Superman Heirs, DC Comics Appeal Copyright Case

  

The heirs of Superman creators Jerome
Siegel and Joseph Shuster will take their 15-year-old fight with
Time Warner Inc. (TWX)’s DC Comics unit to reclaim the rights to the
comic book hero before a federal appeals court.

A U.S. Court of Appeals panel is scheduled today to hear
arguments in Pasadena, California, over whether Siegel’s
daughter can terminate the rights agreement dating back to 1938,
when DC’s predecessor, Detective Comics, published the first
Superman story in Action Comics. The panel will also hear
arguments in a lawsuit by DC Comics against Shuster’s heirs and
their lawyer.

“Superman is probably the second most valuable character
of Warner Bros. behind Batman,” said Jeremiah Reynolds, an
entertainment lawyer with Kinsella Weitzman Iser Kump Aldisert
LLP in Santa Monica, California, who isn’t involved in the case.
“Any litigation where a studio is fighting over one of its most
valuable assets will be of great interest to the entertainment
industry.”

The first Superman movie Warner Bros. released in 1978
initiated the era of big-budget superhero movies and brought in
about $300 million worldwide in ticket sales, according to Box
Office Mojo LLP, a compiler of box-office numbers. The film now
ranks No. 29 on Box Office Mojo’s list of most successful
superhero movies by domestic ticket sales.

‘The Avengers’

The best-selling movie on the list is “Marvel’s The
Avengers,” released this year by Walt Disney Co. (DIS)’s Buena Vista
unit, which brought in $623 million in domestic ticket sales and
$1.5 billion worldwide, according to Box Office Mojo.

DC Comics licenses the Superman rights to Warner Bros.,
also a unit of New York-based Time Warner. The company contends
its copyrights can’t be terminated because the Superman stories,
including key elements of the very first one, were produced on a “work-for-hire”
basis, which gives controlling rights to the
party commissioning the work and paying the artists.

The heirs to the creators argue the stories weren’t work-
for-hire because Siegel, the writer, and Shuster, the cartoon
artist, produced the first story independently of DC Comics and
the later ones, when they had a contract with DC Comics, on a
speculative basis. That left them with the creative control and
financial risk, the heirs said in court filings.

“Siegel and Shuster were self-employed, with their own
expanding comic production business, the American Artists
League, which supplied and sold finished comic book stories that
Detective purchased for publication and finished Superman comic
strips that McClure Newspaper Syndicate distributed to
newspapers,” Siegel’s daughter, Laura Siegel Larson, said in
court papers.

Split Rulings

A federal judge issued split rulings in 2008 and 2009 which
held that the the first published Superman story wasn’t work-
for-hire, while most of the later stories were. While U.S.
District Judge Stephen Larson didn’t resolve all the issues in
the lawsuit before he left the bench, both sides were permitted
to appeal over the issues he did address.

A year after Siegel’s death in 1996, his widow and daughter
sought to end DC Comics’ rights to Superman under the 1976 U.S.
Copyright Act that gave original authors and certain heirs the
right to recapture their original copyrights 56 years from the
date they first signed them over.

According to DC Comics, the company negotiated a new deal
in 2001 with Siegel’s daughter and wife, who has since died,
that guaranteed the family “many millions of dollars in cash,
royalties and other compensation.”

“But after agreeing to this deal in writing, the family
was approached by a self-styled ‘intellectual property
entrepreneur’ who dangled the prospect of even more money,” DC
Comics’ lawyers told the appeals court in a filing. “In short
order the family reneged on its deal with DC.”

2001 Agreement

DC Comics is challenging Larson’s ruling that without a
“long form” contract formalizing the 2001 agreement, there was
no deal. The company also wants the appeals court to reverse the
judge’s 2008 ruling that the Superman stories in Action Comics 1
and some other of the early publications weren’t work for hire.

The judge concluded that while DC Comics retained the
copyright to some black and white promotional announcements
published before the first Superman story, the crusader’s
storyline, including his name, his Clark Kent alter ego, his
origins, his mission and his heroic abilities, was no longer
within the comic book company’s sole possession to exploit.

Leotard, Cape

DC Comics “may continue to exploit the image of a person
with extraordinary strength who wears a black and white leotard
and cape,” the judge said.

He said what the company really wants is “the entire
storyline from Action Comics Vol. 1, Superman’s distinctive blue
leotard, complete with its inverted triangular crest across the
chest with a red ‘S’ on a yellow background, a red cape and
boots, and his superhuman ability to leap tall buildings, repel
bullets, and run faster than a locomotive.”

Siegel and Shuster met working on their high school
newspaper in Cleveland. Their first Superman character in a 1933
short story was a villain instead of a hero. Siegel rewrote the
character the next year as a superhero from outer space who
assumes the persona of mild-mannered newspaper reporter Clark
Kent to blend in with everyday society.

Even if the appeals court rules in Laura Seigel Larson’s
favor and affirms that she has successfully recaptured Siegel’s
half of the copyright, she still may have to settle with DC
Comics because any effort to market or exploit the Superman
character without DC Comics will result in more lawsuits,
Reynolds said.

‘Recipe for Litigation’

“It’s a recipe for litigation,” Reynolds said in a phone
interview. “It’s hard to imagine the Siegels will be able to do
anything without DC Comics.”

While the Siegels succeeded in the lower court in
recapturing their interest in Superman, the Shusters lost their
battle with DC Comics over their half of the copyright. Because
DC Comics and Warner Bros. retained that half, they are free
under U.S. copyright law to exploit those rights by making
another Superman movie due out next year, as long as they
account for the profits owed to the Siegel heirs.

U.S. District Judge Otis D. Wright II, who inherited the
Superman cases after Larson went into private practice, ruled
last month that the Shuster heirs forfeited their rights in a
1992 agreement with DC Comics that boosted a survivor payment
for the late artist’s brother and sister from $5,000 to
$25,000.

Wright said that the Shuster heirs, having locked
themselves into the 1992 contract, couldn’t rely on the 1976
copyright re-capture law because it applies only to agreements
made before 1978.

The 20-year-old agreement “exhausted the single
opportunity provided by the statute to the Shuster heirs to
revisit the terms of Shuster’s original grants of his
copyright,” Wright said in his ruling.

Shuster Estate

While Wright’s decision on that ruling isn’t before the
appeals court today, the three-judge panel is set to review
his pretrial ruling that DC Comics can sue the lawyer who
represents the Shuster estate, Marc Toberoff, for interfering
with its contract with the heirs.

In 2010, DC Comics sued Toberoff, of Malibu, California,
and the Shuster estate, claiming the lawyer “orchestrated a web
of collusive agreements concerning the Superman rights.”

“By these agreements, Toberoff purported to secure a
majority of and controlling financial stake in copyright
interests in Superman assertedly held by the Siegel and Shuster
heirs and preclude the heirs from freely entering into new
agreements with DC Comics,” the company said in its complaint.

Joint Venture

DC Comics alleges Toberoff induced the Shusters to
repudiate their 1992 deal and enter into in a fifty-fifty joint
venture with his company, Pacific Pictures Corp., that would own
their rights if they got them back.

Toberoff, who referred to himself in a court filing as “a
well-known artists’ rights attorney,” said in his appeal that
the lower court should have dismissed the interference claim, as
well as the company’s allegation that his agreements with the
Siegels and Shusters for a stake in their rights to Superman are
void.

The cases are Larson v. Warner Bros., 11-55863, and DC
Comics v. Pacific Pictures Corp., 11-56934, U.S. Court of
Appeals for the Ninth Circuit (Pasadena, California).

To contact the reporter on this story:
Edvard Pettersson in Los Angeles at
epettersson@bloomberg.net

To contact the editor responsible for this story:
Michael Hytha at
mhytha@bloomberg.net

From: http://www.businessweek.com/news/2012-11-05/superman-heirs-dc-comics-appeal-copyright-case

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