Should the Kirby Family Have Settled?

On Veterans Day Marvel celebrated Jack Kirby’s military service with photos and recollections from Kirby’s son Neal. Does this collaboration prove that the Kirby heirs triumphed in their fight for justice, or did their settlement betray creator’s rights?

A little over a month ago, the Supreme Court was on the verge of giving new life - or dealing the final blow - to the attempt by Jack Kirby’s son Neal and daughters Barbara, Lisa and Susan to claim the copyright such iconic characters as Spider-Man, the Fantastic Four, X-Men and the Avengers. What the Court would have decided we may never know for sure, since the company and the family settled just days before the scheduled date for the Court to decide whether to take the case.

For many in the pop culture community the settlement was a clear Kirby victory, with the subsequent credit for Jack Kirby in Marvel comics, the corporate tributes, and the Bleeding Cool report of a mid-eight-figure cash payout vindicating the King’s struggle to gain recognition and fair compensation for creating the Marvel universe. Yet for some fans and creators this settlement came at a steep price: it abandoned countless other freelancers who could have had a clear claim to their own copyrights if the Kirby case had succeeded in reversing decades of publisher-friendly precedent. Instead of establishing that freelancers originally owned the copyright in their original material, courts will now continue to assume that work by non-employees was mere work-for-hire.

Should the Kirbys have settled? In this article I want to take a fresh look at this case in light of how the Supreme Court has ruled on copyright cases in recent years. Then, in a follow-up piece, we’ll dive like a jurisprudential Scrooge McDuck into the substance of the settlement itself.

Remembrance of Thing Past

Before we go any further, let’s take a moment to review how this case came to be. As several people noted following the settlement, the lawsuit was not initially brought by the Kirbys, although in another way they did indeed strike first. Taking advantage of a provision in the current copyright law that gives creators and their heirs the right to take back copyrights after a certain period of time, the Kirbys had filed to terminate the transfers of copyright that (purportedly) occured when Jack Kirby had sold the Fantastic Four and other superhero material to Marvel in the early 1960s. After several months of negotiation Marvel filed suit in New York federal court to have the work declared work made for hire. According to Marvel, there never was a copyright transfer - Marvel owned the work from the start.

The fact that Marvel shot first reflects a tactical error by Kirby family attorney Marc Toberoff, or at least that’s what Toberoff himself signalled when he filed suit to have the case transferred from New York to federal district court in California. The New York court is in the business-friendly Second Circuit U.S. Court of Appeals, the nation’s leading copyright jurisdiction. California federal courts, in contrast, are in the Ninth Circuit, which has the reputation of being more liberal. At the time the Kirby case was revving up Toberoff had already seen the federal district court in Los Angeles leap tall legal buildings in order to give the Siegels a win, so it would have made a fair amount of sense for Toberoff to beaten Marvel to the lawsuit punch in order to raise the odds of a win. As it was, Toberoff tried to get a change a venue but lost, a foretaste of far more serious losses to come.

In short, both the trial court and the panel in the Second Circuit of the U.S. Court of Appeals ruled against the Kirbys on their copyright termination claims. The trial court’s opinion opened with a rather forthright declaration that the ruling was not about facts or fairness but the law — and the law was squarely on Marvel’s side. The Second Circuit doubled down on the lower court’s reasoning with an explanation of the history behind the principle deciding the case, namely, that material produced at someone else’s instance and expense is work-for-hire owned by the commissioning party. The court observed that although early cases presumed that freelancers owned their work and could later take it back, the instance-and-expense test adopted in the 1960s has since become a well-established standard for determining whether the publisher actually owned the material from the moment it took form.

For decades the Supreme Court had refused to review any challenges to the instance-and-expense test, and if the Kirbys had petitioned the Court with the same arguments that their lawyer, Marc Toberoff, had been making from the start, the overwhelming odds were that the dispute would have ended months ago with the Court declining to hear the case.

However, this time, something changed - and this part of the story began right here on tcj.com. When Dan Nadel asked me to write my take on the Second Circuit’s Kirby decision, I decided to take a flyer on a jurisprudential theory & petition strategy that no one had ever thought to use in this context before, namely, that the shift in standards described by the Second Circuit was in fact an unconstitutional judicial taking of intellectual property. Even if that argument ultimately didn’t fly, I noted that it was the best chance to grab the Court’s attention, and also baking in a due process claim would provide an out for Justices to rule in Kirby’s favor in a more familiar way.

That argument was by no means guaranteed to win, especially since I left out several key counterpoints and procedural arguments that were also omitted when Toberoff curiously used the exact same theory, at times in the same words, in his petition for the Supreme Court to hear the case. Marvel’s attorneys then did what lawyers often do when dealing with a Supreme Court petition in a case they are likely to win: they did not file a response. Nonetheless, as predicted, the innovative approach did indeed get the Court’s attention, and much to everybody’s surprise Marvel was asked to respond.

And here’s where things get a bit sticky.

The Supreme Sacrifice!

On the surface, the fact that the Supreme Court had finally opened the door to a re-assessment of the estabished standard for assessing freelance work under the old 1909 Copyright Act was a historic opportunity for all creators and their heirs. Equibrilating the judicial balance so that it was no longer tipped in favor of publishers would send a message that creator’s rights indeed deserved respect. Thus, when the Kirbys took the settlement before the scheduled date for the Court to make its final determination as to whether to hear the case, it was only natural that questions would emerge as to whether the settlement had come with too steep a price: the Kirby family would get money and Jack Kirby would now receive long due credit and accolades, but a rare opportunity for securing the same for all creators and their families had been squandered.

That’s not an unreasonable point of view, but it’s also not entirely fair. To see why, it can help to compare the Kirbys’ situation with that of the Siegel heirs in their own pursuit of a historic precedent. As we saw with the Siegels, the calculus in the Siegel case involved more than a decision between a win and a loss. The Siegels filed their lawsuit after agreeing to a set of terms that their previous attorney had informed them was legally binding; the likely and ultimately realized worst-case scenario was that the Siegels would quote-unquote lose with an eight-figure payout. The Kirbys, on the other hand, were in Schroedinger’s Court - the case for the moment was dead and alive, but once the Court observed it the lawsuit would reduce to just one of these states with no in-between.

What would you do when faced with such an existential quandary? For those who already have secured a fair amount of recognition and financial resources prior to the case, standing up for principle is an investment with little downside risk, at least if your attorney is working on contingency as opposed to an hourly rate. You win and you’re a hero; you lose and you get the reputational benefits on martyrdom without actually suffering loss. For someone like the Kirbys, however, there’s a different calculus: if you lose, your father’s quest for credit and fair compensation has failed, and no amount of praise for making the ol’ college try will fill that void.

It’s easy for those on the outside to counter with claims that a win was a slam dunk, but when you’re looking out from inside the case this sounds as hollow as a sideline cheer routine when you’re down 50 points with a minute to play. The Kirbys had already been through three lopsided losses, and as I explained in my last couple of posts, there were considerable legal arguments weighing against a Court victory, not to mention a grant of their petition. What’s more, the Court had calendared the petition to be considered during the last conference of term, which is a traditionally a catch-all conference in which upwards of thousand remaining petitions are processed, with a handful selected for consideration during the next term — in short, if you’re a petitioner left for the last day, the odds are decidedly not in your favor.

Which brings us to the new calculus the Kirbys faced in the days leading up to the fateful conference on September 29. A settlement was in play, and by all accounts it was more than a handshake and bus fare — even if was chump change for Marvel, for four middle class families that had seen executives make millions from their dad’s page-rate product it was a chance for recognition for their father, college tuition for the grandkids, and a lifetime without fretting about what might have been.

But unlike the Siegel settlement, this would all go away if they lost.

Counting the Votes

And whatever you may have read in articles repackaging Toberoff’s PR, the so-called momentum had not shifted — the Kirbys were still likely to lose. To see why, I want to take up a recommendation made to me by Brad Ricca — whose brilliant book on Siegel and Shuster is now out in paperback, just sayin’ — and go beyond a general analysis of legal arguments to tally the Justices’ votes.

First, when doing this sort of analysis it’s essential to set aside whatever impressions you may have of the Court under Chief Justice John Roberts having been captured by a pro-corporate cabal. There may be a tendency when chatting about the Supreme Court and business cases to see it in terms of a conservative Gang of Five against four stalwart liberals fighting for the common person, but in highly technical matters such as intellectual property the reality is that conservative and liberal Justices are often on the same side, or if not, not far apart.

To get a clear sense of how the Supreme Court has handled copyright, consider the track record of the current liberal Justice du jour — Ruth Bader Ginsburg, or as she has come to be affectionately known, the Notorious RBG. Ginsburg is the Justice who asked Marvel for a response in the Kirby case, and her daughter is a well-known intellectual property professor who, as IP professors tend to be today, is skeptical toward today’s corporate-friendly copyright regime; in fact, some Court watchers believe that the Justice’s daughter might have had some influence in Ginsburg’s request.

Nonetheless, while Ginsburg’s dissents in such infamous cases as Citizens United (opposing corporate personhood) and Hobby Lobby (opposing the corporate religious exception for birth control coverage in Obamacare) have made her an anti-corporate hero, her approach to copyright cases is far more tempered. Exhibit #1: Justice Ginsburg wrote the majority opinion in the equally notorious case of Eldred v. Ashcroft upholding the constitutionality of the Sonny Bono Act, the law that extended the term of copyright and kept Mickey Mouse out of the public domain.

Ginsburg also concurred in the Grokster case, an unpopular decision (in free-culture circles, at least) that sided with the music companies against those who believed that online file sharing should be left alone. Moreover, Ginsburg sided with the majority in the recent Aereo case, which helped the big TV networks to keep an Internet start-up from rebroadcasting freely available TV signals. Opposing Ginsburg & the rest of the majority in defending the rights of the corporate copyright establishment: conservative Justices Scalia, Thomas and Alito.

Raging for the Machine

Ah, some might say, what about this year’s landmark Raging Bull case, in which Ginsburg wrote the opinion for the majority? This decision involves some a rather arcane doctrine in civil procedure known as laches, but the upshot is that a creator’s heir who had previously reclaimed a copyright was allowed to proceed in a copyright infringment lawsuit against MGM despite having waited eighteen years to file. The dissent, written by liberal Justice Stephen Breyer, sided with the studio in arguing that you shouldn’t be able to let someone use your work for a couple decades only to spring a lawsuit on ‘em when they start rakin’ in the dough. The majority - with the conservatives Scalia, Alito, Thomas joining the liberal Ginsburg, Kagan and Sotomayor - disagreed, which led some to see this as a positive bellweather for the Kirby case.

However, when you dig deeping into the decision’s details, the outcome is far less encouraging. The Raging Bull decision hinges on the statute of limitations enacted by Congress for copyright infringement, which limits a lawsuit to infringement that has occurred within the past three years. This is a rule that the judges shouldn’t be allowed to unsettle with an appeal to equity, or fairness, a principle that comes into play when Congress hasn’t weighed in with a statutory rule. Everyone doing business in the copyright realm knows these are the rules of the game, and sticking with the relatively short three-year statutory window established for copyright does not upset any previously made deals. Thus, Ginsburg notes, MGM can keep every penny made before the period at issue in this case even as it reckons with a routine infringement claim.

In short, when it comes the potential impact of this case for corporate owners trying to protect themselves against angry heirs, RBG says NBD.

Ginsburg’s emphasis on the decision’s limited impact and the role of equity in areas without a clear statute of limitations is essential for understanding the hypothetical prospects of the Kirby case. In contrast to the Raging Bull case, the Kirby case involved an established principle of copyright law on which dealmakers have relied for at least half a century. Just as companies have had to factor in a rolling three-year period for infringement lawsuits, countless deals had been made and priced on the legally grounded assumption that the material at issue was work-for-hire.

In this regard Jack Kirby’s claims in interviews and negotiations are of little to no legal relevance.  Despite the key precedents having come down when Kirby was actively producing comics material, he did not file or go to court to secure the pertinent copyright renewals and did not raise a court challenge at the time of the alleged judicial taking. Whereas the facts and fallout from Raging Bull were limited to a recent three-year window, Toberoff’s inartful echo of the TCJ argument would have the Court run rampant throughout the past century and beyond, retroactively declaring decades-old precedent to be a judicial mindgrab and handing entire franchises over to people who had never filed a claim to it before.

It is precisely at this point where both the liberal and conservative justices would likely align against Kirby and other similarly situated freelancers. A narrow application of the judicial takings doctrine would appeal to Scalia, Thomas, Alito and Roberts, who come from a tradition of challenging what they perceive to be overreachy by liberal judges in the era defined by Chief Justice Earl Warren. Scalia would also jump on the amicus briefs’ poorly researched references to the legislative history of the 1909 Copyright Act. Scalia thinks that using legislative history to interpret statutes is dangerous, and he would no doubt relish the opportunity to show that the legislative history quotes in context actually refute the amicus briefs’ claims.

Expanding this same doctrine to give judges the right to nullify deals made decades ago would trigger concerns about fairness similar to those raised by Justice Breyer in the Raging Bull dissent. Again, don’t let Breyer’s reputation as a liberal Justice distract you from his technocratic pragmatism in decision-making, which tends to be more businesslike than an expression of anti-corporate animus - just see his opinion in Aereo for a telling example. The one big outlier for Breyer is his dissent in Eldred, but that becomes clearer when you realize Breyer’s own place in the history of the movement against expanding copyright protection before he became a judge.

Calculus II

Plenty more details could be added about other Justices, but I hope the main point is clear: the Kirby case was by no means a slam dunk. The prospect that got so many people excited — the opportunity to flip the judicial interpretation of almost a century of contracts in favor of freelancers - is precisely what would have made that Justices on both sides of the bench skittish. Rather than follow the Second Circuit’s narrative of an arbitrary and constitutionally dubious shift in standards to favor publishers, there would be a greater inclination to rationalize the history by finding deeper internal consistencies - a predictable reaction that should have been addressed.

Which brings us back to the Kirbys’ decision-making calculus when faced with a settlement offer. They had to weigh a sure thing that gives their father credit and recompense against decades of precedent, an attorney who had (ahem) for some unknown reason tossed over his old well-worn arguments in favor of cutting-edge jurisprudence he had never thought of before, and a probable alignment of Justices from both sides of the bench in favor of preserving the established status quo. While one could argue that the Kirbys traded the birthright of all freelancers for a tempting stew, the risk of losing was too great for any family to be expected to bear.