Who Owns Captain America? Contested Authorship, Work-for-hire, and Termination Rights Under the Copyright Act of 1976

• Publication year: 2010

Who Owns Captain America? Contested Authorship, Work-For-Hire, and Termination Rights Under the Copyright Act of 1976

John Molinaro

Introduction

When Congress passed the Copyright Act of 1976 ("1976 Act"), it included a new termination right allowing authors to terminate an assignment of a copyright "notwithstanding any agreement to the contrary."[1] However, Congress explicitly prevented creators of works-made-for-hire from exercising this right because they are not the statutory authors of a work.[2] In the 1960s, Joe Simon, the creator of the comic book hero Captain America, sued the publishers of Captain America comic books, alleging that he owned the copyright to the character and that he had not created it as a work-for-hire.[3] The parties settled the suit, and as part of that settlement, Simon stipulated that he had created Captain America as a work-for-hire.[4] In 1999, Simon tried to exercise the termination right.[5] The Second Circuit Court of Appeals held "that an agreement made subsequent to a work's creation which retroactively deems it a ‘work for hire' constitutes an ‘agreement to the contrary' under Sec. 304(c)(5) of the 1976 Act" and therefore allows for termination.[6] This decision potentially opens a floodgate of litigation concerning the validity of work-for-hire agreements signed subsequent to the creation of a work by giving creators more legal power to reclaim works that they signed away.[7]

This Comment will examine the Second Circuit's decision in Marvel Characters, Inc. v. Simon[8] and its potential impact on copyright law. Part I will look at the previous suit concerning Simon's ownership of Captain America.[9] This suit produced the settlement agreement in which Simon stipulated that he created Captain America as a work-made-for-hire, thus giving rise to the current controversy.[10] Part II will examine the termination right created by the 1976 Act.[11] It will analyze the legislative purpose behind the new right—to protect authors who may not have equal bargaining power when they assign their works—and the key case leading to the creation of that right.[12] It will then assess why the termination right does not include works-made-for-hire.[13] Part II will also look at the United States Supreme Court's interpretation of the termination right in Mills Music, Inc. v. Snyder,[14] where the Court found that Congress created the right to protect authors' interests.[15]

Part III will trace the development of the work-made-for-hire doctrine from the Copyright Act of 1909[16] ("1909 Act") to the 1976 Act.[17] It will address the current circuit split concerning whether parties must sign work made-for-hire agreements prior to the creation of the work.[18] Part IV will examine the holding from Marvel Characters, Inc. v. Simon that any agreement made subsequent to a work's creation that retroactively declares it a work-made-for-hire constitutes an "agreement to the contrary" under Sec. 304 of the 1976 Act, therefore allowing the creator to exercise the termination right.[19] Finally, Part V will analyze the decision in Marvel Characters, Inc. and discuss its potential impact on works-made-for-hire in light of the current circuit split.[20]

I. Background

A. The Works

In 1940, writer Joe Simon and artist Jack Kirby created the patriotic superhero Captain America.[21] In the same year, the character first appeared in Captain America Comics published by Timely Publications.[22] Captain America was an "army-reject" named Steve Rogers whom the government turned into a masked hero.[23] He helped defend America's shores against Nazis, spies, and other criminals.[24] Garbed in a red, white, and blue costume and wielding a stars-and-stripes shield, Captain America joined the pantheon of costumed super heroes featured in the comic books of the early 1940s.[25] Simon continued to write the character's adventures, which Timely published as Captain America Comics #1-10 for several years.[26] Soon after publication, Timely received copyrights for each of the ten issues of the comic.[27] Timely, and later Marvel Comics, Timely's successor in interest, continued to publish comics featuring Captain America until 1949 and then reintroduced the character in the 1960s.[28] The character's enduring appeal continues to sell more than 40,000 comic books every month.[29]

B. The Prior Case

Under the 1909 Act, an author had a 28-year copyright from the date of publication and could renew that copyright for an additional 28 years by applying to the United States Copyright Office.[30] In 1966, as the original copyright term for Captain America neared its end, Simon sued Timely and Marvel in New York state court for violation of state law property rights stemming from their use of the Captain America copyright.[31] Simon claimed that Timely and Marvel misappropriated the character and engaged in unfair competition because he owned the copyright.[32] Simon contended that he independently created the character and the first issue of the comic and that he sold the story to Timely after shopping it around to other comic book publishers.[33] Simon also asserted that he wrote the second through tenth issues of the comic on a free-lance basis and assigned the rights to Timely.[34]

In 1967, while the state claim was pending, Simon sought a declaratory judgment in federal court to establish that he was the statutory author of Captain America Comics and that he held the copyright to the character and the stories.[35] Simon also sought injunctive relief to keep Timely from applying for the copyright renewal.[36] In both the state and federal actions, Timely denied that Simon was the author of the work.[37] In the state action, Timely asserted that Simon made his contributions as an "employee for hire."[38] In the federal suit, Timely asserted a counterclaim seeking a declaratory judgment establishing that it owned the copyright and an injunction to keep Simon from applying for the copyright renewal.[39] While the claims were pending, Marvel, Timely's successor in interest, applied for the copyright renewal.[40]

In 1969, Simon and Timely entered into a settlement agreement in which Simon acknowledged that he was "an employee for hire of [Timely]" when he created Captain America Comics and Captain America.[41] Simon then "assigned ‘any and all right, title and interest he may have or control or which he has had or controlled . . . (without warranty that he has had or controlled any such right, title or interest)'" to Timely and its successors in interest.[42] All parties to both the state and federal actions filed stipulations dismissing all claims with prejudice.[43]

In the decade following the settlement agreement, Congress passed the 1976 Act, which granted authors a new right to terminate assignments of copyrights that meet certain criteria.[44] Congress, however, did not extend this termination right to the creators of works-made-for-hire.[45] In 1999, Simon tried to terminate his transfer of rights in Captain America under Sec. 304(c) of the 1976 Act and filed notice with the Copyright Office.[46] In the notice, Simon declared that he did not create the works as works-made-for-hire, as the earlier settlement agreement indicated, but that he independently created Captain America and wrote the first issue of the comic book.[47]

C. Marvel's Action

In 2002, Marvel Characters, Inc., Timely's successor in interest and the current publisher of comics featuring Captain America, sought a declaratory judgment to establish that it was the sole owner of the Captain America copyright.[48] Simon filed a counterclaim seeking a declaratory judgment that "(1) he [was] the sole author of the Works; (2) the Termination Notices [were] valid; and (3) all copyrights in the Works revert to him on the effective date of the Notices of Termination."[49] Marvel moved for summary judgment, and the district court granted its motion.[50]

The district court found that res judicata barred Simon's claim that he was the sole author of the works because the parties' 1969 settlement agreement resolved the issue.[51] The court also found that, based on the "plain language of the [s]ettlement [a]greement," Simon created the works as an employee-for-hire and thus could not exercise the termination right.[52] Simon appealed the case to the Second Circuit Court of Appeals.[53]

II. Termination Rights Under the Copyright Act of 1976

When Congress passed the 1976 Act, it included a new right for authors who previously assigned their copyrights to another party.[54] The 1976 Act contains two provisions concerning the termination right.[55] Section 304 addresses works created before January 1, 1978, the date the 1976 Act took effect.[56] Section 203 addresses works created after January 1, 1978.[57]

A. 17 U.S.C. Sec. 304(c)

Section 304(c) allows an author to terminate an assignment at the end of the initial or renewal term.[58] Congress, however, expressly prevented employees who created works-made-for-hire from exercising this right.[59]

To obtain a termination for materials copyrighted before January 1, 1978, an author must comply with certain formalities.[60] He must give written notice to the grantee of the copyright indicating the date of termination, and he must do so no more than ten years but no less than two years prior to the termination date.[61] The author must also file a copy of the termination notice with the Copyright Office.[62] The author may set the termination date at any point within a five year window "beginning at the end of fifty-six years from the date copyright was originally secured[] or beginning January 1, 1978, whichever is later."[63] The law allows authors to exercise this right even if they have signed away renewal rights or any other rights.[64]

B. 17 U.S.C. Sec. 203

The primary difference between Sec. 304 and Sec. 203 is when an author may exercise the termination right.[65] Under Sec. 203 of the 1976 Act, all rights to...