Disney Faces Classic Work-Under-Hire Copyright Battles with Creators

Image Source: “The Importance of Intellectual Property (and How to Protect It).” Equinox Law Group, September 7, 2021. https://equinoxbusinesslaw.com/blog/the-importance-of-intellectual-property-and-how-to-protect-it/.

By Rachel Gu

Rachel Gu is a senior at the University of Pennsylvania studying Bioengineering.

Generation Z’s most loved cinematic characters of the Marvel universe have recently become the main characters of one of The Walt Disney Company’s largest asset battles to date. Through distinguished Intellectual Property lawyer Marc Toberoff, five of the original Marvel Comics creators served Marvel Entertainment–owned by Disney–with notices of copyright termination under section 304(c) of the Copyright Act. These creators include comic illustrators Steve Ditko and Don Heck, heirs of writers Don Rico and Gene Colan, and comic writer and artist Lawrence D. Lieber–who is the younger brother of the deceased chief writer and editor of Marvel Comics, Stan Lee. Toberoff’s clients seek to reclaim copyright ownership through copyright termination for their characters Doctor Strange, Black Widow, Hawkeye, Captain Marvel, Falcon, Blade, and the Wizard, all of which provide large sources of revenue for Disney through films, television shows, and merchandise. Consequently, Marvel filed lawsuits in return to invalidate the termination notices. If Toberoff is successful, Marvel would lose full copyright ownership as soon as June 2023. [1]

The current reigning version of Copyright Law is dictated by the Copyright Revision Act of 1976,  but this revision took effect on January 1st, 1978 and only applies to works created after this date. [2] Prior to this revision, the 1909 Copyright Act served as the rule of copyright law. Because the Marvel characters in question were created in the 1960s and prior to the Copyright Revision Act, the 1909 Copyright Act applies to these lawsuits.​

In Section 26 of the 1909 Copyright Act, the definition of a copyright author included “an employer in the case of a work made for hire.” Subsequently, courts developed an “instance and expense test” to determine whether a work was made for hire, considering factors such as the existence of a written agreement that acknowledges a hired authorship, payment of wages in return for the work, or the right of the employer to supervise the creation of the work. [3] Essentially, if the creator was given an opportunity–or “instance”–to create the work all while the work was being largely funded by an “employer,” then the work was made for hire. 
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Using this definition of work for hire, Black Widow, for example, seems to clearly fall under a work made for hire since writer Stan Lee was a fully employed paid editor. While Rico and Heck were not traditional employees and instead freelancers paid on a page rate, their work also seems to fall under the “instance and expense” test, where Marvel provided the motivation–or instance­–and paid for the work done. Other characters similarly fall under the same fate.

Toberoff argues that the current interpretation of “work made for hire” is too broad and needs to be redefined. He contends that the characters were all created when the creators worked as freelancers or independent contractors, thus differentiating them from traditional employees of Marvel–the only standard that should actually count as a work made for hire. [4]

Toberoff has been involved in similar cases in the past. In August 2013, he represented Jack Kirby in serving copyright termination on Spider-Man, X-Men, the Hulk, and Thor, but the 2nd U.C. Circuit Court of Appeals affirmed a lower court ruling that rejected the termination request due to Kirby having created his materials as a work made for hire. Just before the case was brought to the Supreme Court, the case was settled. Toberoff’s attempts to serve a copyright termination of Superman, on behalf of creators Jerry Siegel and Joe Schuster, to DC Comics ended in a settlement. [5] While no successful legal precedent in copyright termination in favor of the creator was made, Toberoff said he thinks of the settlement as a win. [6]

 The Kirby case took place in the Second Circuit, which, along with the Ninth Circuit, is home to all five of the current lawsuits. This legal precedent does not bode well for Toberoff’s current case. In fact, both the Ninth and Second circuits utilize the “instance and expense test” for any copyrighted work made before 1978.

If in the small chance that Toberoff’s clients prevail, Marvel would not entirely lose its profit stream from these famous characters. The termination of these copyrights would just lead to joint ownership between the creators and Marvel. Copyright law holds that any owner can exploit the copyright ownership without permission from the creators, but they must share the profits. However, given that the Kirby case almost reached the Supreme Court, Toberoff still has a small shot of potentially redefining a work made for hire.

 The opinions and views expressed in this publication are the opinions of the designated authors and do not reflect the opinions or views of the Penn Undergraduate Law Journal, our staff, or our clients.

[1] Barnes, Brooks. "Disney Sues to Keep Complete Rights to Marvel Characters." New York Times, September 24, 2021. https://www.nytimes.com/2021/09/24/business/media/disney-marvel-copyright-lawsuits.html.
[2] Hull, Geoffrey P. "Copyright Act of 1976 (1976)." THE FIRST AMENDMENT ENCYCLOPEDIA, 2009. https://www.mtsu.edu/first-amendment/article/1072/Copyright-act-of-1976.
[3] "Work Made for Hire under the 1909 Copyright Law," April 2005. U.S. Copyright Office Release, Appendix E. https://copyright.gov/comp3/chap2100/doc/appendixE-madeforhire.pdf.
[4] Moss, Aaron. "What's Really Going On In Marvel's Copyright Termination Lawsuits." Copyright Lately (blog). Entry posted September 26, 2021. https://copyrightlately.com/marvel-copyright-termination-lawsuits/.
[5] Gardener, Eriq. "Marvel Suing to Keep Rights to 'Avengers' Characters From Copyright Termination." The Hollywood Reporter. September 24, 2021. https://www.hollywoodreporter.com/business/business-news/ marvel-suing-avengers-copyright-termination-1235020110/.
[6] Thomas, David. “Bang! Pow! Lawyer foes square off again in Marvel copyright fight” Reuters. September 18, 2021. https://www.reuters.com/legal/transactional/bang-pow-lawyer-foes-square-off-again-marvel-copyright-fight-2021-09-28/