Warner Bros.’ Super Victory: U.S. Supreme Court Effectively Ends Lengthy Superman Copyright Dispute

The Sedgwick Law Firm > Warner Bros.’ Super Victory: U.S. Supreme Court Effectively Ends Lengthy Superman Copyright Dispute

 

Media Law Bulletin

November 2014

Warner Bros. and its DC Comics subsidiary can now breathe a bit easier, as the U.S. Supreme Court has recently declined to intervene in the ongoing dispute over the ownership rights to Superman.  And so ends (at least for now) the lengthy legal fight over who owns the copyright to DC Comics’ flagship character.

The Origins of a Super Legal Fight

By now, the story behind Superman’s origins is well-known.  Created by teenagers Joseph Shuster and Jerry Siegel in the 1930s, Superman first appeared in Action Comics #1 in 1938.  Shortly thereafter, Shuster and Siegel reportedly sold to what is now DC Comics their rights to the Action Comics storyline, including the Superman character as he then existed, for $130.00 and additional, annual “work for hire” payments for supplying material to DC Comics.  Superman would, of course, then go on to become one of the most well-recognized and financially successful characters in comic book history, generating millions of dollars in subsequent sales, spin-offs, movies and merchandise.  In the years that followed, both Shuster and Siegel would attempt to regain ownership of Superman and a more appropriate share in DC’s profits from the booming franchise.  Ultimately, various lawsuits, settlements and copyright extensions restored their names to the Superman comics’ credit pages, and deals were made to provide pensions and other compensation for the co-creators’ heirs.

But it was not until recently that the legendary copyright dispute really picked up its pace, as heirs of both creators attempted again to find the legal kryptonite capable of loosening DC’s grip on the Superman franchise.  Their plan of attack?  The 1976 Copyright Act’s termination provisions.  Unfortunately for the heirs, the federal courts have not been receptive.

The Copyright Act

Termination rights (also referred to as “recapture rights”) are equitable accommodations under the copyright laws.  They allow authors, or their heirs, a second opportunity to share in the economic success of their works.  Codified in sections 304(c), 304(d) and 203 of Title 17, respectively, they encompass grants made before and after January 1, 1978 (the effective date of the 1976 Copyright Act).  The provisions do not apply to copyrights in works made for hire or grants made by will.

Section 304(c) governs older works; specifically, works in which a copyright was subsisting in its first or renewal term as of January 1, 1978.  It provides for termination of the exclusive or nonexclusive grant of a transfer or license of the renewal copyright (or any right under it) executed before January 1, 1978.  Because Superman was first published in 1938, Section 304 applies.  Per Section 304, termination may be exercised at any time during a five-year period beginning at the end of 56 years from the date copyright was originally secured.  Section 304(d) governs a smaller subset of pre-1978 works for which the termination rights under section 304(c) expired (and was not exercised) on or before the effective date (October 27, 1998) of the Sonny Bono Copyright Term Extension Act, which extended copyright terms by 20 years. It provides for termination of the exclusive or nonexclusive grant of a transfer or license of the renewal copyright (or any right under it) at any time during a five-year period beginning at the end of 75 years from the date the copyright was originally secured.

Courts to the Rescue!?

Per Section 304, the Superman copyright could be reclaimed between 1994 to 1999, based on the initial publication date of 1938.  Jerry Siegel died in January 1996, and his wife and daughter filed a copyright termination notice in 1999.  In October 2004, they filed suit alleging copyright infringement on the part of Warner Bros., DC’s parent company.  Warner Bros. counter sued, alleging, among other claims, that the termination notice contains defects.  In March 2008, a federal district court in California ruled that Siegel’s estate was entitled to reclaim its share in the United States copyright to Superman.  In January 2013, however, the Ninth Circuit Court of Appeals reversed and sided with DC with respect to Siegel’s heirs’ copyright reclamation claim, finding that DC assumed Siegel’s portion of the Superman copyrights through a 2001 agreement permitting the publisher to retain all rights to Superman (as well as Superboy) in exchange for cash and other contingent compensation.  On remand, the district court found the 2001 agreement enforceable, rejecting Siegel’s heirs’ claim that the deal was rescinded.  Siegel’s heirs have appealed to the Ninth Circuit, and the decision remains pending.

For Shuster’s estate, though, the Supreme Court battle has effectively ended.  In January 2004, Mark Peary, nephew and legal heir to Joe Shuster’s estate, filed notice of his intent to terminate Shuster’s 1938 assignment and reclaim Shuster’s half of the copyright, effective in 2013.  At issue was the existence of an earlier 1992 agreement between DC and Shuster’s siblings that DC argued legally “re-granted” to DC Shuster’s Superman contributions in exchange for lifetime pensions to Shuster’s siblings, a revocation of the 1938 copyright assignment to DC and a re-grant to DC of all of Shuster’s copyrights in Superman.

Because the 1976 and 1998 statutes allowing the filing of copyright termination notices permit only the termination of assignments “executed before January 1, 1978,” 17 U.S.C. § 304(c), (d), DC argued that the 1992 agreement foreclosed the estate’s 2003 notice of termination in that it left no pre-1978 assignment to terminate (instead creating a new assignment effective as of 1992).  On the other hand, Shuster’s estate argued they never gave up any right to seek termination of Shuster’s copyright grants because such a right did not exist at the time, as Congress did not extend termination rights to executors of an author’s estate until 1998.  Prior to that, the right to terminate was limited to spouses and children only.  The Ninth Circuit, as it did in the Siegel case, sided with DC and affirmed the district court’s conclusion that the 1992 agreement legally re-granted to DC Shuster’s portion of the Superman copyrights.

After Shuster’s estate’s request for rehearing before the Ninth Circuit was denied, the estate asked the Supreme Court to decide the issue once and for all.  But at the beginning of its fall 2014 term, the Supreme Court denied certiorari, leaving the Ninth Circuit ruling in favor of DC in effect and Shuster’s estate without any claim to the Superman copyrights.  And with copyright termination notices generally anticipated to increase in the next few years, the certiorari denial has left the legal community without some helpful guidance as to the circumstances under which the Copyright Act’s termination rights can be eliminated by contract.

High-Flying from Here

The Ninth Circuit has fittingly recognized the Superman copyright litigation to be nearly as old as The Man of Steel himself.  With the Supreme Court’s decision declining review of Shuster’s heirs’ appeal, however, the dispute is now effectively over.  True, Siegel’s heirs may have one more shot at it, but many analysts doubt they will achieve much success, if any.  For Warner Bros., one might say they dodged a bullet.  Its future use of arguably the most famous comic book superhero of all time will proceed unfettered.  And much to the chagrin of his creators’ heirs, more comic books, more storylines, more movies and more profits shall follow.