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In comic books, the good guys are usually the ones in tights ' red and blue are the most popular colors ' who put themselves in harm's way to save innocent lives, while the bad guys are the ones sulking in darkened lairs and dreaming up plans to take over the planet. In real-world legal battles over the intellectual property in comic books, the two sides aren't as easy to distinguish, and they're certainly not as colorful. But as the IP rights to comic book icons become the subject of ever more heated ' and lengthy ' disputes, maybe it's time that superhero litigation got its own comic book series.
The litigation of recent months alone would fill a couple of issues. In July 2010, author Neil Gaiman won a fight over the Spawn comic book characters Dark Ages Spawn, Domina and Tiffany when a federal district court judge in Wisconsin ruled that all three derived from other Spawn characters that Gaiman had co-created ' and that had already been the subject of a jury trial and appellate decision more than six years ago. Gaiman v. McFarlane, 02-cv-48 (W.D.Wis. 2010).
In January, Marvel Entertainment LLC filed suit in New York federal district court against the heirs of illustrator Jack Kirby after they claimed the right to regain partial ownership of some of the comic company's most popular characters, including the X-Men and the Incredible Hulk. Marvel Worldwide Inc. v. Kirby, 2010-cv-141. And in May, the long-running copyright termination battle between Warner Bros. Entertainment's DC Comics and heirs of Superman's creators ratcheted up when the movie studio's lawyers at O'Melveny & Myers filed a lawsuit, in the U.S. District Court for the Central District of California, accusing the heirs' lawyer, Los Angeles-based Marc Toberoff, of contractual interference and scheming to gain control of Superman for his own enrichment. DC Comics v. Pacific Pictures Corp., 2:10-cv-03633-ODW-RZ.
Comic Book Value Soars
The legal arguments at the core of these lawsuits are not identical. Some cases are driven by the Copyright Act of 1976, which extended copyright protections and granted original holders rights to those additional years. But they all touch on creative processes that are at times opaque, making it difficult to assign credit or decipher employment parameters. At the same time, assigning credit (or rather ownership) has become even more important in the comic book industry as a result of the skyrocketing value of comic book properties, which have emerged as among Hollywood's most bankable commodities. The three Spider-Man movies, the two Iron Man movies, and the most recent Batman movie, The Dark Knight, averaged domestic box office revenue totals of $380 million and are among the 30 highest-grossing movies of all time.
“Over the last decade or so, the value of [comic book] intellectual property has taken a dramatic rise,” says Michael Lovitz, a Beverly Hills-based attorney who represents clients in the comic book industry. “Creators have seen some of their creations go on to become icons in the popular culture arena. Clearly there is value out there.” If there was any doubt about the extent of the value, it was extinguished in 2009, when The Walt Disney Company acquired Marvel for $4 billion, even though some of the latter company's most popular characters are locked into long-term commitments to other studios.
The Spawn Saga
The Spawn comic book series, launched in 1992, lacks the straightforward plot lines and moral simplicity of older comic-book series. The initial title character in Spawn was a CIA agent who was killed and makes a deal to join Hell's army in order to return to Earth. As a business proposition, the comic book was also a break from the past. It was released by the independent publisher Image Comics Inc., which was co-founded by Spawn's creator, Todd McFarlane, in part to allow comic book creators ownership and greater control of their work product. But this new model didn't prove beneficial for Gaiman, who was first brought in by McFarlane to write issue number nine of the Spawn series, released in March 1993. It sold over one million copies and led to three new characters ' Medieval Spawn, Angela and Cogliostro ' for which Gaiman wrote background stories, while McFarlane drew them to Gaiman's specification. Spawn was a hit and its stream of revenue ultimately grew to include income from statuettes, an animated television series, clothing, trading cards, posters and a 1997 motion picture.
The year before the movie was released, Gaiman, who had worked under an oral agreement with McFarlane, sought a written contract spelling out his ownership rights in the characters he created. After negotiations broke down, Gaiman eventually sued to establish that he was a joint owner with McFarlane in the copyright of all three characters, and in 2002 a jury granted him co-ownership in the copyrights. Although McFarlane appealed, arguing among other things that Gaiman had contributed only ideas ' which are not copyrightable ' the U.S. Court of Appeals for the Seventh Circuit upheld the verdict. Gaiman v. McFarlane, 360 F.3d 644 (7th Cir. 2004).
The most recent decision in the long-running case involved characters ' Dark Ages Spawn, Domina and Tiffany ' that were developed after Gaiman stopped working on Spawn. Gaiman argued that he was entitled to a co-copyright of the three characters because they were derivatives of Medieval Spawn and Angela. McFarlane argued that the characters were based solely on Gaiman's ideas and not on any physical expression of those ideas, which meant that Gaiman was not entitled to a copyright interest.
But Judge Barbara B. Crabb ruled that the newcomers were derived from Medieval Spawn and Angela. Noting various similarities between Medieval Spawn and Dark Ages Spawn, the judge wrote: “Both Medieval Spawn and Dark Ages Spawn committed bad deeds in the past for which they want to make amends, both have sisters whom they love who married men who were or became Hellspawn's enemies; both made a deal with the devil to let them return to [E]arth; and both use their power to help the defenseless.” The court also noted strong similarities among Angela, Tiffany and Domina: “All three are warrior angels with voluptuous physiques, long hair, and masklike eye makeup.”
“We're glad the judge agreed with our position that the works were derivative,” says Gaiman's counsel, Allen Arntsen, a Madison, WI-based partner at Foley & Lardner. Judge Crabb found that Gaiman was entitled to a portion of the profits from Medieval Spawn, Angela and any characters based on them. A final judgment was to be entered following a report from accountants on the revenue generated from the characters. McFarlane's attorney, J. Alex Grimsley, a partner in Bryan Cave's Phoenix office, did not return calls seeking comment for this article.
“There is a pretty good stew of issues inherent in comic books that provide fodder for litigation,” says Arntsen. “You've got characters spinning off from other characters, and you have allocation issues with writers and artists.”
Copyright Act Drawn In
With the Copyright Act of 1976, the extension term of works copyrighted before 1978 that had not entered the public domain went from 28 years to 47 years. The Act also allowed copyright holders who signed over their rights to regain control of them for this additional period of protection through the process that includes the delivery of termination notices to current holders of the copyrights. (The Sonny Bono Copyright Term Extension Act further increased the period of protection to 67 years for works copyrighted before 1978 that had not entered the pubic domain.)
These changes in copyright law are at the core of disputes between the heirs of those who created iconic comic book characters and the industry's largest comic book companies. While Congress might have sought to provide original copyright holders and their heirs a means to benefit from the extended copyright protection, it would appear that, when it comes to comic book'related disputes, the lawyers have benefited most. “The termination issues are such a hot topic right now, especially in my world,” says Christine Lepera, a partner at Mitchell Silberberg & Knupp and a member of Entertainment Law & Finance's Board of Editors whose commercial litigation practice focuses on copyright and trademark issues. “There is some uncertainty about the termination process and who has termination rights.”
Spidey Sense
Illustrator Jacob Kurtzberg, best known as Jack Kirby, played a role in the development of Spider-Man as well as many other popular comic book characters, from Captain America to Marvel's Fantastic Four, X-Men and The Hulk. (Many of his Marvel characters were co-created with writer Stan Lee.) Last year, the children of Kirby (Kirby died in 1994) sent out copyright termination notices to Marvel, Twentieth Century Fox Film Corporation ' maker of the X-Men movies ' and other movie studios, indicating an intent to regain some of the copyrights as soon as 2013, the earliest allowed by copyright law.
In January 2010, Marvel sued the Kirby heirs in federal district court in Manhattan, alleging that the termination notices were invalid because Kirby never held a copyright to the characters. He helped create them as a work for hire, Marvel contends.
But the Kirby family, represented by Marc Toberoff (the same lawyer who represents heirs to the creators of Superman), argues that Kirby worked on a freelance basis, using his own materials, and bore the financial risk of creating the material. If Marvel (or those companies for which it is a successor in interests) wanted Kirby's material, they purchased it at a per-page rate, the Kirby heirs say. (A second lawsuit, filed by the Kirby family in federal district court in Los Angeles, has essentially been combined with the New York suit.)
Weil, Gotshal & Manges partner James Quinn, who is representing Marvel along with David Fleischer at Haynes and Boone, says that discovery was slated to be completed in January, at which point Marvel would move for summary judgment. “They thought they would throw a monkey wrench in Disney's acquisition of Marvel,” Quinn adds. “Toberoff ' who's a holdup artist ' convinced the Kirby heirs that because he had some success with Superman, they should let him bring a similar case, but they're not entitled to anything.”
The Man of Steel
Marvel's lawyers may have some sharp words for Toberoff, but at least they haven't resorted to suing him personally ' as has happened in the most vitriolic comic book litigation to date, the long-running legal battle between DC Comics and the heirs to the creators of Superman. Since Superman's creation in the 1930s by writer Jerome Siegel and artist Joseph Shuster, the character has been the subject of merchandise, radio shows, television programs, movies and video games, as well as comic books. Even today, Superman remains a very popular and profitable character. Smallville, a television program based around a young Superman character, has been renewed for its 10th (and final) season. And the movie Superman Returns, released in 2006, garnered $391 million in worldwide ticket receipts.
For the most part, Shuster and Siegel were left out of the financial windfall. As early as 1947, the two men sought unsuccessfully in New York courts to have their agreement turning over rights to Superman invalidated. In 1975, the comic book company agreed to make annual payments to the men and some of their family members. The total figure paid to date exceeds $4 million ' a relatively modest sum, compared to the Superman character's total earnings. In 1997, Siegel's heirs served copyright termination notices, which Warner Bros. contested. In March 2008, the judge then overseeing the dispute, federal district court judge Stephen Larson, ruled that Siegel's heirs were entitled to claim a share of the U.S. copyright of the character. Siegel v. Warner Bros. Entertainment Inc., 542 F.Supp.2d 1098 (C.D.Calif. 2008). The value of these rights, deemed to have started in 1999, would be determined at trial. (The Shuster heirs, meanwhile, have notified Warner Bros. of their plan to recapture Shuster's copyrights beginning in 2013.)
That's where the dispute stood in May 2010, when Warner Bros. filed suit against Toberoff as well as his clients, the heirs of both Shuster and Siegel. Warner Bros., represented by O'Melveny, argues that the termination notices by the Siegels and Shusters were invalid and claims that Toberoff has maneuvered to gain control of the Superman copyright for himself through a series of deals with his clients. Underlying these claims is a mysterious seven-page letter provided to the movie studio in 2002 by a still unidentified former Toberoff associate. The letter alleges that “[Toberoff] is solely motivated at all times not by his clients' interests but by manipulating pieces of the puzzle so that he may receive the greatest percentage from a very possible large Time Warner Inc. settlement, through part ownership and unconscionable fees.”
The suit also contends that Toberoff induced both the Siegels and Shusters to repudiate agreements with DC Comics that allowed the company to retain all rights in Superman in exchange for monetary compensation.
“The complaint, which is directed against an attorney based on the advice he gave and the agreements he reached and the follow-through in pursuing rights on behalf of his clients, is barred by the anti-SLAPP law and by litigation privilege,” says Toberoff's counsel, Kendall Brill & Klieger's Richard Kendall. (Toberoff declined to comment for this article, but in May he told Entertainment Law & Finance ALM affiliate The Am Law Daily that the complaint severely underestimates the intelligence of the federal judiciary.)
“The lawsuit against Mr. Toberoff and his companies, as detailed in the complaint, is directed to his conduct as an entrepreneur, producer and businessman ' not as a lawyer and litigator,” O'Melveny's Daniel Petrocelli says. “There is no immunity in the law for such a person because he later claims to be acting as a lawyer.” During a September 2010 hearing, a magistrate judge rejected Kendall's motion for a protective order that would have denied DC Comics the ability to use the former Toberoff associate's letter in the lawsuit that the company brought against Toberoff and his clients.
The suit against Toberoff in the Siegel-Schuster litigation is not entirely surprising, IP attorney Lovitz says. “There is a bit more of a personal element to [comic book litigation] than you would find in general commercial litigation,” notes Lovitz, who is not involved in the Siegel case. “And the reason for that is that you have these creators who created a character who went on to make billions of dollars for the corporations, and there have always been questions as to how well they were treated and compensated for their creation.” Moreover, Toberoff, who has built his practice around recovering copyrights for creators, has emerged as a particularly unpopular figure in Hollywood.
A Watchful Eye
Both the Kirby and the Siegel-Schuster litigations are being closely watched by IP litigators, adds Lovitz, who predicted more copyright termination notices in coming years. A win for the Kirby heirs or a big recovery for the Siegel heirs would send an encouraging signal to other comic book writers and artists eager to assert their rights to the characters they created. In other words, the battle is just beginning. Tell the lawyers to suit up.
In comic books, the good guys are usually the ones in tights ' red and blue are the most popular colors ' who put themselves in harm's way to save innocent lives, while the bad guys are the ones sulking in darkened lairs and dreaming up plans to take over the planet. In real-world legal battles over the intellectual property in comic books, the two sides aren't as easy to distinguish, and they're certainly not as colorful. But as the IP rights to comic book icons become the subject of ever more heated ' and lengthy ' disputes, maybe it's time that superhero litigation got its own comic book series.
The litigation of recent months alone would fill a couple of issues. In July 2010, author Neil Gaiman won a fight over the Spawn comic book characters Dark Ages Spawn, Domina and Tiffany when a federal district court judge in Wisconsin ruled that all three derived from other Spawn characters that Gaiman had co-created ' and that had already been the subject of a jury trial and appellate decision more than six years ago. Gaiman v. McFarlane, 02-cv-48 (W.D.Wis. 2010).
In January,
Comic Book Value Soars
The legal arguments at the core of these lawsuits are not identical. Some cases are driven by the Copyright Act of 1976, which extended copyright protections and granted original holders rights to those additional years. But they all touch on creative processes that are at times opaque, making it difficult to assign credit or decipher employment parameters. At the same time, assigning credit (or rather ownership) has become even more important in the comic book industry as a result of the skyrocketing value of comic book properties, which have emerged as among Hollywood's most bankable commodities. The three Spider-Man movies, the two Iron Man movies, and the most recent Batman movie, The Dark Knight, averaged domestic box office revenue totals of $380 million and are among the 30 highest-grossing movies of all time.
“Over the last decade or so, the value of [comic book] intellectual property has taken a dramatic rise,” says Michael Lovitz, a Beverly Hills-based attorney who represents clients in the comic book industry. “Creators have seen some of their creations go on to become icons in the popular culture arena. Clearly there is value out there.” If there was any doubt about the extent of the value, it was extinguished in 2009, when
The Spawn Saga
The Spawn comic book series, launched in 1992, lacks the straightforward plot lines and moral simplicity of older comic-book series. The initial title character in Spawn was a CIA agent who was killed and makes a deal to join Hell's army in order to return to Earth. As a business proposition, the comic book was also a break from the past. It was released by the independent publisher Image Comics Inc., which was co-founded by Spawn's creator, Todd McFarlane, in part to allow comic book creators ownership and greater control of their work product. But this new model didn't prove beneficial for Gaiman, who was first brought in by McFarlane to write issue number nine of the Spawn series, released in March 1993. It sold over one million copies and led to three new characters ' Medieval Spawn, Angela and Cogliostro ' for which Gaiman wrote background stories, while McFarlane drew them to Gaiman's specification. Spawn was a hit and its stream of revenue ultimately grew to include income from statuettes, an animated television series, clothing, trading cards, posters and a 1997 motion picture.
The year before the movie was released, Gaiman, who had worked under an oral agreement with McFarlane, sought a written contract spelling out his ownership rights in the characters he created. After negotiations broke down, Gaiman eventually sued to establish that he was a joint owner with McFarlane in the copyright of all three characters, and in 2002 a jury granted him co-ownership in the copyrights. Although McFarlane appealed, arguing among other things that Gaiman had contributed only ideas ' which are not copyrightable ' the U.S. Court of Appeals for the Seventh Circuit upheld the verdict.
The most recent decision in the long-running case involved characters ' Dark Ages Spawn, Domina and Tiffany ' that were developed after Gaiman stopped working on Spawn. Gaiman argued that he was entitled to a co-copyright of the three characters because they were derivatives of Medieval Spawn and Angela. McFarlane argued that the characters were based solely on Gaiman's ideas and not on any physical expression of those ideas, which meant that Gaiman was not entitled to a copyright interest.
But Judge
“We're glad the judge agreed with our position that the works were derivative,” says Gaiman's counsel, Allen Arntsen, a Madison, WI-based partner at
“There is a pretty good stew of issues inherent in comic books that provide fodder for litigation,” says Arntsen. “You've got characters spinning off from other characters, and you have allocation issues with writers and artists.”
Copyright Act Drawn In
With the Copyright Act of 1976, the extension term of works copyrighted before 1978 that had not entered the public domain went from 28 years to 47 years. The Act also allowed copyright holders who signed over their rights to regain control of them for this additional period of protection through the process that includes the delivery of termination notices to current holders of the copyrights. (The Sonny Bono Copyright Term Extension Act further increased the period of protection to 67 years for works copyrighted before 1978 that had not entered the pubic domain.)
These changes in copyright law are at the core of disputes between the heirs of those who created iconic comic book characters and the industry's largest comic book companies. While Congress might have sought to provide original copyright holders and their heirs a means to benefit from the extended copyright protection, it would appear that, when it comes to comic book'related disputes, the lawyers have benefited most. “The termination issues are such a hot topic right now, especially in my world,” says Christine Lepera, a partner at
Spidey Sense
Illustrator Jacob Kurtzberg, best known as
In January 2010, Marvel sued the Kirby heirs in federal district court in Manhattan, alleging that the termination notices were invalid because Kirby never held a copyright to the characters. He helped create them as a work for hire, Marvel contends.
But the Kirby family, represented by Marc Toberoff (the same lawyer who represents heirs to the creators of Superman), argues that Kirby worked on a freelance basis, using his own materials, and bore the financial risk of creating the material. If Marvel (or those companies for which it is a successor in interests) wanted Kirby's material, they purchased it at a per-page rate, the Kirby heirs say. (A second lawsuit, filed by the Kirby family in federal district court in Los Angeles, has essentially been combined with the
The Man of Steel
Marvel's lawyers may have some sharp words for Toberoff, but at least they haven't resorted to suing him personally ' as has happened in the most vitriolic comic book litigation to date, the long-running legal battle between DC Comics and the heirs to the creators of Superman. Since Superman's creation in the 1930s by writer Jerome Siegel and artist Joseph Shuster, the character has been the subject of merchandise, radio shows, television programs, movies and video games, as well as comic books. Even today, Superman remains a very popular and profitable character. Smallville, a television program based around a young Superman character, has been renewed for its 10th (and final) season. And the movie Superman Returns, released in 2006, garnered $391 million in worldwide ticket receipts.
For the most part, Shuster and Siegel were left out of the financial windfall. As early as 1947, the two men sought unsuccessfully in
That's where the dispute stood in May 2010, when Warner Bros. filed suit against Toberoff as well as his clients, the heirs of both Shuster and Siegel. Warner Bros., represented by O'Melveny, argues that the termination notices by the Siegels and Shusters were invalid and claims that Toberoff has maneuvered to gain control of the Superman copyright for himself through a series of deals with his clients. Underlying these claims is a mysterious seven-page letter provided to the movie studio in 2002 by a still unidentified former Toberoff associate. The letter alleges that “[Toberoff] is solely motivated at all times not by his clients' interests but by manipulating pieces of the puzzle so that he may receive the greatest percentage from a very possible large
The suit also contends that Toberoff induced both the Siegels and Shusters to repudiate agreements with DC Comics that allowed the company to retain all rights in Superman in exchange for monetary compensation.
“The complaint, which is directed against an attorney based on the advice he gave and the agreements he reached and the follow-through in pursuing rights on behalf of his clients, is barred by the anti-SLAPP law and by litigation privilege,” says Toberoff's counsel, Kendall Brill & Klieger's Richard Kendall. (Toberoff declined to comment for this article, but in May he told Entertainment Law & Finance ALM affiliate The Am Law Daily that the complaint severely underestimates the intelligence of the federal judiciary.)
“The lawsuit against Mr. Toberoff and his companies, as detailed in the complaint, is directed to his conduct as an entrepreneur, producer and businessman ' not as a lawyer and litigator,” O'Melveny's Daniel Petrocelli says. “There is no immunity in the law for such a person because he later claims to be acting as a lawyer.” During a September 2010 hearing, a magistrate judge rejected Kendall's motion for a protective order that would have denied DC Comics the ability to use the former Toberoff associate's letter in the lawsuit that the company brought against Toberoff and his clients.
The suit against Toberoff in the Siegel-Schuster litigation is not entirely surprising, IP attorney Lovitz says. “There is a bit more of a personal element to [comic book litigation] than you would find in general commercial litigation,” notes Lovitz, who is not involved in the Siegel case. “And the reason for that is that you have these creators who created a character who went on to make billions of dollars for the corporations, and there have always been questions as to how well they were treated and compensated for their creation.” Moreover, Toberoff, who has built his practice around recovering copyrights for creators, has emerged as a particularly unpopular figure in Hollywood.
A Watchful Eye
Both the Kirby and the Siegel-Schuster litigations are being closely watched by IP litigators, adds Lovitz, who predicted more copyright termination notices in coming years. A win for the Kirby heirs or a big recovery for the Siegel heirs would send an encouraging signal to other comic book writers and artists eager to assert their rights to the characters they created. In other words, the battle is just beginning. Tell the lawyers to suit up.
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