In a previous piece, I wrote about how visual effects company Rhythm & Hues, whose work includes “It’s Tough to Be a Bug” at DCA and Animal Kingdom, filed for bankruptcy a week before winning the Oscar for “Life of Pi.” Since then, the company has been purchased out of bankruptcy by Prana Studios, a computer animation company responsible for the film “Hoodwinked” and a number of the Tinkerbell movies distributed to home video. For the time being, it looks like Prana is keeping Rhythm & Hues intact, but this is not always the case when a bankruptcy takes place.

Take for instance Digital Domain. The company, originally founded by “Avatar” director James Cameron, makeup and effects wizard Stan Winston, and former ILM head Scott Ross, filed for bankruptcy (under different owners) this past September. At the beginning of the bankruptcy process, the company began selling off assets. In the end, what remained of Digital Domain was sold to a partnership between a Chinese and an Indian company. Some of the assets put up for sale were the Kaye patents and this had Disney so concerned that the mouse house actually filed in Federal court to prevent their sale.


The Kaye patents, or “In-Three patents,” as they are sometimes listed in court documents and the press, have an interesting history which gives an insight into patent law. Michael C Kaye invented and developed one of the very first processes for converting 2D into 3D for films and television. He called the process “Dimensionalization” and founded a company called In-Three to bring it to the commercial market. In March, 2005, In-Three’s work was introduced to the National Association of Theater Owners at the annual ShoWest conference. The company had already produced work for one film released – James Cameron’s IMAX documentary “Aliens of the Deep,” released by Disney – but this was bigger. As part of Texas Instrument’s launch of digital 3D cinema, George Lucas came on stage and introduced a series of clips “dimensionalized” by In-Three.

The clips that I and more than a thousand others saw at this event were the speeder chase from “Star Wars Episode II: Attack of the Clones,” “Top Gun,” Disney’s “Lilo and Stitch,” and the entire first reel of “Star Wars Episode IV: A New Hope.” I later met Kaye and his financial partner at In-Three the following month and they invited me to visit their screening room in Agoura Hills, CA.

I brought along my friend and colleague, the late 3D historian and advocate Ray Zone. In addition to the clips I had previously seen, they showed off some more dimensionalized work: a collection of six to eight clips from the original “Matrix,” including Neo waking up in his incubation pod and the helicopter crash into the building at the end of the film, the motorcycle game of chicken from “Mission Impossible 2,” the “Greased Lightening” song and dance segment from “Grease,” the opening of Disney’s “Treasure Planet,” a poolside scene from Disney’s “Tuck Everlasting,” and the ending of the original “Spider-man,” with Spidey flying through buildings and landing on top of one grasping the American flag. Ray was impressed, writing “placement of the stereo window, where the left eye and right eye images coincide, was handled with great sensitivity.”


Considering this was May, 2005, what we were seeing was quite remarkable for the time. Outside of a few specialty and IMAX theaters, there were no commercial 3D cinemas at the time, especially digital 3D. In fact, the day we visited In-Three, we also visited REALD, who were in the process of installing their very first theater system. Now, eight years later, REALD provides 3D on more than 22,000 cinema screens worldwide.

Disney’s “Chicken Little” became the first film to be widely distributed in digital 3D, although “widely” in this situation refers to only 86 screens. However, it almost wasn’t that way. Although never officially announced, In-Three was hard at work dimensionalizing a film to be released in 3D along with its original 2D counterpart. That film was Peter Jackson’s 2005 film “King Kong.” The 3D version of the film was eventually scrapped by the studio as the movie went extremely over budget. At the same time they were taking on this gargantuan project, IMAX, who had become the leader in 3D cinema, licensed a fifteen year old 3D conversion patent and sued In-Three for patent infringement.


It should be noted that in 2005, In-Three was not the only company doing 3D conversion for movies. Disney was sending the digital files of “Chicken Little” to ILM’s San Francisco offices to be converted into the third dimension in order to meet the film’s opening deadline (however, this was computer animation, not live action). The conversion job was completed in four months, roughly half the time it took to prepare the 3D version of “The Polar Express.” And executives from Disney have told me that another company, Creative Logik, converted scenes from the 1985 IMAX film “Chronos” that were included in the opening scene of “Aliens of the Deep.” But by the time that digital 3D was starting to become the norm and the IMAX lawsuit was settled in arbitration, practically every company doing digital visual effects had entered the business of converting 2D footage to 3D using off-the-shelf software. In 2007, Kaye sold his portion of In-Three to his business partner.

In 2008, In-Three was chosen as one of two companies to handle 3D conversion on Disney’s “G-Force.” They converted the film’s live action scenes while Sony Imageworks converted the computer animated segments, which they had also animated. This led to In-Three again joining forces with Sony Imageworks and a third company, Sassoon Film Design, whose visual effects and 3D conversion credits include numerous IMAX films, on Tim Burton’s “Alice in Wonderland.” In-Three then converted an Air Force ad in 2009 to run before “Avatar” in 3D, and then in 2010, In-Three’s assets, namely the Kaye patents, were sold to Digital Domain.

According to John Textor, Digital Domain’s former CEO, he believed that his company’s 2D to 3D conversion process might be infringing upon the Kaye patents. In order to protect itself from any potential action from In-Three, Digital Domain opted to purchase the Kaye patents for $1.1 million. After they were approached by Samsung, who believed they were infringing on the Kaye patents and paid $3.5 million in exchange for Digital Domain’s agreement not to sue, Textor’s company approached visual effects house Prime Focus about potential infringement. The two companies, which had a working relationship, settled with no licensing fee but an agreement to have Prime Focus continue as a subcontractor with Digital Domain.

In August 2012, Digital Domain entered into an agreement with Texas patent company Acacia Research Group, whereby Acacia would pursue those believed to be infringing on the Kaye patents and would share licensing fees obtained with Digital Domain. Thirty-three companies, the major US studios and visual effects houses, were excluded in the agreement from being pursued. This included Disney. According to Textor, “We were working on building the visual effects industry in North America and you don’t accomplish that by going after the companies you work with. One of our main goals with this was to go after the visual effects companies popping up in China and Nepal that were infringing on our technology.”

And in September 2012, this visual effects house, whose legacy of work included “Titanic,” “Apollo 13,” and “Tron Legacy” went bankrupt. Before the new owners – China’s Golden Horse and India’s Reliance Mediaworks – purchased the company, Digital Domain, as part of its bankruptcy, began to put a number of its assets up for bid. Those assets included the Kaye patents and in December, 2012, it was announced they would be sold for $5.45 million to REALD, the company that installed all those digital 3D systems in theaters around the world. It hasn’t been disclosed what REALD plans to use the technology for. Some of my colleagues believe it is to protect themselves from potential litigation. Textor pointed out in a July 2012 conference call, when Digital Domain still owned the Kaye patents, that all companies in the product chain that take advantage of 3D conversion are potentially liable for infringement. “Who is infringing? Let me just give you a sense for it. Well, everybody that has an interest in a 3D film, from the content creators to the production companies to the distributors, the exhibitors, the projector companies, privately and publicly traded, the theaters, down to the television sets, the video games.”

“. . . So — now why is that difficult for us? Well, we’re a studio friendly Company. They’re our customers in our animation studio. They’re our partners. We’re an entertainment player. So, you’ve got to be very careful about how you do this. The whole world is infringing, and who we go after next, we’ve got to be very careful. Our options are to — if you look at just the value of this, there’s a publicly traded company, REALD, that makes projectors that has a $700 million market cap, because they make the projector to project the image that was only created in violation of our patent. So, anybody that’s monetizing a film that infringed is a potential target for our actions.” But REALD has also been investing heavily in 3D for home entertainment and one of my colleagues believes they intend to use this technology for real time 2D to 3D conversion on 3D televisions.

Disney filed with the federal court to halt the sale of the patents (separate filings were done by Lucasfilm, who had received license from In-Three to use their technology on “The Nightmare Before Christmas, and Marvel). Disney’s concerns were many: the new patent owners might sue them for infringement. They might not be able to use the existing licenses from “G-Force” and “Alice” to convert other films, both new and in their library. They might be prevented from distributing their existing films in 3D in cinemas or for home entertainment if those films used technology as outlined in the Kaye patents.


So now REALD owns the Kaye patents and Disney has let 3D conversions of “Star Wars” Episodes II – VI (all being converted by Prime Focus, another company that licensed and objected to the sale of the patents) and “The Little Mermaid” slide away into obscurity. If you ask, the official company line has something to do with poor performance of the films’ predecessors that were converted. But it does make one wonder.

I, however, am one who prescribes to the belief that the best 3D is 2D . . . . on a dome. What started as planetarium and giant screen film technology, has now become a staple at theme parks and attractions around the world. Universal uses digital dome technology on its “Spider-man,” “Harry Potter,” and “Simpsons” rides. At SeaWorld, it can be found on both coasts, with Orlando’s “TurtleTrek” theater and San Diego’s “Manta” launch tunnel. And the digital mapping technology that’s used to make a flat image round and fill a dome is also used to project images on Disney castles, Small World’s, and even put monsters on giant geodesic spheres (appropriate as the tallest point of Spaceship Earth is itself a planetarium dome). Next time, I’ll introduce you to three organizations – IMERSA, the International Planetarium Society, and the Giant Screen Cinema Association – that are at the forefront of changing what we see on domes.

In the meantime, I want to leave you today with a look at three digital domes you can visit where the artistic experience is king:

  • In Santa Fe, NM, the Institute of American Indian Arts uses a 24’ wide dome to teach Native Americans new ways to interpret their culture. What’s unique is that the dome, installed in a black space, can tilt a full 90 degrees, creating an effect similar to the Omnisphere on Epcot’s old Horizons ride. The IAIA explores interactivity in unique ways with a number of different interfaces, all under a grant from the Department of Defense, and often has public showcases of student works.
  • In Montreal, QB, Canada, SAT, the Society of Arts and Technologies, features the 60’ wide, 43’ high Satosphere on its roof. The space is used for everything from video and film presentations to fashion shows and concerts. On select evenings, it becomes a dance club.
  • The 46’ wide, 19’ high Vortex Dome in downtown Los Angeles is becoming an integral part of the city’s arts scene. Events, many produced in conjunction with the Center for Conscious Creativity, have ranged from symposiums to laser shows to live ballet and Bollywood-themed performances.

 A NOTE ON CHANGES TO THIS ARTICLE: Minor changes have been made since the date of posting to better reflect the history of In-Three and properly reference the patents. At the time of initial posting, the piece included information based in part on a July 18, 2012 article at StudioDaily. Since this Micechat article was originally posted, the author has had the opportunity to speak with John Textor and to review documents, including the transcript of the July 2012 Digital Domain call and contracts between In-Three/Digital Domain and third parties, that were not available beforehand. This piece has been revised to account for this new information.