Have Marvel Superheroes Met Their Copyright Match?

After a week in intense trial mode, it is great for this Kat to get his life back once again. No sooner had I sent back to the archives the last of the boxes than I came across an interesting dispute of copyright ownership involving all of the ingredients of a Hollywood tale, including a role for Hollywood itself.

As reported in the 21 March issue of the New York Times, "A Supersized Custody Battle over Marvel Superheroes", the struggle is between the heirs of Jack Kirby, a renowned artist who was one of the creators of a number of iconic characters on behalf of Marvel comics, and the owner of the Marvel library, being none other than the Walt Disney Company. For those of you who may have been on vacation last August, Disney agreed to fork over $4 billion dollars to acquire Marvel Comics and its rich library of oversized heroes, including Spider-Man, the X-Men, the Incredible Hulk and the Fantastic Four.

At issue is the claim by Kirby's heirs that they have not been compensated for the revenues derived by Marvel in merchandising comic characters that they claimed had been created, at least in part, by Kirby, who passed away in 1994. To push the issue, the heirs took advantage of provisions under the 1976 U.S. Copyright Law that allows the author or his heirs to terminate transfers or licences of copyright after the passage of certain number of years. Relying on these provisions, in September 2009, counsel for the heirs sent 45 notices of termination to Disney, Marvel and other studios, the earliest reversion to kick in during 2014.

Presumably, the heirs viewed the move as a tactical move to gain leverage in negotiations with Marvel. Settlement talks between the parties did transpire. Whatever the contents of those talks, Marvel did not reach agreement, but rather countered in court in New York by filing an action on 8 January to invalidate the notices of termination. Not to be outdone, on 9 March, the heirs filed a counteraction in court in Los Angeles. At legal issue is whether Kirby created the works as an independent contractor, in which case the heirs have a valid claim of ownership, or as an employee of Marvel, in which case rights belong to them. The legal fight, therefore, would seem to have just begun.

Lurking in the background to this dispute are several strands of unfolding plot that only could happen in Hollywood. First there is the transformation of artistic creations into merchandising platforms capable of generating revenues wildly beyond the value of the initial work. What makes the equity of the legal dispute deliciously ambiguous is that it is Kirby's heirs, and not the late Kirby himself, who seek to gain a piece of this commercial action.

Underlying this business structure is the legal recognition that copyright extends to derivative works. While the recognition of protection derivative works took place in the 19th century with respect to translations, the commercial potential in derivative works only came to play in the latter third of the 20th century as the foundation to the merchandising industry.Whether this is what was intended when derivative works were recognized under copyright law can be questioned, but the horse has long left the copyright barn. When the commercial potential of merchandising is joined with the right of termination by heirs, the potential for complicating the rights clearance mechanism, thereby introducing a material source of uncertainty, is substantial.

Secondly there is the complicated relationship between Marvel and Disney, at least regarding legacy licence agreements involving Kirby creations that were entered into by Marvel with studios in competition with Disney, including Sony, 20th Century Fox and Universal Studios. This interweaving of Disney, Marvel and Disney competitors was, at least for this vertiginous Kat, one of the most interesting aspects of the Disney acquisition last summer and I suspect it will play out for Disney and Marvel in a variety of settings beyond the contours of the current dispute.

Third, is the role of some of the personalities involved. One is Stan Lee, the legendary publisher etc. at Marvel. Mr Lee won a so-called "profit-participation lawsuit" with Marvel a decade ago. You might think, therefore, that Mr Lee would be on the side of the heirs. Not so fast. It appears that Disney has a stake in a creative company in which Mr. Lee has a central position. Mr Lee's position on the matter can only be described as uncertain.

The other compelling personality is counsel for the heirs, an attorney named Mark Toberoff. Mr. Toberoff has gyrated from law school, to "go-fer" to film director Robert Altman, to film producer of his own, bring to the public the unforgettable 1987 celluloid classic -- "Zombie High", to lawyer specializing in representing artists and their heirs against studios.

When one tries to take make sense of all of these various strands in connection with the Kirby-Marvel dispute, there is a certain feeling of unease. Paul Goldstein, the Stanford University expert on copyright, is quoted in the article as characterizing such film right cases as "a real profit center" for the lawyers taking part in such litigation. He noted that the potential for termination of rights cases is only beginning. One wonders if Goldstein finds this prospect to be good or bad for copyright, the media and merchandising.

After all, there is always the threat of gridlock if there are too many competing claims of rights, and no effective mechanism for resolving these claims, other than through litigation. One thing seems for certain, however. Judging by the legal point and counter-point in the Kirby matter, voluntary profit-sharing is not part of the Kool-Aid that they drink in Hollywood.