Heirs' Claim Is Kryptonite to DC Comics

K CASE COMMENT THE CASE Heirs’ claim is kryptonite – Siegel v Warner Brothers Entertainment Inc, 542 F Supp 2d 1098 (CD Cal 2008) to DC Comics – US District Court for the Central District K Creator’s relatives recapture a portion of of California Superman copyright – 26 March 2008 Ron Dove and Erin Smith of Covington & Burling LLP discuss the recent ruling over royalties following copyright termination

fter 70 years, the heirs of one of the creators of Superman have regained half of the copyright in the famous comic A book superhero. The victory for creator Jerome Siegel’s heirs came 11 years after they notified the copyright holder, DC Comics, of their intent to terminate the 1938 copyright grant by which Siegel granted ownership rights in the Superman copyright to DC Comics’ predecessor, Detective Comics. AUTHORS The decision in Siegel and others v Warner Brothers Entertainment Inc and Ron Dove (left) is Of Counsel in the others could have future consequences for DC Comics, which still Washington office of Covington & owns the other half of the copyright that belonged to Siegel’s Burling. He is a member of the co-creator, Joseph Shuster. Shuster’s heirs have also filed global IP group and has advised and notices seeking to terminate the 1938 copyright grant. litigated cases for clients in While ruling in favour of the Siegel heirs, the court the sports, media, did impose several limitations on the rights that they publishing, luxury recaptured. To understand the court’s decision, let goods and us travel back in time to the creation of the pharmaceutical original Superman. industries. Many of the cases Ron The original Superman has litigated have In 1934, Siegel and Shuster created a character much involved developing and like the Superman we know today: A man who, due to a implementing a national strategy ‘pseudo-scientific explanation’, has superhuman that has required prosecuting or powers and uses them ‘to perform daring feats for defending similar claims against the public good’. different parties in multiple courts The Superman of 1934 had superhuman across the United States. strength, could hurdle a 20-story building, and ran faster than an express train. Superman had Erin Smith (right) is an Associate an alter ego named Clark Kent, a secret in the global IP group of identity that allowed for plot twists, Covington & Burling LLP and is especially surrounding the love triangle with based in the firm’s San fellow newspaper reporter Lois Lane. Francisco office. She practices Superman wore a leotard, briefs, a in the areas of litigation, IP and cape, and boots. Emblazoned on his antitrust. Erin has chest was the letter ‘S’ in an represented clients in inverted triangular crest. In California federal and state contrast, Clark Kent wore a suit and courts as well as in black-rimmed glasses. arbitration before the On 18 April 1938, Detective International Chamber Comics published Superman for the of Commerce. first time in the comic book Action Comics, Vol 1. It was an instant success. The Superman published in 1938 had all of the features conceived by Siegel and Shuster in 1934, but not all of the story elements that we know today. For example, the 1938 comic book did not contain references to Superman’s ability to fly or his vulnerability to kryptonite. And some of the most well-known supporting

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characters, such as Lex Luthor, were not in for a termination notice to be effective for 1999 Superman movies).The court reserved the 1938 comic. pre-1978 grants. Among others, the effective for another day the question of what to do date of the termination must be between 56 about pre-termination derivative works that The copyright grants and 61 years from the date the copyright have been altered since the 1999 termination. On 1 March 1938, six weeks before Action was originally secured4. Notice of the • Certain 1938 promotional announcements, Comics, Vol 1 was published, Siegel and termination must be served no less than two which were published before Action Comics, Shuster assigned to Detective Comics ‘all the and no more than 10 years before the Vol 1, are still held exclusively by DC good will attached and exclusive rights to effective date of the termination5. Comics because they were published six days Superman to have and hold forever’. In return, The Copyright Act also places certain before the 61-year reach of the termination Siegel received $130. This worldwide grant limits on the availability and scope of the notice. Of course, these rights include only was confirmed in a September 1938 agreement termination. Works made for hire, as well those features of Superman that were acknowledging that Detective Comics was the as derivative works prepared before the depicted in these particular illustrations, ‘exclusive owner’ of Superman. termination date, are not subject to which the court found to be only a man of Over the next several decades, the parties termination6. Termination affects only those extraordinary strength wearing a black-and- sparred over who owned the Superman rights arising under the Copyright Act, not white leotard and cape. copyright. In 1948 they settled a lawsuit and those ‘rights arising under any other • Finally, the court declined to rule on agreed that Detective Comics owned ‘all Federal, State, or foreign laws’7. summary judgment whether the Siegel rights’ to Superman. In 1974 the US Court of heirs are entitled to profits from Warner Appeals for the Second Circuit found that the The court’s holdings Brothers, a corporate affiliate and licensee 1938 grant had assigned to Detective Comics In 1997 the Siegel heirs served notices to of DC Comics which distributed the 2006 both the initial 28-year term for the Superman terminate the Superman copyright grants, movie Superman Returns. The court copyright as well as the renewal term. effective 16 April 1999. Applying the rules hinted, however, that if the record were In 1975, and again in 1982, DC Comics set out above, the court held that the notices to show that the licence between DC agreed to make ‘voluntary’ payments to the effectively terminated Siegel’s 1938 grant to Comics and Warner Brothers was a creators and their families, and Siegel and Detective Comics, and the Siegel heirs ‘sweetheart deal’, then the shielding of Shuster re-acknowledged the Second regained the copyright in the Superman those profits would be inequitable and an Circuit’s decision that DC Comics had ‘all material published in Action Comics, Vol 1. accounting would be appropriate. right, title and interest in Superman’. In addition to this central holding, the How, then, after the unequivocal grant of court also found that the Superman material A partial victory the Superman copyright in 1938, followed in Action Comics, Vol 1 was not a work made The court’s decision drew to a close one by at least four reaffirmations of DC Comics’ for hire. The Second Circuit had already portion of the 70-year Superman copyright exclusive ownership of all rights, did Siegel’s rejected that argument in the 1970s, finding battle, but the dispute is still not over. A trial heirs regain half of the Superman copyright? that Siegel and Shuster created Superman on several issues is scheduled for later this The answer lies in provisions of the 1976 long before their employment relationship year, and an appeal of the court’s summary Copyright Act that the court described as with Detective Comics began, and collateral judgment ruling is a real possibility. ‘formalistic and complex’. estoppel prevented the court from These sorts of disputes are likely to increase reconsidering that decision. in the years ahead as greater numbers of The author’s right to terminate Furthermore, the court ruled that the creators and their heirs exercise their own prior grants acceptance of benefits from DC Comics by termination rights over characters and other The 1976 Copyright Act granted artists and Siegel’s widow was not a post-termination creations. For creators and their heirs, the their heirs a new right to terminate prior re-grant of rights in the Superman copyright. lesson of this decision is that they need to be grants to their creations: The court sided with DC Comics on a careful in navigating through the complex and ‘In the case of any copyright subsisting in number of issues, including: technical termination provisions of the US either its first or renewal term on 1 January • The Siegel heirs recaptured only the US Copyright Act, seeking legal advice and 1978, other than a copyright in a work made copyright, not the right to exploit the making sure to follow those provisions to the for hire, the exclusive or nonexclusive grant work abroad under the copyright laws of letter. Grantees, for their part, should be aware of a transfer or license of the renewal other nations. DC Comics, therefore, must that these termination rights exist in the US copyright or any right under it, executed only account to the Siegel heirs for and should plan accordingly. K before 1 January 1978… is subject to domestic profits earned from the termination… notwithstanding any Superman copyright since 1999, the Notes agreement to the contrary…’2 effective date of the termination. 1. Joanne Siegel and Laura Siegel Larson v Time Importantly, the termination of a copyright • DC Comics retained the rights to its Warner Inc, Warner Communications Inc, grant includes derivative works created after Superman-related trademarks and profits Warner Bros Entertainment Inc, Warner the termination date3. The rationale behind ‘purely attributable’ to those trademarks. Brothers Television Production Inc and DC this new right was to give authors (and their The court did not decide how to determine Comics, 542 F Supp 2d 1098 (CD Cal 2008). heirs) a second chance to reap the value of which profits are derived purely from 2. 17 USC §304(c). their creation, this time from a stronger trademarks as opposed to mixed trademark 3. Id §304(c)(6)(A). bargaining position. (A similar termination and copyright uses. 4. Id §304(c)(3). right for grants made on or after 1 January • DC Comics does not have to account for 5. Id §304(c)(4)(A). 1978 is provided at 17 USC §203.) profits from unaltered derivative works 6. 17 USC §§304(c), (c)(6)(A). There are several detailed requirements created prior to termination (such as the pre- 7. Id §304(c)(6)(E). www.ipworld.com September 2008 | Copyright World Issue # 183 | 15