U.S. District Court Judge Dean Pregerson ruled in Beatrice Welles' favor, saying the Academy of Motion Picture Arts and Sciences has no claim to the Oscar awarded to her father for co-writing the screenplay of his 1941 classic. The March 4 ruling was made public Monday.
"Welles has unrestricted property rights in the original Oscar, which she may dispose of however she sees fit," Pregerson wrote.
Her attorney said Monday that Welles plans to sell the Oscar at auction and hopes it will fetch $1 million.
The academy will appeal the ruling, said David Quinto, an attorney for the academy.
Welles had tried to sell the Oscar last year, but Christie's auction house pulled it from a scheduled sale because of the ownership dispute with the academy.
The dispute centered on a right-of-first-refusal agreement that the academy adopted in 1950, which stipulates that if an award winner or the winner's heirs ever put an Oscar up for sale, it has to be offered to the academy first for $1.
The Oscar presented to Welles, who died in 1985, had long been presumed lost, and his daughter asked the academy for a replacement in 1988. The academy agreed, but asked her to sign the agreement regarding potential sale of Oscar statuettes.
Orson Welles' original Oscar surfaced in 1994 in possession of Gary Graver, a cinematographer who had worked with the director. Graver sold the statuette for $50,000 to Bay Holdings, which then offered it for sale through Sotheby's auction house.
When Beatrice Welles heard of it, she sued to block the sale of the Oscar, which eventually was returned to her. After she offered the original Oscar for auction, the academy notified her she was obligated to return it under the agreement she signed for the duplicate statuette.
Welles then sued the academy, arguing the agreement applied only to the duplicate, not the original.
In last week's ruling, Pregerson agreed, saying the wording of the agreement did not cover the original award.
The academy "always knew they had no right to this Oscar, but they made this woman sue over it," said Welles attorney, Steven Ames Brown.
Academy attorney Quinto said he believes Welles understood that the academy's intent was to prevent the sale of any Oscars so the statuettes would not become "articles of commerce."
By David Germain