- It's possible that Marvel might lose the rights
to some of its most popular characters: Spider-Man,
Black Widow, Thor, and Iron Man, among others.
It's possible they might be ripped right out of the MCU,
because copyright is weird.
But Marvel is being proactive.
That's why they're going to court to stop the heirs
of the creators of some of its most iconic characters
from getting any royalties.
With these lawsuits, Marvel is arguing
that characters created by geniuses like Stan Lee
are ineligible for copyright termination
because they were works made for hire.
In other words, since Lee was a Marvel employee,
his estate is not entitled to any of the profits
from future TV, movies, and merchandise.
And Marvel makes the same argument against Steve Ditko,
Gene Colan, and Larry Lieber, or their estates.
Ditko, of course, is the reclusive legend
who created Spider-Man with Stan Lee.
Colan is the genius behind Daredevil,
Falcon, Carol Danvers as Mrs. Marvel,
and the cult satire Howard the Duck.
Lieber drew newspaper strips
of "The Incredible Hulk" and "The Amazing Spider-Man"
and was instrumental in creating Iron Man.
Marvel is still making movies
and TV shows featuring these characters,
and they are a big part of Disney's long-term plan.
Well, maybe not Howard the Duck, at least not yet,
but if that dog killer Cruella de Vil
can get a favorable origin story,
we know that Howard the Duck
probably can't be too far behind.
- That's it.
No more Mr. Nice Duck.
- But this is no small matter.
If Marvel loses these lawsuits,
its parent company Disney would have to share ownership
of these characters that are worth billions of dollars.
(stately music)
Hey, Legal Eagles, it's time
to think like a copyright lawyer.
So let's talk about why is Marvel suing the creators
of some of its most famous characters and what's at stake.
Let's take a look at what prompted Marvel
to file these lawsuits.
Steve Ditko was a renowned comic book artist
who collaborated with Stan Lee
to create Spider-Man and Doctor Strange.
And unlike Lee, Ditko was a recluse
who preferred to live in privacy,
much like author J. D. Salinger.
In his post-Marvel career,
Ditko invented cult favorites like Squirrel Girl
and wrote several comics featuring objectivist characters
modeled on the philosophy of Ayn Rand.
Ditko lived and worked alone in a Manhattan studio
until his death at the age of 90 in 2018.
And no one knows what Ditko worked on in his last years,
but his last published words came in 2019.
Quote: "Here's to those who wish me well,
and those that don't can go to hell."
And in this case, those who can go to hell
might include Marvel and Disney.
- Oh, dear, what an awkward situation.
- Now, this isn't always the case, but sometimes,
there are termination provisions
under copyright law where authors or their heirs
can reclaim rights once granted to publishers
after waiting a statutorily set period of time.
Ditko's heirs, in this case,
include his brother and his nephew.
In August, his estate filed a notice
of termination on Spider-Man.
The Ditko termination notice demands
that Marvel must relinquish Ditko's rights
in Spider-Man by June of 2023,
and there are termination provisions
potentially at issue with a whole host
of some of Marvel's most famous characters.
So just what is a termination provision in US copyright law?
Well, copyright termination is the termination
of a grant or transfer of someone's copyright rights,
and the Copyright Act of 1976
lengthened the term of copyright protection,
giving copyright owners even more time
to control and profit from their works of art.
This was the major policy accomplishment
of congressman Sonny Bono,
otherwise known as 1/2 of Sonny & Cher.
Yes, he did go on from the duo to hold office in Congress.
And many people have either blamed or congratulated Disney
on this extension of the copyright term.
But note that not all copyright holders
are the original creators of the art.
For example, Paul McCartney co-wrote
some of the most memorable songs ever written,
but over the years, he's sold or lost
the copyright to that material.
Most of the Beatles' catalog is currently owned
by Sony/ATV, which acquired a good chunk of it
from the estate of Michael Jackson,
who famously purchased them for $47 million.
♪ Yeah, yeah, ooh, ooh, yeah ♪
In 2018, McCartney filed termination notices
to reclaim those Beatles copyrights.
Eventually, he settled with Sony/ATV.
A decision on the merits of that case
would have been a landmark ruling,
but both sides obviously felt
there was too much to risk to proceed.
And with the value of the Beatles publishing rights
over $1 billion, there's plenty of money to go around.
Now, creators can lose or voluntarily assign rights
in a number of different ways, including just entering
into a contract that seemed fair at the time,
but in retrospect turned out to be very one-sided.
Now, the amended Copyright Act therefore gave some artists
the chance to get their copyrights back,
provided that they lost their rights
on or before January 1st, 1978.
So the idea was that Congress
is extending the copyright term,
so if you had a copyright and then transferred it
to somebody else before 1978, then you were allowed
to claw back that copyright assignment
or transfer many decades later,
and now a lot of those terms are coming due.
Following termination, any rights
transferred under the grant come back
to the person who created the copyrighted work.
The purpose of this provision is to let authors, musicians,
and illustrators and other artists renegotiate the terms
of their original contractual agreements.
It basically gives artists a second chance
to get a better deal.
If the author is living, like Larry Lieber,
they can file a termination notice at the appropriate time.
Lieber is Stan Lee's little brother.
He's responsible for co-creating
Ant-Man, Thor, and Iron Man.
Marvel is suing Lieber to stop him
from terminating the Marvel copyrights
to these characters, or in other words,
Marvel is going to court to say that in this situation,
the termination provisions don't apply
and the rights therefore don't have to go anywhere else.
But not all rights return after a successful termination.
Creators' American rights revert, but foreign rights,
which are usually negotiated separately,
do not return to the creator.
Derivative works created under the authority of the grant
before its termination can continue to be exploited,
and as you can see, this is a more complex situation
than it first appears.
So let's dive into the Copyright Act provisions at stake:
17 U.S.C. 203 and 304.
The first question that arises
is which works are eligible for termination.
Although most grants of copyright rights can be terminated,
some grants are excluded.
Since the termination provisions are meant
to give the author a second chance,
if the author is still living
and the original grants were made by somebody else,
these grants can't be terminated.
If the author is living, grants made
by anyone other than certain statutory heirs
are also ineligible for termination.
The list of individuals is included in section 304.
And the act also excludes grants made by will,
so if an author died 50 years ago
and granted their copyrights to someone by will,
that person's heirs can't attempt
to revoke the grant under this section.
Additionally, and this is the big one,
the Copyright Act's termination provisions
do not apply to works made for hire.
A work made for hire has a complicated definition,
but generally speaking, if you're employed
when you make something that could be copyrighted,
it's your employer who gets the copyright to that thing.
It's not the employee who made that thing
while being employed by somebody else.
And if a work is made for hire,
an employer is considered the author,
even if the employee actually created the work.
The employer can be a firm,
an organization, or an individual.
This is a very contentious part of the law
for comic book creators,
many of whom were actually employees
when they created their characters.
And determining whether something is a work for hire
is challenging and depends on the facts
of each particular situation.
Now, there are some complications
in when the termination notice needs to be provided.
I won't bore you with the details,
but it generally has to fall
within a five-year termination period,
and here, the Marvel cases mostly involve grants
executed before January 1st, 1978.
And in addition to the timing,
there are tons of procedural issues, like co-ownership.
A majority of the co-owners have to agree.
There are lots and lots of procedural issues here
that are extremely boring and have no place
in a 15-minute YouTube video.
And other creators have filed termination notices as well.
They tend to be represented by attorney Marc Toberoff,
the lawyer who represented "Superman" creators Jerry Siegel
and Joe Schuster in their ultimately unsuccessful
termination attempt against DC Comics.
Now, under some circumstances,
a would-be defendant can go into court
and get the court to adjudicate the issue
before everything goes crazy,
and that's what Marvel has done here.
Marvel has filed suit against the creators,
alleging that they were all employees
and that the works that they created
were considered works for hire
and thus not subject to copyright termination.
Marvel is asking federal courts in New York
and California to issue declaratory judgments
blocking the termination notices and affirming
that Disney is the sole owner of these characters.
So you might see headlines that Disney is suing the owners,
and it sounds nefarious,
but there's really nothing wrong with it.
They're adjudicating this case early,
and while Disney would normally be the defendant
in an action like this,
they're really just going to the court
to adjudicate exactly the same things that they would
if the creators were the ones that were suing Disney.
Now, a lot of this litigation is going to turn
on the definition of a work made for hire.
That's defined by section 101 of the Copyright Act,
which defines a work made for hire in two parts.
It can be either A, a work prepared by an employee
within the scope of his or her employment, or B,
a work specially ordered or commissioned for use
as a contribution to a collective work,
as part of a motion picture or other audiovisual work,
as a translation, as a supplementary work,
as a compilation, as an instructional text,
as a test, as an answer material for a test,
or as an atlas if the parties expressly agree
in a written instrument signed by them
that the work shall be considered a work made for hire.
And the Supreme Court has interpreted a work for hire
in the famous case of CCNV vs. Reid.
Now, in that case, the Community for Creative Non-Violence
made an oral agreement with James Reid, a sculptor,
to produce a statue depicting the plight of the homeless
for display in a 1985 Washington DC Christmas pageant.
After the sculpture was completed and delivered,
CCNV paid Reid in full.
Shortly after that, both parties filed separate
and competing copyright claims over the sculpture.
A lower court held
that the sculpture was a work made for hire,
and after the Second Circuit reversed the decision,
it went all the way to the Supreme Court.
And the Supreme Court ruled for Reid, the sculptor,
holding that the court must first ascertain
whether the work was prepared by an employee
or an independent contractor.
If an employee created the work,
part one of the definition that we talked about applies,
and the work will generally be considered
a work made for hire because it was made
within the scope of that person's employment.
But this gets more complicated,
because the term employee in the definition
differs from the common understanding of the term.
For purposes of the Copyright Act, an employee
means an employee under the general common law of agency.
If an independent contractor created the work,
then the work was specially ordered or commissioned.
Part two of the definition applies.
And an independent contractor is someone
who was not an employee
under the general common law of agency.
And the Supreme Court created four factors
to determine whether someone is an employee
under purposes of the Copyright Act.
I won't bore you with those definitions,
but you can actually read it in CCNV vs. Reid.
It's actually a pretty understandable court decision,
as those things go.
But in this litigation, it will probably focus
on what's called the Marvel Method, which is a,
quote, "loose collaborative working atmosphere
where initial ideas were briefly discussed
with artists responsible for taking care of the details."
Marvel characterizes this
as a traditional employer-employee relationship,
and Marvel argues that any contributions
that Steve Ditko, for example, made
were at Marvel's instance and expense.
Marvel editorial staff have the right
to exercise creative control
over Steve Ditko's contributions,
and Marvel paid Steve Ditko a per-page rate
for his contributions.
When Steve Ditko worked for Marvel,
he did so with the expectation that Marvel would pay him.
Moreover, Marvel says that its editorial staff had the right
to exercise creative control
over Steve Ditko's contributions.
Quote: "Any contributions Steve Ditko made
to the Works were done at Marvel's expense
because Marvel paid Steve Ditko
a per-page rate for his contributions,
Steve Ditko made those contributions to the Works
with the expectation that Marvel would pay him,
and Steve Ditko did not obtain any ownership interest
in or to his contributions."
And Marvel made the same arguments
in the other lawsuits as well,
and the representatives of the comic book creators
will make the same legal arguments that Jack Kirby did
over a decade ago when Kirby and Marvel litigated the issue
of whether Kirby could terminate a copyright grant
on "Spider-Man," "X-Men," "The Incredible Hulk,"
and "Mighty Thor."
In 2013, the Second Circuit Court of Appeals
affirmed a lower court ruling
that Kirby's heirs could not terminate
the copyright over those characters,
since Kirby had contributed his materials
as a work made for hire.
Kirby tried to appeal to the Supreme Court,
arguing that he was essentially a freelancer,
not an employee.
Kirby didn't receive any benefits or fixed salary,
nor did Marvel reimburse him for his expenses.
Kirby also worked from home, and although this would seem
to suggest that he was an independent contractor,
the Second Circuit saw the situation differently.
Quote: "Despite the absence
of a formal employment agreement,
however, the record suggests
that Kirby and Marvel were closely affiliated
during the relevant time period.
Lee assigned Kirby, whom he considered his best artist,
a steady stream of work during that period,
and Kirby seems to have done most of his work
with Marvel projects in mind."
The Second Circuit emphasized
that the key factor is whether a work is made
at the hiring party's instance and expense,
and that happens when the employer
induces the creation of the work
and has the right to direct and supervise
the manner in which the work is carried out.
The Second Circuit acknowledged that Kirby's,
quote, "working relationship with Marvel
between the years of 1958 and 1963
was close and continuous," and continued, quote,
"Understood as products of the overarching relationship,
Kirby's works during this period
were hardly self-directed projects
in which he hoped Marvel,
as one of several potential publishers,
might have an interest.
Rather, he created the relevant works
pursuant to Marvel's assignment
or with Marvel specifically in mind.
Kirby's ongoing partnership with Marvel,
however unbalanced and under-remunerative to the artist,
is therefore what induced Kirby's creation of the works."
It's believed that Kirby had a looser agreement
with Marvel than many other artists, including Lee.
And when the Supreme Court declined to accept the appeal
from the Kirby case, the parties settled.
And since the ruling only applied
to two of Kirby's four children,
the others lived in California, Marvel opted to settle
with the family rather than face more litigation.
So this probably means that Marvel has the edge
because of this published Second Circuit ruling.
In the current cases,
Marvel argues that the Kirby case is dispositive
and that the courts must rule in its favor.
However, the ultimate issue of whether the Marvel Method
of producing comics means that the creators were employees
still hasn't been decided by the Supreme Court.
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