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Warner Bros. Contract Proves to be Kryptonite for Copyright Claim

By: Stephen C. Pritchard *

Joe Shuster (Shuster) and Jerry Siegel (Siegel) became friends in 1931 and began working together on science fiction and their concept of superheroes. Over the next seven years, they solidified the creation of Superman, and eventually sold the rights, including the new copyright, to DC Comics, owned by Warner Brothers, in 1938. Warner Brothers has since reaped over $500 million solely from films, not to mention revenues from other sources such as television, product licensing, and comic books. Since that sale, the two friends and their heirs have sought to reclaim their rights under § 304 of the Copyright Act of 1976, although Shuster died in 1992 and Siegel in 1996.

That section of the Copyright Act applies to pre-1978 works and allows for heirs to terminate any copyright agreement, including written agreements, beginning at the end of 56 years after the initial assignment was made and for five years after. It also allows the same termination period beginning at the end of 75 years, within the following five years, allowing heirs to capture the final 20 years of copyright if they have not already done so. Notice of termination may be sent ten years before the beginning of either period, but not later than two years before the end of either period. Since “Superman” was officially copyrighted between 1923 and 1963, it is entitled to a total 95-year term of protection. As a result, the heirs’ termination periods are 1994-1998 and 2013-2018.

Warner Brothers made a deal with the Shuster family in 1992, shortly after Shuster’s death, in which the company settled his outstanding debts and gave his sister an annual pension for the remainder of her life. The agreement was contingent on Shuster’s heirs waiving their termination rights under the Copyright Act, effectively ending their recourse under the Act. The Shusters have since brought suit against Warner Brothers in an attempt to invalidate the agreement and reclaim their termination rights, but a court decided on October 17th, 2012, that the agreement was binding on Shusters heirs and their termination rights were extinguished in 1992. The judge in the case also noted that Warner Brothers, through DC Comics, has paid both the Shuster and Siegel families more than $4 million since 1975.

The Siegel family was arguably luckier in 2008 when a U.S. District Court ruled that they could seek termination of the transfer and license of Superman’s copyright to Warner Brothers. This entitled them to half of the Superman-related revenues from Warner Brothers, but allowed the company to use the rights as they wish. However, Warner Brothers claims it also made a deal with the Siegel family in 2001, in which they gave up their termination rights, and Warner Brothers says that agreement is binding in the same manner as that with the Shusters. The company appealed that 2008 decision in March of 2012, and the initial hearing is scheduled for November 5. Siegel’s daughter has written a public letter over the matter in response to the appeal.

If Warner Brothers is successful in its claims against the Siegel family, it will finally possess all of the rights present under the Superman copyright for the remainder of its term, which will result in more profits as well as decreased legal costs resulting its newly incontestable status. The outcome of the appeal will depend on whether the court concludes that the 2001 agreement was binding in a manner sufficient to effectively cancel the termination rights possessed by the Siegels under the Copyright Act.

* Stephen C. Pritchard is a second year law student at Wake Forest University School of Law. He holds a Bachelor of Science in Information Systems and Operations Management, with minors in Economics and Political Science, from the University of North Carolina at Greensboro. Upon graduation, he intends to practice corporate and entertainment law.