On September 26, 2014, Marvel Entertainment and the Jack Kirby estate reached a settlement ending their longstanding dispute over the rights to Kirby-created characters and concepts, just days before a U.S. Supreme Court conference was scheduled to discuss whether the nine justices would hear the case. See Vaneta Rogers, "Jack Kirby Estate and Marvel Announce Settlement," Newsarama (Sept. 26, 2014). Jack Kirby (1917–1994) was a legendary comic book artist and writer who was heavily involved in the creation of the X-Men, Thor, the Hulk, and the Fantastic Four—iconic characters that have become cash cows for Marvel Entertainment and its parent, the Walt Disney Company. The central issue in this legal dispute was whether Kirby was the true copyright holder to the characters and concepts he created, or whether his creations were merely a "work for hire." See Marvel Worldwide, Inc. v. Kirby, 777 F. Supp. 2d 720, 737 (S.D.N.Y. 2011), aff'd in part, vacated in part sub nom, Marvel Characters, Inc. v. Kirby, 726 F.3d 119 (2d Cir. 2013), cert. dismissed, 135 S. Ct. 42 (2014). Of larger consequence than Kirby's rights to the characters he created is the persistent issue of freelancers attempting to reclaim copyrights to work they sold before the Copyright Act of 1976 was enacted. Prior to the settlement, the U.S. Court of Appeals for the Second Circuit had affirmed the district court's grant of summary judgment in favor of Marvel, holding that Marvel was the rightful copyright holder under the "instance and expense" test. Unfortunately for freelancers, because of the settlement between the Kirby estate and Marvel, the Second Circuit's decision will remain the controlling authority in the Second Circuit on independent contractors' rights to pre-1978 work.
The legal dispute between the Kirby family and Marvel dates back to August 2009, when Walt Disney agreed to a $4 billion acquisition of Marvel Entertainment. Brooks Barnes & Michael Cieply, "A Supersized Custody Battle over Marvel Superheroes," N.Y. Times (Mar. 20, 2010). On September 16, 2009, Kirby's heirs sent 45 notices of copyright termination to Marvel and Disney, as well as Paramount Pictures, Sony Pictures, 20th Century Fox, Universal Pictures, and other companies that have been using Kirby's popular characters. The notices demonstrated the heirs' intent to regain copyrights to Kirby's creations as early as 2014. On January 8, 2010, Marvel filed for declaratory relief seeking to invalidate the notices, arguing that Kirby's work constituted works made for hire.
On July 28, 2011, the District Court for the Southern District of New York granted summary judgment in favor of Marvel, finding that the Kirby works were made for hire under the Copyright Act of 1909 as they were created at the instance and expense of Marvel. See Marvel Worldwide, 777 F. Supp. 2d at 750. Because the Kirby works were published between 1958 and 1963, the Copyright Act of 1909 was the controlling law. The district court focused on the word "author," which under the 1909 Act includes an employer in the case of works made for hire, and applied the "instance and expense" test to determine whether the Kirby works were made for hire. The Ninth Circuit, in Lin-Brook Builders Hardware v. Gertler, 352 F.2d 298, 300 (9th Cir. 1965), was the first court explicitly to extend the "instance and expense" test to works for hire subject to the 1909 Act.
The district court found the evidence in favor of Kirby's works being made at Marvel's instance, highlighting that "Kirby did not create the artwork that is the subject of the Termination Notices until Lee assigned him to do so." Marvel Worldwide, 777 F. Supp. 2d at 739. Kirby's heirs argued that because a written agreement was absent between Kirby and Marvel, Marvel lacked the legal right to control Kirby's work. However, the court rejected this position because a written agreement is not necessary to form a contract. After looking at the relationship between the parties, the court concluded that "Marvel did control and supervise all work that it published between 1958 and 1963." Marvel Worldwide, 777 F. Supp. 2d at 741.
The district court determined that the expense prong also favored Marvel because Marvel, not Kirby, bore the risk of the comic books' failure. Kirby's flat sum payment also favored Marvel on the expense prong of the test. Because the district court determined the Kirby works were created at Marvel's instance and expense, this made Marvel the presumptive author of Kirby's creations unless Kirby's heirs could rebut this with evidence to the contrary.
Unfortunately for the heirs, the three documents they produced were deemed unconvincing and proved "conclusively that the Kirby Works were works for hire." Marvel Worldwide, 777 F. Supp. 2d at 744. For example, a 1972 assignment, which was the first written contract between Kirby and Marvel, contained language that made it clear that all of Kirby's work was work for hire. Statements made by Kirby himself, including a 1986 affidavit in which Kirby admitted Marvel had vested ownership in his works, corroborated the plain language of the 1972 assignment. Thus, the district court found Kirby's creations were works made for hire, which made Marvel the statutory author under the 1909 Act, invalidating the termination notices filed by Kirby's heirs. Kirby's heirs appealed the decision. Marvel Characters, 726 F.3d 119.
On August 8, 2013, the Second Circuit affirmed in part and vacated in part the district court's decision. The court agreed that the Kirby works were created at Marvel's instance and expense and that the heirs had failed to overcome the presumption that Kirby's works were made for hire. The following facts were used to establish Kirby's work was made at Marvel's "instance": Kirby's "close and continuous" working relationship with Marvel; drawings made according to Marvel assignments; Marvel being involved with the creative process; the works built on existing Marvel copyrights; Marvel's control over the final product; and Kirby's collaboration with Stan Lee, a Marvel employee, on many of the works. While the appellate court found that "both parties took on risks with respect to the works' success[,] . . . Marvel's payment of a flat rate and its contribution of both creative and production value, in light of the parties' relationship as a whole, [was] enough to satisfy the expense requirement." Marvel Characters, 726 F.2d at 143.
On March 21, 2014, Kirby's heirs filed a petition for a writ of certiorari. On September 26, 2014, the parties settled and the petition was dismissed. Kirby v. Marvel Characters, Inc., 135 S. Ct. 42 (2014).
What are the larger implications of the settlement? The deal between the Kirby estate and Marvel leaves an unfavorable precedent for other freelance artists wishing to reclaim the rights to their old work predating 1978, the effective date of the 1976 Copyright Act. The amicus brief submitted by the Screen Actors Guild, American Federation of Television and Radio Artists, Directors Guild of America, Inc., and Writers Guild of America, West, Inc., expressed their concern that the "instance and expense" test the Second Circuit applied to the Marvel v. Kirby case will prevent independent contractors from benefiting from the long-term success of work they sold prior to 1978. Cynthia Turner & Dena Matthews, "Understanding the Kirby Case: ASAI joins Amicus Brief for Kirby v. Marvel Comics, Disney," Am. Soc'y of Architectural Illustrators (June 26, 2014). Congress rebalanced rights when it revised the Copyright Act of 1909 by defining what constitutes work for hire in the 1976 Act. In Community for Creative Non-Violence v. Reid, 490 U.S. 730, 753 (1989), the Supreme Court held that the old "instance and expense" test did not apply to works subject to the 1976 Act. However, that decision left uncertainty about the applicability of the test to works that are governed by the 1909 Act. Until the courts further clarify the 1909 Act, the Second Circuit will continue to apply the "instance and expense" test to cases like Marvel v. Kirby.
Keywords: litigation, intellectual property, copyright, characters, comic book, work for hire, instance and expense test
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