Superman and a Super Copyright Battle

On March 26, 2008, the District Court for the Central District of California issued an order closing one chapter to a long running battle between the heirs of one of the original creators of the iconic comic book superhero, Superman, and DC Comics. The court’s order addressed the heirs’ attempt to exercise their rights under the termination provision contained in the Copyright Act of 1976; a formalistic and complex statutory scheme which allows authors and their heirs to terminate a prior grant of copyright in a creation.

At issue in the case was a 1938 grant (and other purported grants) by Jerome Siegel and his creative partner Joseph Shuster, of the copyright in the first edition of Superman published by DC Comics. The court’s order is a detailed 72 page ruling which devotes great consideration to the story behind the creation of Superman. As the court notes, “any discussion about the termination of the initial grant to the copyright in a work begins with the story of the creation of the work itself.”

In 1932 Jerome Siegel and Joseph Shuster were teenagers at Glenville High School in Cleveland, Ohio. Siegel was an aspiring writer and Shuster an aspiring artist. The two men met while working on their high school newspaper and discovered a shared passion for science fiction and comics.

In January, 1933, Siegel and Shuster first introduced the Superman character in a short story, The Reign of the Superman. The story told of a mad scientist’s experiment with a “deprived man from the bread lines,” and the creation of a villain with superhuman powers. A short time later, inspired to introduce a literary character which would bring hope amidst the general despair felt by most as a result of the Depression, Siegel revised the Superman character from a villain to a hero.

Siegel and Shuster made numerous attempts to get their current version of Superman published. The comic book publisher Detective Dan was the first potential publisher. However, Detective Dan later rescinded its offer. Undaunted rejections, Siegel and Shuster continued to work on Superman. They enhanced his powers and modified the format from comic book to newspaper comic strip.

By 1934, Siegel and Shuster had transformed the Superman character to its present day incarnation. Dressed in its now well known cape and outfit, complete with the “S” crest on its chest, Superman possessed superhuman strength, had the ability to jump an eight of a mile and leap a twenty story building; the character could run faster than an express train and was impervious to gunfire. Siegel and Shuster had also developed the concept of Superman’s secret identity and humanized this character by giving it an “ordinary person” alter ego in the form of Clark Kent.

The two shopped Superman for a number of years to numerous publishers but were unsuccessful. During that time, Siegel and Shuster wrote other comic strips that were sold to Nickelson Publishing Company. When Nickelson closed up in 1937, Detective Comics acquired some of the comic properties that Siegel and Shuster had written. On December 4, 1937, Siegel and Shuster entered into an agreement with Detective Comics and agreed to continue to furnish these comics for the next two years. The agreement also gave Detective Comics a sixty day option to publish any new material created by Siegel and Shuster.

Soon thereafter, Detective Comics decided to issue a new comic book magazine entitled Action Comic and became interested in Siegel and Shuster’s Superman material. With Detective Comics intending to publish Superman in an expanded thirteen page format, Siegel and Shuster began work on revising and expanding the existing Superman newspaper material into a format suitable for a comic book. In February, 1938 Siegel and Shuster resubmitted their Superman material to Detective Comics. On March 1, 1938, prior to the printing of the first issue of Action Comics, Detective Comics sent Siegel a check for $130.00 (representing the per page rate for the thirteen page Superman comic book) and a written agreement for Siegel and Shuster’s signature. The agreement assigned to Detective Comics “[all] the goodwill attached…and exclusive right[s]” to Superman “to have and hold forever.” Siegel and Shuster signed and returned the written assignment to Detective Comics.

Siegel and Shuster’s grant of worldwide ownership rights in Superman was later confirmed in a September 22, 1938 employment agreement in which Siegel and Shuster acknowledged that Detective Comics was “the exclusive owner of Superman.” This agreement also provided for Siegel and Shuster to continue to supply the artwork and storyline for Superman at a per page rate for the next five years.

Superman was published by Detective Comics on April 19, 1938 in Volume One of Action Comics. The comic was highly successful. However, while Superman continued to grow in popularity, a rift developed between the two creators, and Detective Comics. The parties engaged in legal bouts and disputes beginning in 1947, when Siegel and Shuster brought an action against Detective Comics seeking, among other things, to rescind their previous agreements with Detective Comics based lack of mutuality and consideration. The parties litigated again in 1969 as a result of the expiration of the initial copyright term for Superman. Siegel and Shuster brought suit seeking a declaration that they, not Detective Comics, were the owners of the renewal rights to the Superman copyrights. The results were not fruitful, and in 1970 the Federal District Court in New York ruled that the March 1, 1938 grant to Detective Comics (which was reconfirmed in a 1948 stipulation) had transferred and assigned to Detective Comics not only the initial copyright term, but the renewal term in the Superman copyrights as well.

In 1976, Congress made substantial changes to the Copyright Act, and these changes would have a great and profound affect on Siegel and Shuster and their grant of rights to Detective Comics. The 1976 Act expanded the duration of the renewal term for works like Volume One of Action Comics that were already in their renewal term at the time of the Act’s passage. Additionally, the Act gave artists and their heirs the ability to terminate any prior grant of rights to their creation where the grants were executed before January 1, 1978. The purpose was to protect authors, given their lack of bargaining power. Specifically, Section 304(c) of the Act provided that any copyright subsisting in either its first or renewal term on January 1, 1978, other than a copyright in a work for hire, the exclusive or non-exclusive transfer or license executed before January 1, 1978 is subject to termination notwithstanding any agreement to the contrary. It was this right of termination that spurred ten years of negotiation and litigation between the heirs of Jerome Siegel and Detective Comics, its parent company Time Warner, and their affiliated entities.

While the 1976 Act created a new right allowing authors and their heirs to terminate a prior grant of copyright, the Act also set forth specific steps concerning the timing and contents of the termination notice that must be served in order to effectuate termination. The termination of a grant may be effective “at any time during a period of five years beginning of the end of 56 years from the date the copyright was originally secured” and the notice of termination must by served “not less than two or more than ten years” before its effective date. These statutory requirements, along with regulations promulgated by the Register of Copyright made the termination process difficult, complex and extremely technical. However, through assistance of able counsel, the Siegel heirs were able to serve seven separate notices of termination on April 3, 1997, purporting to terminate several of Siegel’s grants in the Superman copyright. The parties negotiated until February, 2002 but were unable to come to terms. Litigation commenced in 2004.

Detective Comics attacked the enforceability of the termination notices and claimed that certain portions of the Superman comic in Volume one of Action Comics were in the nature of a work for hire and not subject to termination. Detective Comics raised other technical challenges to the claims made by Siegel’s heirs. Although highly technical and intricate, the court essentially ruled in favor of Siegel’s heirs and returned to them the copyright in the Superman material that was published in Volume one of Action Comics. Left undecided was how to apportion the profits from the exploitation of new derivative works on a going forward basis. (A termination of rights does not affect the post termination utilization and exploitation of derivative work prepared before termination.) The Court noted that section 304(c)(6)(E) would appear to exclude the Siegel heirs from sharing in profits derived from the foreign exploitation of the Superman material. Additionally, the Court noted that profits derived form the use of the Superman trademarks need not be shared with the Siegel heirs. Also left open is the issue of an accounting for profits resulting from the exploitations of the works by Detective Comics’ corporate siblings, Warner Brothers Entertainment and its corporate parent Time Warner Inc. The genesis of this claim stems from certain inter-corporate transactions concerning the Superman copyright. In noting that summary judgment was inappropriate (and surely ensuring another ten years of litigation), the court noted that “whether the license fees paid represents the fair market value…or whether the license for the works was a sweetheart deal…” are questions of fact that are not answered on summary judgments.