Who really owns the CG characters in blockbuster films like 'Avengers' and 'Night at the Museum'? On Monday, a judge was told it's not the studios.

Are some of Hollywood's biggest movies from the past decade — Guardians of the Galaxy, Avengers: Age of Ultron, Deadpool and Night at the Museum, among others — all copyright infringements because they were allegedly created with stolen technology? The question seems outlandish, and yet, that's exactly what a California federal judge was told on Monday in a case that can't be shrugged off as a crank even if it is now treading on some fantastic territory including a scholar's search for hidden codes in the Hebrew Bible.

Rearden LLC is the plaintiff. The firm was founded by Silicon Valley entrepreneur Steve Perlman, who claims to own software called MOVA, which captures facial expressions to create photorealistic computer graphic effects. Rearden also alleges its technology was stolen by a former colleague before eventually landing in the hands of a Chinese firm. As the FBI investigated economic espionage, Rearden waged litigation with this Chinese company and won an injunction. Now, Rearden is suing the customers of the stolen technology — Disney, Fox and Paramount — who find their blockbusters the subject of bold intellectual property claims.

In response to the lawsuit, the studios have contended that that the copyright, trademark and patent claims fail as a matter of law. This story will focus on the mind-blowing copyright arguments.

At this stage of the dispute, the studios can't dispute the truth of the allegations — not only did they use stolen technology, they did so knowingly. But Disney, Fox and Paramount ask, so what? Whatever shows up onscreen is primarily the product of human input, namely film direction and an actor's performance. The technology company simply can't own the output.

"Indeed, if Rearden’s authorship-ownership theory were law, then Adobe or Microsoft would be deemed to be the author-owner of whatever expressive works the users of Photoshop or Word generate by using those programs," wrote Kelly Klaus, attorney for the defendants, who also nodded to an 1884 Supreme Court opinion, Burrow-Giles Lithographic Co. v. Sarony.

Rearden, represented by attorney Steve Berman, is now attacking this logic.

To support the proposition that copyright in a software program's output can be owned by the programmer instead of the end user, the plaintiff is turning to a 2001 case, Torah Soft, Ltd. v. Drosnin, that examined scholars who were using technology to see whether the Hebrew Bible had hidden messages foretelling future events. One scholar, Yochanan Spielberg, loaded the Torah into a database and wrote code to help him with his endeavor. After another scholar, Michael Drosnin, purchased a copy of the software, used it, and then published some of the output in matrix form in a best-selling book, The Bible Code, Spielberg sued for copyright infringement.

Here's what a judge wrote on summary judgment:

"[A]n end-user's role in creating a matrix is marginal. Creating a matrix is unlike the creative process used in many computer art programs, which permit an end-user to create an original work of art in an electronic medium. It is fair to say that users of such programs often supply the lion's share of the creativity to create the screen display. By contrast, an end-user of the Software merely inputs a word or phrase which the Software searches for in the Database. Thus, the Software does the lion's share of the work. Indeed, Drosnin's inputs, generally consisting of no more than a single word or phrase, would fail to meet the minimum threshold of originality. In short, Drosnin is not the author of the matrixes."

Rearden believes this case is analogous because it asserts the MOVA program does the "lion's share" of operations required to create output.

But that's hardly the end of Rearden's arguments, because the studios are pointing to film directors and other artists as "critical and indispensable creative elements" to whatever expression is embodied in those output files.

Rearden's first line of attack is to reiterate that at the motion to dismiss phase, its factual allegations must be accepted as true and that the judge must not "draw adverse inferences based on speculation about the relative contributions of the Contour program and the unspecified contributions of the director, operator, and the actors in creating output."

But if the judge wants to get into the finer points of creating CG characters in Hollywood, Rearden is happy to have that discussion. The plaintiff rejects the analogy that using MOVA is like authors who write books in Microsoft Word or artists who create digital art using Adobe Photoshop.

"The MOVA Contour system takes two-dimensional camera captures as input, and the program then synthesizes them into three-dimensional outputs with subtlety and artistry, based on creative choices made by its programmers and embodied in its copyrighted software instructions," states Rearden's court brief. "A director may be the author of an actor’s performance — when posed, arranged, lit, and filmed like the lithograph of Oscar Wilde or the performance of Garcia. But during MOVA Contour performance capture, the director cannot choose camera angles because the cameras are fixed in the MOVA Contour rigging; there can be no 'selecting and arranging the costume, draperies, and other various accessories,' because the capture is of only the random patterns on the actor’s face and neck; and there can be no 'arranging and disposing the light and shade,' because the lighting is also fixed in the rigging, and a random pattern of glowing makeup applied to the actor’s skin eliminates shadows for an evenly-lit random pattern."

In other words, Rearden is saying that the film director is limited by artistic choices already made by the programmer — and what actually is produced comes through the engine of technology.

"Generally, an author writes a book by typing every word into a Word document, and an artist creates a work of art by deciding on specific treatment of every pixel in a Photoshop file," continues the brief. "But in neither case does their work provide input to software that synthesizes an original expression that is distinct from the author’s or artist’s input. ... The core distinction between defendants’ analogies and the MOVA Contour program is the degree to which the output is the product of the effort of the program’s user versus the program itself. Where the program does the 'lion’s share of the work' in creating the output — as the complaint alleges the MOVA Contour program does here — the copyright in the output belongs to the programmer, not the end-user or the director."

The output, Rearden goes on, is then incorporated into CG characters and, using Paramount's The Curious Case of Benjamin Button as an example, it's said to be done with the kind of "sub-millimeter precision" that Rearden argues easily hurdles past the "substantially similar" test in copyright cases.

As such, Rearden asserts that whatever the Hollywood studios are churning out in their blockbuster films relying upon its technology amount to illicit derivatives.

Here's the full brief.

The studios will now have a chance to reply before a judge weighs in with a decision that will either cause a major disruption in Hollywood or give studios some needed precedent beyond what the Supreme Court wrote in the 19th century.