Is Marvel about to lose its heroes?

Copyright in commissioned work

Think of superheroes and you soon think of Marvel. Almost all the best-loved superheroes (and villains), from Spider-Man to Thanos, belong to what is known as the Marvel Cinematic Universe. The American company has an impressive copyright portfolio to match. The creative talents behind these heroes, however, have seen only a fraction of the proceeds. Illustrators, artists and the heirs of comics legends such as Stan Lee and Steve Ditko are now trying to terminate Marvel’s rights in almost all the Avengers characters, among them Black Widow, Dr. Strange, Iron Man, Spider-Man and Thor. Marvel, bought by Walt Disney Studios in 2009, has brought a series of lawsuits to block that termination. How does this work as a matter of copyright? And how would it work in the Netherlands?

Marvel in America

The comic artists’ heirs are using what is known as a ’notice of termination’ to try to get the copyright back. For works made before 1978, which is the case here, rightholders can do so during a five-year window, 56 years after the copyright came into being or 56 years after 1 January 1978 (whichever is later), under section 304(c) of the US Copyright Act. Crucially, though, the work must not be ‘work for hire’. That is what the lawsuits turn on. The question is whether the comic artists produced their strips on their own initiative and then sold them to Marvel, or whether they are better regarded as employees.

As one would expect, Marvel argues that these were indeed works for hire. According to Daniel Petrocelli, Marvel’s lawyer, Marvel gave the artists concerned their assignments, had the right to exercise control over their contributions, and paid the artists per page delivered. In Marvel’s submission, those conditions mean the strips must be regarded as works for hire, so that the provisions of the US Copyright Act mentioned above do not apply.

The comic artists of course argue the opposite. At the time the characters, stories and strips were created, “these guys were all freelancers or independent contractors, working for a pittance out of their basements”, according to Mr Toberoff, the artists’ lawyer.

Should the case go the comic artists’ way, it will be a blow to Marvel. It should be said, though, that Marvel would not lose all its copyright. The comic books are joint works, meaning that several artists contributed to the final result. Stan Lee worked on many of the strips, and unlike other artists he was employed by Marvel. That matters, because under US copyright law a co-owner of a joint work may exploit that work without the consent of the other co-owners, so long as they share the profits with them. So where someone employed by Marvel worked on the strips, those are works for hire and Marvel counts as a co-owner. Even where the notices of termination are valid, then, the worst case is that Marvel has to share the profits; exploitation will not have to stop.

Mr Toberoff’s reasoning recalls the contested series of cases about the self-employment contracts of Uber drivers and meal delivery riders, but in a copyright setting. A remarkable set of proceedings turning above all on whether the artists’ works were produced on their own initiative or to order. What would happen if this case were playing out not in the United States but in the Netherlands? Do provisions such as ’notice of termination’ and ‘work for hire’ exist here as well?

How does it work here?

In short, US law distinguishes between an assignment of copyright and a work for hire. Where there is an assignment, the author (or their heirs) has the right to terminate it after a certain period and thus reclaim the copyright. Where it is a work for hire, the commissioning party is the rightholder and no such right of termination exists.

In the Netherlands the work-for-hire construction does not exist. Only where there is a contract of employment and the work consists of making copyright works does the copyright vest in the employer (unless otherwise agreed in the employment contract).

Nor does the ’notice of termination’ in the case of an assignment exist here. The Dutch artist has three options: the non-usus provision, the bestseller provision, and the general rules on terminating a continuing contract.

The non-usus provision in article 25e of the Dutch Copyright Act would be of no help to the comic artists’ descendants here. That provision allows an author (or their heir) to terminate an agreement where the other party does not exploit the work within a reasonable period. Whatever else may be said of Marvel, arguing that it does not exploit its copyright portfolio is plainly hopeless.

The Dutch Copyright Act does now contain the bestseller provision, in article 25d. That provision gives authors the right to additional remuneration where the remuneration already agreed is seriously disproportionate to the revenue from exploitation. In other words: where you have, as the comic artists say they did, licensed or assigned your work for a pittance and it later turns out to be a great success, you can fall back on this provision to claim additional remuneration (or an increase in royalties).

Finally there are the general rules on terminating a continuing contract. An agreement to exploit a copyright work is regarded as an agreement for an indefinite period, which can in principle be terminated on notice. Termination of such an agreement does in principle require sufficiently compelling grounds; that is what the Dutch Supreme Court held in Nanada/Golden Earring.[1] That is so because the exploiting party generally invests a great deal in exploiting a work. Usually it is a producer, spending large sums on promoting and distributing the work and recouping those investments through the exploitation agreement.

Where an exploitation agreement has run for a long time and the investments could have been recouped, the court may hold that compelling grounds are no longer required. That resembles the ’notice of termination’ somewhat, in the sense that it offers a way of terminating an agreement after a long period. In the United States, however, it is a statutory right with a fixed term, whereas here it will probably depend on the investments the exploiting party has made.

Conclusion

Certainly where much-loved works known the world over are concerned, it is always fascinating to compare the copyright systems of different countries. What holds true for the United States need not apply in the Netherlands. The American court has yet to rule, so we shall have to wait and see whether Marvel takes the blows or lands them.

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[1] Nanada/Golden Earring, ECLI:NL:HR:2017:1270 (link)

In collaboration with Saar Hoek