AN ANALYSIS OF THE ACTION #1 RULING

[MattBrady]

by Tom Bondurant

As you-all know by now, Judge Stephen G. Larson of the United States District Court, Central District of California, has ruled in favor of Jerry Siegel’s widow and daughter, Joanne Siegel and Laura Siegel Larson, in their suit to reclaim Jerry Siegel’s rights to the Superman material contained in Action Comics #1. Pursuant to the Copyright Act of 1976, the Siegel heirs had sued Warner Bros. Entertainment, Time Warner, and DC Comics.

The Copyright Act of 1976 gave authors and their heirs “a chance to retain the extended renewal term in their work and then re bargain for it when its value in the marketplace was known.” (Opinion, p. 62.) In passing the Act, Congress’ intent (quoted by Judge Larson) was to address the “unequal bargaining position of authors, resulting in part from the impossibility of determining a work’s prior value until it has been exploited.” Id (citation omitted).

Accordingly, on April 3, 1997, the Siegel heirs delivered notices of termination to DC which covered various agreements entered into between Jerry Siegel and Joe Shuster, and DC and its predecessors (hereinafter just called “DC” for convenience). These agreements included the original 1938 assignment of rights, a 1948 stipulation which concerned subsequent litigation, and the 1975 agreement in which DC agreed to pay pensions to the two creators. Id. at 20. The central question of this litigation was whether those notices of termination were valid and enforceable.

However, because that question contained many smaller issues, Judge Larson’s opinion covers 72 pages, not including attachments (among them a color reproduction of the first Superman story from Action #1). The Judge observed that

although [the current case is] couched in terms of terminating the 1938 grant [of rights], [it] is in effect one for co ownership of the copyright in the Superman material contained in Action Comics, Vol. 1, because, if successful, plaintiffs would gain only a joint ownership interest in that material with DC Comics, owing to the fact that Shuster left no heirs who could simultaneously seek to terminate his half of the grant in the material.

Id at 54. As with his July 2007 opinion in the Superboy-related lawsuit, Judge Larson’s opinion here goes into considerable detail about the creation of Superman and the character’s progress from idea to potential newspaper strip to Action #1's cover feature. It’s an excellent summary which upon first reading might seem trivial, but it does bear significantly on the ruling.

It’s pretty well-known that the Superman story which Jerry Siegel and Joe Shuster shopped around was created for newspaper syndication. DC subsequently told the two that their four weeks’ worth of strips would have to be reformatted into a 13-page comic-book story. Id. at 9. Because the Copyright Act’s relevant termination provision doesn’t apply to “work for hire,” DC argued that the story’s expansion and revisions made it “work for hire,” at least in part. Judge Larson, quoting a prior ruling, rejected this argument:

In the case before us, Superman and his miraculous powers were completely developed long before the employment relationship was instituted. The record indicates that the revisions directed by the defendants were simply to accommodate Superman to a magazine format. We do not consider this sufficient to create the presumption that the [comic book] strip was a work for hire.

Id at 42 (quoting 508 F.2d at 914).

The Judge also ruled that the notices were not deficient for failing to list a related 1948 “consent judgment”; that the parties’ settlement negotiations (conducted off and on between 1997 and 2004) did not produce any enforceable agreement which would have resolved the Siegels’ claims; and that thanks to an agreement among the parties, the relevant statute of limitations had not run out before the current suit was brought. Id at 48-50, 57-62.

However, the ruling isn’t entirely favorable to the Siegel heirs. The Judge ruled that DC retains the rights to material contained on the cover of Action #1, because it used that cover in black-and-white ads in More Fun Comics and Detective Comics prior to Action #1's publication date (April 18, 1938). Id at 39-40. The Judge stated specifically that “defendants may continue to exploit the image of a person with extraordinary strength who wears a black and white leotard and cape.” Id at 40.

Of course, that still leaves a considerable amount of material for the Siegels, including “Superman’s name, his alter ego, his compatriots, his origins, his mission to serve as a champion
of the oppressed, [and] his heroic abilities in general,” and more particularly “the entire storyline from Action Comics, Vol. 1, Superman’s distinctive blue leotard (complete with its inverted triangular crest across the chest with a red ‘S’ on a yellow background), a red cape and boots, and his superhuman ability to leap tall buildings, repel bullets, and run faster than a locomotive.” Id at 40-41.

As a practical matter, though, the Judge did rule that the Siegel heirs aren’t entitled to a share of the foreign profits from Superman. (Foreign profits would be outside the scope of the federal Copyright Act.) Id at 63-66. The Judge also declined to award the Siegel heirs profits gained from “the use of Superman trademarks that ‘are purely attributable to [those] trademark rights,’
and from its use of unaltered pre termination derivative works.” Id at 68. If I read that correctly, it means the Siegel heirs won’t see any money from those S-shield decals you see on car windows.

Furthermore, the ruling states that “derivative works created during the grant (meaning up until the termination effective date) may continue to be exploited after termination.” Id. I take that to mean that DC can keep all of its profits from any such “unaltered” derivative works, which may include a wealth of material derived from the Action #1 story and produced from 1938 to the late 1990s. The Judge didn’t rule on the issue of “altered” material, which may include such things as a pre-termination story (from, say, the Weisinger era or even the Byrne issues) reworked in the past few years. Id at 67.

Finally, the Judge declined to rule on the issue of profits “made through DC Comics’ exploitation of the Superman copyright to that of its corporate siblings and parent who are licensees to that copyright’s movie and television rights.” Id at 24, 71. The Judge was concerned that the close relationships between DC and its corporate relatives may produce inequitable “sweetheart deals” which would require the court to step in; but he needed more evidence before ruling on those issues. Id at 71.

I can’t imagine that this represents the ultimate resolution of this case. The ruling anticipates a trial on the issue of profits generated by movie and TV adaptations of Superman. Following that, DC, Warner Bros., and Time Warner will almost certainly appeal. The Siegel heirs’ Superboy suit is still ongoing as well. However, this remains a significant victory for the Siegel heirs.

Tom Bondurant, who has been following this case since its early days, is an attorney in Germantown, TN, and a regular contributor to Blog@ Newsarama.

Releated: Inside the Siegel/DC Battle for Superman

The Siegels’ Superboy Complaint

The Siegels’ Superman Complaint

Warner Bros. Counterclaim

A Shuster Joins the Battle

[Skyrider]

Plenty of legal info, but this lacks a difinitive answer to the question that I'm sure is on everyone's minds:

What does this mean for the character and his place within future DCU storylines?

[Jamal Y. Igle]

Originally Posted by Skyrider

Plenty of legal info, but this lacks a difinitive answer to the question that I'm sure is on everyone's minds:

What does this mean for the character and his place within future DCU storylines?

Honestly it really doesn't change much in the near future. If Waner.s appeals succesfully it may not change anything at all.

[Sunspot_616]

So...

Is Superboy coming back ???

[TomBondurant]

As a practical matter, I don't know that this has any effect on the current comics. The ruling gives the Siegel heirs co-ownership (with DC) of the copyrightable material contained in Action #1's Superman story. That naturally includes the foundations of the characters of Superman/Clark Kent and Lois Lane. While I suppose the Siegel heirs could try to micro-manage how Superman and Lois are portrayed month-to-month, it doesn't seem likely that they would. Co-ownership suggests to me that the Siegel heirs and DC must now agree on the future direction of Superman, and that neither side can act unilaterally.

I don't know enough about the intricacies of copyright law to speak definitively about the ruling's effect on other material created and/or developed after Action #1. It does seem, though, that DC still owns all of Lex Luthor, Jimmy Olsen, Brainiac, et al., who were obviously created later; as well as trademarked material like "Look! Up in the sky!"

So I'd say there's a lot that DC can still control about the Superman mythology -- but if it came out of Action #1, the Siegel heirs are now the co-owners of it.

[TomBondurant]

P.S. The Superboy issues are covered in a separate suit, which (last I looked) was still headed for trial.

[Staredcraft]

Originally Posted by TomBondurant

Co-ownership suggests to me that the Siegel heirs and DC must now agree on the future direction of Superman, and that neither side can act unilaterally.

That's the thing. What do Siegel's Widow and daughter know about comics anyway? How do they know how ot handle the character? Stuff like this points more to the fact they're in it just for the money and not about the character

[CapeMonkey]

Originally Posted by Staredcraft

That's the thing. What do Siegel's Widow and daughter know about comics anyway? How do they know how ot handle the character? Stuff like this points more to the fact they're in it just for the money and not about the character

Given how much money Warner Bros and DC have made off the character, why isn't it perfectly fair to be in it for the money?

[Jeffrey Quah]

Originally Posted by Staredcraft

That's the thing. What do Siegel's Widow and daughter know about comics anyway? How do they know how ot handle the character? Stuff like this points more to the fact they're in it just for the money and not about the character

Money that they deserve, yes. What's so bloody wrong about that?

[Kevin T. Brown]

Originally Posted by Staredcraft

That's the thing. What do Siegel's Widow and daughter know about comics anyway? How do they know how ot handle the character? Stuff like this points more to the fact they're in it just for the money and not about the character

Of course it's all about the money. Heirs reaping the benefits of what their grandfather or great-grandfather did....

Regardless of what the judgment says, Siegal and Schuster DID do this on a "work for hire" basis. No one twisted their arms to do this. They could have told National to get lost and pursue a comic strip. They didn't. They willingly changed their concept to make it into a comic book, as they were hired to do.

I'm usually for the little man in such cases, but this is one time I hope Warners, DC, et al, wins this on appeal.

[avitable]

Originally Posted by Kevin T. Brown

Regardless of what the judgment says, Siegal and Schuster DID do this on a "work for hire" basis. No one twisted their arms to do this. They could have told National to get lost and pursue a comic strip. They didn't. They willingly changed their concept to make it into a comic book, as they were hired to do

Did you even read the article? The judge rejected the idea because the concept of Superman was created before the strip had to be made into a comic book. They created the concept for the comic strip. Before they did the work for hire of adapting it into a comic book format.

[ubuking]

I'm all for creators and their immediate family getting their share of the profits. It just seems that now DC just has to learn to share.
All that should really matter to the reader is that he's still getting his dose of Superman monthly.

[jackmurphy19]

It looks like the material that DC has "lost" partial control over is fairly usless on its own. Most of the things that the public associate with Superman were either created after Action Comics #1, or for other media, like the radio show. The material covered by this rulling, if published seperatly from DC, would be a stronger than normal man, that leaps and wears an unrefined version of the Golden Age suit. No flying, no vision or breath powers, no Daily Planet, Jimmy, Luthor, ect. The general public wouldn't recognize it. What I don't under stand is the seperate Superboy lawsuit. Assuming that the powers that be at the time did turn down the concept, then published it by themselves anyway, how is it not an obvious extention of the original concept? If the original Superboy stories were in violation of copyright, how does that apply to the modern character? The Kon-El Superboy was a seperate character from Superman with slightly differant powers and a "non-costume". Since this character was not the "Superman as a boy" concept,and DC's trade mark on the shield is unchanged, wouldn't DC have the right to publish the character seperate from the Superman creators' estates?

[ClaudioPozas]

Could this eventually lead to a DC Universe where Superman *isn't* around?

What will happen in 20 years, when (arguably) Superman enters public domain? And then Batman, Captain America, Wonder Woman, Captain Marvel, etc, etc?

[Snowspinner]

Originally Posted by Sunspot_616

So...

Is Superboy coming back ???

Ironically, this is probably a good ruling for Superboy. If this ruling survives appeal then Warner basically has no choice but to deal with the Siegels and pay a license fee or buy the copyright straight out. Given that, one assumes they'd regain Superboy as well. Whereas if the Siegels just had Superboy it's debatable exactly how much that would be worth - Warner would probably only buy it back if Smallville turned out to be a derivative work.

[Snowspinner]

Originally Posted by ClaudioPozas

What will happen in 20 years, when (arguably) Superman enters public domain? And then Batman, Captain America, Wonder Woman, Captain Marvel, etc, etc?

That one's easy: Congress illegally extends the copyright terms again.

[hondo]

On the surface nothing will change. I agree that the estate will not micromanage the character and leave it to the professionals at DC. What they could do is possibly sell their stake to a possible competitor (Marvel ?) which could complicate things.

It does sound like it's strictly the specific elements introduced in Action # 1 that are addressed here. As has been pointed out, lots of other characters and elements of the mythology were introduced later i.e. kryptonite, Luthor, Kandor, Jimmy Olsen, etc.

I'm glad to see the Siegels get what they are deserved, but I hope DC keeps everything on course. Supes is one of my favorite characters ever.

[spiderrob8]

IIRC, by 2013, Shuster's heirs get the other half.

and therefore, DC would have no interest in Superman at all or Lois, the costume, etc).

In theory, he could then be sold to Marvel, Disney, whoever.

Albeit, w/o Luthor, Jimmy, Kandor, Krypton etc.

But he would still be Superman, Clark Kent, in the costume more mor less, from another planet etc. I don't see why his powers could not expand either.

Interesting.

Siegel and Shuster;s heirs are going to be extremely rich.

[Snowspinner]

Originally Posted by hondo

On the surface nothing will change. I agree that the estate will not micromanage the character and leave it to the professionals at DC. What they could do is possibly sell their stake to a possible competitor (Marvel ?) which could complicate things.

As it stands, the estate can't micromanage the character anyway - they own half the copyright, with DC owning the other half, and each half is free to exploit it. They could license it to Marvel, but it's an open question whether Marvel would want to buy it. Especially since DC unquestionably still owns all the Superman stories since Action. Who wants a Superman without Lex Luthor, the ability to fly, or any of his history? DC would probably even argue that the Siegels don't own the modern-day logo, and it'd be an ugly fight to find out if that's true. And Marvel has enough of their characters that this could happen to that they'd probably not want to cross DC.

They could probably make a tidy profit by selling the license to a ton of merchandise companies - who wouldn't want the non-exclusive rights to make Superman lunchboxes. But even there they'd have to pay a tidy license fee to DC on any profits.

In the end, the Superman copyright is enormously valuable to exactly one company: Time Warner. That renders it basically inevitable how this will shake out.

[aceatkins]

The reactions I've seen so far to this story fall along a couple lines:

1. The Siegels are just money-hungry scumbugs who are ripping off DC!

2. DC is a bad, greedy corporation that abused two kids and got what it deserved!

3. None of it matters so long as I get my Superman comics!

I disagree with all three points. I think I understand the ruling and its legal arguments pretty well, and ultimately I just don't agree with the principle of it. Or I guess I should say I don't agree with the principle of the law from the 1970s that allows creators and their heirs to renegotiate a legal arrangement that was reached decades ago.

The pro-Siegel side of the argument seems to think that the Siegels are owed this money because DC is a big, bad corporation that has made billions off of an idea that they paid two naive kids $150 for back in the 1930s. That Siegel and Shuster were taken advantage of, and then died lonely and poor. I'm sorry, all respect to them, but that's a pretty specious argument. They signed a contract. In hindsight that contract might not have been "fair," but you, me, everybody signs contracts that aren't always "fair." But that's business. They chose to sign that contract, nobody forced them. They could have shopped around the property if the terms didn't seem fair. Superman could have starred in one issue and then gone kaput; then they would have made a pretty sweet deal. But it turned out the other way. Now they can go back and demand more money for work they already sold? If you're an employee of a start-up company that you help build, then leave, then it goes on to make billions of dollars, can you go back and demand a cut of its current profits? And as for making DC sound like some awful, greedy bastard who repeatedly kicked these two poor guys around, consider that in the 1970s, the THIRD time the company paid S&S for their work, they agreed to pay them $30,000 per year for life for work they had done decades before. That's not exactly chump change.

The complaints that DC is just a money-hungry corporation with no soul --- what do you expect? It's a corporation. That's what corporations DO. They don't give out hugs. They are created to make money. They struck a business deal that ultimately made them billions. They have nothing to feel guilty over. Does that mean they should offer some kind of reparation to their creators? Sure; that's what royalties are for, in general, and what the three separate payoffs to the S&S families were for too. Does the company owe them an even greater slice of the pie for work they did 70 years ago? Sorry, I just don't see that.

As for "It doesn't matter, so long as I get my Superman books" -- it does matter. Maybe not this specific ruling, but it seems to me this sets a pretty dangerous precedent. What's to stop the families of the creators of any of the big comic properties from not following suit? And when you've got dozens, possibly hundreds, of folks all reaching into the kitty for work that was created decades ago, you're heading toward an unprofitable situation pretty damned fast. And an unprofitable situation (which monthly comics are well on their way to being anyway) means no comics.

This certainly isn't the end of the world, and it'll be appealed, and likely nothing will happen for years and years. But I just have a really hard time wrapping my head around the logic of allowing creators -- or, even more stunning to me, the families of creators, who had absolutely nothing to do with the work in question -- to come back umpteen years later and renegotiate legally binding contracts just because they no longer work in their favor. Are you and I allowed to do that in our business life? I don't think so. What makes this any different?

[MikeinDCU5]

My guess at the future ending here is that the Schuster heirs want to be compensated for Jerrys work, now and in the future. So they get a piece of the gate so to speak moving forward with back compensation. They want TimeWarner/DC to keep using Superman and keep paying them. I'm not sure if anything in the case can lead to them "owning" Superman and shopping the character like a free agent. Actually the fanboy in me thinks that would be fun....the last Superman at DC story....followed by him entering the MArvel world....

[Snowspinner]

Originally Posted by spiderrob8

But he would still be Superman, Clark Kent, in the costume more mor less, from another planet etc. I don't see why his powers could not expand either.

Because it would be a complete minefield to do it. Any time you did anything that resembled an existing Superman story, Warner would be suing you for violating their copyright, saying it's clearly a derivative work. Make him fly? Derivative work. Have him fight an obvious Lex Luthor clone? Derivative work. Have him marry Lois Lane? Derivative work.

I agree that the Siegels and Shusters will be enormously rich due to this. And if the Siegels are smart they'll hold their stake and settle for license fees until the Shusters have theirs and they can negotiate from a real position of power.

But there is no chance that the rights end up anywhere other than Warner. Simply put, the rights are much more valuable to Warner than they are to anyone else.

[Sluggo]

Originally Posted by ClaudioPozas

Could this eventually lead to a DC Universe where Superman *isn't* around?

What will happen in 20 years, when (arguably) Superman enters public domain? And then Batman, Captain America, Wonder Woman, Captain Marvel, etc, etc?

Personally, I can't wait for all these characters to enter the public domain. Think of all the incredible interpretations that we would get by creators who want to tackle them, without corporate interference or needing to fit into a shared universe or anything else that hampers creativity.

Besides, in the public domain, these characters would finally "belong" to the world, rather than to any one individual or entity.

That said, I love the character of Superman (I'm typing this as I sit here drinking coffee from my gigantic mug with the Superman shield on it) and all this legal fighting over a symbol of Truth Justice & The American Way just makes me sad.

It reaffirms my belief that lawyers and insurance companies have ruined any potential this country had to be great.

[spiderrob8]

The question of whether they are entitled to half of the license fees, or half of the profits from all WBEI exploitations of Superman is yet to be determined. It's going to hinge on whether or not DC is found to have given it's coporate sibling (which it must answer to like a parent) WBEI, a "sweetheart deal", or one that is fair and equitable to the joint-owner of the copyright. As joint owners, DC can't legally grant that license (happened in 2003) without the consent of the other joint owners (The Seigels), so it should be null and void. They'll still have to hash some of that out in court.

What has clearly been established in that court order is that the Seigels have successfully terminated the 1938 grant to DC Comics, of (half) copyright to Superman. Not just the actual first story, but the material represented in that story. Superman, his costume, his look, his attributes that make him Superman, Clark Kent, and whatever else is in that story that defines Superman. They have recaptured copyright to the characters, not just to that first story, the characters! Characters can be copyrighted. Yes, DC Comics is sole owner and still controls all the profits exploited from deriviative works created since then, Krypton, Lex, Supergirl, etc., all of the comics produced up to 1999, but they are now joint owners of Superman/Clark Kent, at least until when or if Shuster's heir's termination notice takes effect. They are owed an accounting of all expolitations of Superman post termination ('99), meaning comics, and other profitable exploitations, with some wrinkles concerning trademarks, and they get no accounting of all of the work produced prior to the termination, with the exception of work that is altered (new trade publications?) so it becomes post-termination work.

DC comics owns half the copyright to Superman (for the time-being until Shuster's claim is determined) and the Seigel's heirs own the other half.

[spiderrob8]

Originally Posted by Snowspinner

Because it would be a complete minefield to do it. Any time you did anything that resembled an existing Superman story, Warner would be suing you for violating their copyright, saying it's clearly a derivative work. Make him fly? Derivative work. Have him fight an obvious Lex Luthor clone? Derivative work. Have him marry Lois Lane? Derivative work.

I agree that the Siegels and Shusters will be enormously rich due to this. And if the Siegels are smart they'll hold their stake and settle for license fees until the Shusters have theirs and they can negotiate from a real position of power.

But there is no chance that the rights end up anywhere other than Warner. Simply put, the rights are much more valuable to Warner than they are to anyone else.

I remember there was also no chance that Time Warner would let it get to this point.
and yet, Mrs. siegel at the last minute did not settle.

Mrs. Siegel may feel that Time Warner and their predecessors ruined her husband's life.

and she may not deal.

and while Luthor, et al is important, the key important thing is Superman/Clark/Lois.

Hell, I'd rather have some Superman comics like the Superman in Action 1 then the whiney toothless wonder DC created.