Now that the new Superman movie has globally collected more than $600 million, making it a colossal hit (not always a sure thing, since the last two lost money), it seems like a good time to review the legal conflict over who gets to rake in those profits. You may be forgiven if you’ve lost track of who owns the rights to the protagonist of Man of Steel. On the other hand, you probably won’t be surprised to learn that the legal seesaw between the heirs of Superman’s creators and Warner/DC landed solidly in favor of the corporation earlier this year, just before the release of its big-budget tent-pole movie.
An appeal of a ruling against the heirs of Joe Shuster is pending, but it is before the same appeals court that ruled against the Siegel heirs in January. Warner Senior Vice-President of Corporate Communications Paul McGuire told the Journal a ruling on that appeal is expected soon.
Marc Toberoff, attorney for the heirs, vowed to continue the fight. Warner, however, considered itself the winner of not just the battle but the war. “This is a great day for Superman, for his fans, for DC Entertainment and for Warner Bros,” the company announced, following the court’s latest ruling against Siegel’s heirs. If this is the end of what has been an epic struggle over control of one of the world’s most valuable properties, how happy an end is it? Is it really a great day for Superman, his corporate owners, and his fans? And what kind of day is it for comics creators?
The story so far: In April the original $412 check from DC to writer Jerry Siegel and artist Joe Shuster (which included a line item showing $130 for rights to Action Comics #1) sold at auction. (The artifact netted its owner $160,000.) After the series became a huge success, establishing the comic book’s dominant genre and setting its template for decades to come, the two men tried to negotiate a share of the property and a higher rate of pay. Instead, they were pushed out the door by the end of World War II and DC hired other hands to continue the title.
Over the years, Siegel and Shuster pursued various legal efforts to gain a piece of Superman’s expanding multimedia profits, with Siegel, at one point, placing a public “curse” on the first Superman movie. Legalities aside, DC recognized that the two creators had a strong case in the court of public opinion. The publisher negotiated increasingly conciliatory monetary settlements, while keeping a tight grip on its super-property. The first legal round was temporarily resolved in the 1940s, when DC agreed to a one-time $94,000 payment. In the 1970s, with its first major Superman film hitting screens and Siegel firing off furious press releases, DC attempted to dodge a potential public relations disaster by authorizing a $20,000-a-year annuity for each creator. Later the amount was raised to $30,000 a year.
Nevertheless, when Shuster died in 1992, he was blind and broke — so broke that his closest relatives, sister Jean Shuster Peavy and brother Frank Shuster, had to ask DC for enough money to cover his burial costs. DC agreed to pay $25,000 a year to Peavy (and to Shuster if Peavy dies before him), but also used the occasion to fortify itself against any challenges to its copyrights. In the words of the 1992 letter of agreement signed by the Shuster heirs and DC, “this agreement fully settles all claims to any payments or other rights or remedies which you may have under any other agreement or otherwise, whether now or hereafter existing regarding any copyrights, trademarks, or other property right in any and all work created in whole or in part by your brother, Joseph Shuster, or any works based thereon.”
The agreement established dire consequences should Peavy or Shuster make any future claims: “If, despite the terms of this agreement, either of you assert any such claim of right for any reason, you agree to refund to us, upon the making of any such assertion, all amounts previously paid to you hereunder, and we will have no obligation to make any further payments under this agreement.”
On the face of it, DC’s lawyers might seem overly eager in this document to secure rights that DC already owned. However, a window was about to open under copyright law that would, for the first time, allow Siegel and Shuster and their heirs to reclaim ownership of Superman, or at least all aspects of Superman deriving from the first issues of Action Comics. Previously, a copyright term could last a total of 56 years, after which, the work fell into Public Domain. Under the Copyright Act of 1976 and the 1998 Sonny Bono Term Extension Act, the term of a copyright was extended to 50 years beyond the death of the author. However, when a copyright reached its 56th year, the year it would formerly have expired, the original authors or their heirs were granted a five-year period during which they could reclaim the copyright. For Superman, that window opened in 1995.
As much as it may seem that DC’s lawyers had this possibility in mind when they drafted the 1992 agreement, Toberoff has argued that the agreement was never intended as a bulwark against the author’s right of termination. His case rests primarily on two points: 1) the vagueness of the agreement, which never even mentions Superman by name, and 2) the fact that in 1992 the Copyright Act of 1976 applied only to immediate heirs — spouse and children. Because it was not until 1998 that the termination rights were extended to an author’s estate in whatever form, Toberoff has maintained that Peavy and Shuster could not have signed away rights in 1992 that they didn’t yet have.
There was a reason for these changes in the law. It had long been recognized that copyrights had taken on a value undreamed of at the time authors like Siegel and Shuster were selling their rights for a song. Not only have copyright terms grown far beyond their original limits as Congress has diligently striven to keep the aging Mickey Mouse franchise from the Public Domain, but every day brings a new technological app for iconic intellectual properties. The Copyright Law of 1976 was designed to allow authors to share some of the multiplying fruits of their creative labors. If the acquisition of an intellectual property is terminated during the five-year window allowed under the law, the corporate owner of the property is forced to renegotiate with the original creator or the creator’s heirs.
In the comics field, artists and writers commonly create works under conditions of employment. In such cases, the law treats the employer as the “author” of the work. In the case of Siegel and Shuster, however, Superman was created by them before they began to work for DC. They and their heirs, therefore, were entitled to take advantage of the window of opportunity provided under copyright law. The Siegels filed for termination of DC’s Superman copyrights in 1997, with an effective date of 1999.
Mark Peary, Shuster’s nephew, contacted Toberoff, an attorney with a string of successes for high-profile clients in the entertainment industry, to help Shuster’s heirs terminate their share of the copyright assignments to DC. At the same time, Siegel’s heirs, through their attorney, Kevin Marks, were filing copyright terminations papers and negotiating with DC and its parent company, Warner. Toberoff attempted to represent the heirs of both Siegel and Shuster, but Marks had already written DC to agree to a settlement. This letter, which would ultimately prove to be a major stumbling block to Toberoff’s campaign, began, “This is to confirm our telephone conversation of October 19, 2001. The Siegel Family (through Joanne Siegel and Laura Siegel Larsen, the majority owners of the terminated copyright interests) has accepted D.C. Comics’ offer of October 16, 2001 in respect of the ‘Superman’ and ‘Spectre’ properties.” Included in DC/Warner’s offer to the Siegel family were a $1 million signing bonus and royalties of six percent of DC’s percentage of gross profits from the use of the properties, as well as medical and dental benefits for Laura and her children. In return, the Siegel heirs were to transfer all Superman and Spectre rights to DC/Warner. Furthermore, even “at the end of the U.S. Copyright term, the Siegel Family agrees that it will not exploit the Property, even though it is in the public domain.” In other words, the agreement bound Siegel’s heirs to be the only people on Earth who could not make use of the Superman property even after it finally enters the public domain.
Neither Joanne Siegel, who died in 2011, nor her daughter personally signed any document spelling out the terms of this agreement. DC offered a subsequent, more detailed letter of agreement, but Siegel wrote a response accusing DC’s lawyers of changing the terms in ways that would significantly affect the family’s liabilities and open loopholes that could siphon away payments due to the heirs. As a consequence of this disagreement, the Siegel family has not received any of the promised money. Toberoff, acting on behalf of the Siegel heirs since late 2002, has maintained that these letters did not constitute a binding contract. He has gone on record as saying that the Siegel heirs should get a much higher percentage of profits than the agreement allows. DC, backpedaling from the longer letter of agreement that had drawn Siegel’s objections, has embraced the initial letter as a done deal. The U.S. District Court agreed with Toberoff and issued a summary judgment in 2008 placing the Superman and Spectre copyrights in the hands of the Siegel family.
DC/Warner appealed and obtained a reversal upholding the letter as a binding contract on the grounds that it had been signed by the Siegel family’s legal representative. A three-judge panel of the Ninth Circuit instructed the U.S. District Court to revisit the case with the understanding that an agreement had already been reached between DC and the Siegel heirs. As a result, in April, Superman bounced back into the custody of DC/Warner.
And on the other front, the District Court ruled against the Shuster heirs in October on the grounds that the 1992 agreement forbade Shuster’s heirs from making any claim on Superman-related properties.
In its statement following the April Siegel ruling, DC/Warner said, “Today’s ruling vindicates DC Comics’ long-held position that it entered into a binding agreement with the Jerry Siegel family in 2001. The Court’s decision paves the way for the Siegels finally to receive the compensation they negotiated for and which DC has been prepared to pay for over a decade. We are extremely pleased that Superman’s adventures can continue to be enjoyed across all media platforms worldwide for generations to come.”
Toberoff, who is working entirely on a contingency basis, still has options. His appeal of the Shuster ruling is pending and he can again appeal the District Court’s latest ruling against the Siegels to the Ninth Circuit. Because litigation is still pending, he was reluctant to talk on the record about the cases, but he was unable to take DC/Warner’s boastful press release lying down. He gave the Journal the following exclusive statement:
Warner Bros.’ proclamations of “a great day for Superman and his fans” is disingenuous and manipulative. The truth is that this case is about Siegel’s and Shuster’s families exercising the rights Congress gave them under the Copyright Act, Warner Bros.’ refusal to respect those rights, and its attempt to crush them at all cost.
Congress expressly intended that the Copyright Act’s termination provisions give authors and their families a chance after 56 long years (section 304(c)) or 75 years (section 304(d)) to finally participate in the increased value of their works by recovering their copyrights and then entering into new licenses with the original grantees (like DC/Warner) that better reflect that market value. This is all the Siegel and Shuster families ever wanted to do, and DC/Warner knows it. The release of Man of Steel or taking Superman away was never a real issue, nor does this make any practical sense as this was about the recovery of partial U.S. rights only. Warner Bros. just wanted to avoid paying the families the reasonable value of their rights.
Warner’s statement that they have been prepared to pay the Siegels “for over a decade” is also completely false and belied by the record. First, Warner flatly denied the validity of the Siegels’ termination rights. Second, the 2001 negotiations fell apart because Warner conditioned any payments on all sorts of new one-sided accounting terms that sharply reduced agreed upon payments to the Siegels. Warner/DC’s alleged “October 19, 2001 agreement” expressly called for payments and accountings by March, 2002, which it did not honor. In fact, Warner/DC never even claimed there was an agreement until years later in November 2004, and then, only after the Siegels were forced to file suit for declaratory relief to uphold their rights. Warner’s First Counterclaim was that the Siegels’ termination rights were invalid (i.e, that they owed the Siegels nothing). Warner’s Fourth Counterclaim that DC had a purported 2001 agreement with the Siegels was alleged in the alternative if, and only if, Warner’s First Counterclaim was denied and Siegel’s statutory termination was upheld. In other words, if Warner/DC had prevailed on its First Counterclaim (it lost), it wanted to pay the Siegels nothing. Similarly, if Warner/DC prevails against Joe Shuster’s family in the pending 9th Circuit appeal, they will pay the Shusters nothing.
None of this is what Congress intended in the Copyright Act. If denying the Siegel and Shuster families their fair rights is “a great day,” it is a great day for Warner’s already overflowing bank account, and I think that most people with a brain intuitively understand that. What did Abe Lincoln say? “You can fool some of the people some of the time, but you can’t …” Well, you know the rest.
Whether these rulings mark a great day for Superman or just a great day for Warner’s bank account, it is safe to say that comics creators have seen worse days. Even if DC’s initial letter of agreement with the Siegel family is upheld and Toberoff never gets to go back to the negotiating table, the realization of the terms in that letter will be the first time any comics author (or comics author’s estate) has been able to successfully benefit from the negotiating opportunities intended by the Copyright Act of 1976.
If the difficulties comics creators have run into trying to make use of the Copyright Act doesn’t say enough about the low position of comics on the social totem pole, consider this: The share that the Siegel and Shuster heirs have been fighting for is a percentage of DC’s percentage of Warner’s profits from Superman — and DC, the publisher that launched Superman into the stratosphere, gets only five percent of Warner’s gross profits on a Superman movie. To put it in perspective, Nicolas Cage, who was once attached to star in an earlier version of Man of Steel, is contractually promised a higher percentage of the current movie’s profits than the entire DC Comics division, even though he is not actually in the final product.
Of course, Warner Bros. is more of a big-ticket operation than DC, but the way profits are divvied up also serves as yet another firewall between comics authors and the sometimes immense profits that their creations generate — in the unlikely event that a comics creator ever wins a copyright case.
NOTE: This article has been slightly edited.