Will Mighty Marvel Defeat the Little Guys Yet Again?

Unless you’re Stan Lee, working for Marvel seems like a frustrating gig.  As I’ve written about before, Marvel has profited mightily from the blood, sweat, and tears of many a Marvel artist, thanks to the work-for-hire rule in copyright law.  But Marvel’s standard work-for-hire defense may finally be vulnerable.

This issue has come up in Gary Friedrich Enters., LLC v. Marvel Characters, Inc., a dispute over the Marvel character Ghost Rider.  I never had much interest in the Ghost Rider character, and the movie with Nicholas Cage seemed pretty lame, but the few tastes of the comic I got from the opinion intrigued me.   (The opinion even includes the cover of the first Ghost Rider comic book, which is pretty cool!)

Ghost Rider Image From Opinion Opinion at p. 5.

The character was introduced in 1972 – a motorcycle stunt driver who promised his soul to the devil, becoming a demon in exchange for saving his adoptive father from cancer.  As the front page of the comic book acknowledges, Gary Friedrich, who brought this suit, conceived of this character and wrote the story.  Stan Lee, of course, edited the story.

Friedrich filed suit a few years ago, claiming that he owns the renewal term copyright to Ghost Rider.  The district court ruled against him, finding that Marvel owned the copyright because Friedrich had assigned his rights to the renewal term copyright when he executed a form work-for-hire agreement in 1978.  Friedrich appealed this decision and the appellate court remanded the case for trial.

Flaming SkullThe appellate decision laid out the disputed facts, describing in part the inspiration for the Ghost Rider character.  Although there’s a dispute as to how the character was developed, it seems clear that Stan Lee agreed to publish the comic book in exchange for Friedrich assigning his rights in the Ghost Rider characters to Marvel, although there was never any discussion of renewal rights and no written contract.  The Ghost Rider character was very popular and Marvel ended up publishing over 300 Ghost Rider stories, including some as late as 2005.

Friedrich wrote many of the Ghost Riders stories on a freelance basis.  In 1976, Congress changed the copyright law to provide, in part, that a work created outside the scope of employment could only be a “work-for-hire” if there was an express written agreement to that effect.  See 17 U.S.C. § 101.  When Friedrich was asked to sign such an agreement in 1978, he was supposedly told that the written agreement only covered future work and that he had to sign it if he wanted to continue working with Marvel.  He was not paid for signing the agreement and, in fact, he was never hired to do any more work for Marvel.

The initial 28-year copyright term for Ghost Rider expired at the end of 2000.  Normally, Friedrich, as the original author, would have held the right to the renewal copyright that began in 2001.  See id. § 304(a)(1)(C)(i), (2)(B)(ii).  Marvel continued to use the Ghost Rider character – a fact that Friedrich only became aware of in 2004 when he learned of the plans to make a movie on his character.  Despite having his attorney assert his right to control the copyright, Marvel insisted they still owned the rights to the character under the work-for-hire law.

After filing suit, the district court found that the agreement Friedrich signed in 1978 included his assignment of all rights to both the original copyright term as well as the renewal term.  That issue (along with two other related issues) is what was addressed on appeal.

The appellate court first explained the purposes of a renewal term (of 76 years), which is to “‘provide authors a second opportunity to obtain remuneration for their
works'” and “‘to renegotiate the terms of the grant once the value of
the work has been tested.'”

stk22466btmThe court then looked to the contract to see if that intent had been clearly expressed.  Interpreting the contract under New York state law (an issue I’ve discussed before in relation to Howard Stern’s contract dispute with Sirius), the appellate court found that it was not clear that Friedrich had assigned his renewal rights to Marvel under the 1978 agreement.  This finding was based in part on the “strong presumption against the conveyance of renewal rights” under copyright law.  The court then went on to find that the wording of the entire agreement was ambiguous and it was not clear whether it would have even covered a work created six years earlier.  Nor was it clear that the agreement addressed renewal rights.

Because the contract language was ambiguous, the court looked to evidence outside of the terms of the agreement itself to see if the parties intended to address renewal rights in the agreement.  Finding that there was a genuine dispute as to what the parties had intended (at the summary judgment stage there cannot be disagreements over facts key to resolving the legal dispute), the court sent the case back to the district court for trial.

There were two other related issues that were raised on appeal but both of those issues were also found to have factual disputes, so this decision by the appellate court didn’t resolve anything in either the plaintiff’s or defendants’ favor.  But what it means is that, unlike so many of the other legal efforts made by Marvel comic book artists, Friedrich at least has a chance to take his case to a jury.  It’s unlikely, of course, that the case will ever actually make it to trial – instead, the parties will probably settle based on the appellate court’s ruling.

It makes me happy, however, to know that at least one of the Marvel artists has a chance to get some proper compensation for his hard work and creativity!

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Jessica has been litigating business and IP disputes for the past decade. During that time, she’s dealt with clients, lawyers, and judges who have varying degrees of appreciation for the challenges of managing discovery in an electronic age. Until the fall of 2011, she was an attorney at a large, Texas-based law firm, where she represented clients in state and federal court nationwide. That fall, she made a long-desired move back to the Midwest and is now a partner at Hansen Reynolds Dickinson Crueger LLC, a litigation boutique based in Milwaukee, Wisconsin, where she continues to litigate while also consulting with business and law firms on e-discovery issues (before, during, and after litigation arises).