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Clause & Effect
Comic-Book Characters/
Profit Particpation
The U.S. District Court for the Southern District of New York ruled that a 1998 agreement between comic-book-character creator Stan Lee and Marvel Enterprises, with which Lee has been involved since 1940, didn't limit Lee to net profits from television or movie productions that used Marvel characters. Lee v. Marvel Enterprises Inc., 02 Civ. 8945 (RWS).
The clause at issue, which the district court described as “deceptively simple,” stated:
“[Lee] shall be paid a participation equal to 10% of the profits derived during [his] life by Marvel (including subsidiaries and affiliates) from the profits of any live action or animation television or movie (including ancillary rights) productions utilizing Marvel Characters. This participation is not to be derived from the fee charged by Marvel for the licensing of the product or of the characters for merchandise or otherwise…”
The district court determined that the clause “does not state that Lee's participation is limited to net profits earned by the producer or studio. Nor is the word 'profits' defined in the Agreement. … [But] the first sentence of paragraph 4(f) is not ambiguous. It provides that Lee is entitled to share in the results of Marvel's arrangements for movie and television productions involving Marvel characters, however those arrangements may have been characterized as between Marvel and the third party, as long as there is a valuable gain or return, a benefit to Marvel.”
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