Intellectual Property Attorney

Recent Ruling In “Superman” Cases Demonstrates Potential Pitfalls For Copyright Termination Seekers

As discussed in Parts One
Three and
Four of the blog series on copyright termination rights under the Copyright Act, the provisions affording these rights are complicated. Only certain types of works are subject to termination (for example, works made for hire are never terminable). Termination rights are available only during specified periods of time, with eligible termination “windows” opening and closing over the course of decades. An individual’s authority to exercise a particular right of termination may arise unexpectedly (for example, upon the death of the author and/or the author’s widow(er)). In many cases, this authority is exercisable only when acting in concert with others. Notice must be signed by the authorized individual(s) and served on the correct party(ies). It must contain the required information and be recorded properly. A failure to comply with any one of these requirements may render the notice ineffective, and the ability to terminate a particular grant may be lost as a result.

Even if all of the requirements are met, termination rights may still be lost due to subsequent acts by the unwary. The Superman saga is a case in point.

Superman was created in comic form in the 1930s by Jerry Siegel and Joe Shuster. Siegel wrote the stories, and Shuster drew the artwork. As co-creators, each owned 50% of the copyright in their joint works. In 1938, Siegel and Shuster sold their rights to a predecessor of DC Comics in exchange for $130. They continued to create Superman comics for a few years thereafter, but eventually the comic was written and illustrated by others. Shuster died in 1992, and Siegel died in 1996.

Both men’s respective heirs sought termination of the 1938 grant by serving notices pursuant to Section 304 of the Copyright Act. According to the notices, termination of Siegel’s share in the rights would be effective as of 1999; Shuster’s share would revert as of 2013. Time Warner (which owns DC Comics) contested both claims.

In 2004, Siegel’s heirs sued Time Warner alleging copyright infringement. The company counterclaimed that the notice of termination was defective. After four years of bitter litigation, Judge Stephen G. Larson of the U.S. District Court for the Central District of California ruled that Siegel’s estate was entitled to reclaim Siegel’s 50% of the copyright in some of Superman’s defining elements as described in the first editions of Action Comics, including the origin story, the iconic costume, his secret identity as Clark Kent, and the Lois Lane character. Later works were deemed “works for hire,” thus Time Warner retained rights in the Lex Luthor character and Kryptonite, among other elements. As a result of the decision, the Siegel estate is entitled to a share of the income derived from the massively successful Superman franchise since the 1999 termination date. Just how much is still being litigated.

In stark contrast to the Siegel’s 2008 legal victory, according to a recent decision in a case brought by DC Comics to secure its remaining interest, Shuster’s heirs are precluded from terminating the very same 1938 grant. On October 17, 2012, Judge Otis Wright granted Time Warner’s motion for summary judgment, holding that a 1992 agreement between DC Comics and Shuster’s siblings constituted a binding and superseding agreement whereby the Shuster heirs voided their prior termination notice and effectively waived their termination rights. Under that deal, DC Comics agreed to pay Shuster’s outstanding debts and to pay Shuster’s sister $25,000 a year for life. DC Comics’ Executive Vice President, Paul Levitz, stated, “This agreement would represent the author/heir’s last and final deal with DC and would fully resolve any past, present, or future claims against DC.”

Judge Wright found “that the 1992 agreement, which represented the Shuster heirs’ opportunity to renegotiate the prior grants of Joe Shuster’s copyrights, superseded and replaced all prior grants of the Superman copyrights.” “The 1992 agreement thus represents the parties’ operative agreement and…is not subject to termination.” According to the Judge, unlike in a 2008 case involving the Lassie franchise, the Shuster heirs were aware of their termination right “when they bargained for and entered into the 1992 Agreement” and thus cannot claim ignorance.

In other words, had Shuster’s siblings never agreed to the 1992 deal, the heirs would likely have been successful in recapturing Shuster’s interest in a Superman franchise worth billions.

As a result of the decision, Time Warner may continue to exploit the Superman property (so long as it accounts for profits to the Siegel heirs). The next Superman movie, “Man of Steel,” will be released in June 2013, and several other films featuring the character are already being planned.

Meanwhile, the Siegel estate and Time Warner have both appealed the 2008 decision in the Siegel case. The Siegel estate claims the District Court erred when it deemed the later comics “work for hire.” Time Warner argues that the Siegel estate agreed to re-grant its rights in 2001—an agreement which would supersede the 1938 grant—before walking away from the deal and commencing suit. A hearing on the appeal is scheduled for November 5, 2012.

An appeal in the Shuster case is also likely.

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