeal resolved on the merits, to reduce uncertainty about whether they too will face expensive litigation. Patrons of other cons don't want confusing name changes for their favorite events. None of these interests is served if (San Diego Comic-Con) destroys defendants via enforcement before this court can resolve the appeal," the motion states.

FanX co-founder Bryan Brandenburg released a statement Wednesday saying the organization is seeking an injunction from the 9th Circuit Court before "irreparable harm" is done and as it continues its appeal of the verdict.

"I look forward to sharing additional news on these developments soon," Brandenburg concluded.

Without an emergency stay from the circuit court, FanX would be required to pay the judgment by Oct. 22, and abandon potentially irretrievable web addresses beginning Oct. 17, according to the motion.

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