A fan of comic books and motorcycle gang movies, in the 1950s Gary Friedrich began to imagine a motorcycle-riding superhero. The hero developed into a motorcycle stuntman when Evel Knievel rose to popularity in the late-1960s and in 1968 Friedrich gave his hero a flaming skull for a head. He then fleshed out a story for this hero.
At that time, Gary Friedrich was a part-time free-lance comic book writer scripting issues of existing comic book serials as requested by Marvel and other publishers. In 1971, Friedrich decided to try to publish a comic book starring his flaming-skulled hero and created a written synopsis on his own initiative and at his own expenses which he called “Ghost Rider.”
Friedrich decided to approach Marvel with his idea. Marvel agreed to publish Ghost Rider in its series “Marvel Spotlight”, which was the way in which it auditioned new superheroes. Friedrich assigned his rights in the Ghost Rider characters to Marvel. In April 1972 Marvel Spotlight was published featuring Ghost Rider. It was republished five times. In each there was a copyright notice in favor of Marvel, but also a credit “Conceived & Written Gary Friedrich.” In a separate publication Marvel acknowledged that Friedrich “dreamed the whole thing up.”
Ghost Rider quickly became very popular and in May 1973 Marvel launched a separate Ghost Rider comic book series. Friedrich wrote the stories for several of these later comics on a freelance basis. Marvel promptly filed copyright registrations for several of these subsequent Ghost Rider comic books.
The Copyright Act of 1909, which was in effect in 1972, provided that the original term of a copyright was for 28 years from the date of first publication. The Copyright Act of 1909 also provided for a renewal and extension of the copyright for an additional 28 years upon the filing of an application to renew.
In 1976 Congress repealed the 1909 act and adopted a new copyright act, effective January 1, 1978. The new copyright act provided for a much longer original term and discontinued the concept of a renewal copyright for new copyrights. However, as to copyrights which were then existing and in their first term on January 1, 1978, the Copyright Act of 1976 continued the concept of having an original term of 28 years, but provided for a renewal term of 67 years. If no application to renew the copyright was made, then at the expiration of the original term the copyright vests in the author if he is still living.
A copyright work for hire under the 1976 Copyright Act, as construed by the United States Supreme Court[i], is generally a work prepared by an employee (as that term is understood to mean under agency law which is broader than just a W-2 wage employee), or certain types of specially ordered or commissioned works if the parties expressly agree in a written instrument that it is to be considered a work for hire. The prior law did not require an express agreement. Instead, the copyright belonged to the person at whose “instance and expense” the work was created.[ii]
Because of this change in the law, in 1978 the then publisher of Marvel comics required Friedrich, and all other freelance artists, to sign a form work for hire agreement. The agreement was a page long and contained two operative sentences. The first sentence was 90-words long, the second 45. The first sentence provided that all works which “have been or are in the future” created by Supplier (Friedrich) “have been and will be specially ordered or commissioned for use as a contribution to a collective work and . . . is . . . a work made for hire.” The second sentence grants to Marvel all rights of ownership “forever.”
The initial copyright term for Ghost Rider expired in the year 2000, 28 years after it was first published. Friedrich was unaware of Marvel’s use of the Ghost Rider character during the renewal term until 2004 when he learned Marvel was preparing to make a Ghost Rider movie. Friedrich’s attorney wrote to Sony Pictures, which was producing the movie, and asserted Friedrich’s rights in the Ghost Rider copyright. In a response dated April 14, 2004, Marvel advised Friedrich that Ghost Rider was a work for hire. Despite taking this position, however, Marvel sent Friedrich a check when it reprinted Spotlight 5 in 2005.
On April 4, 2007, Friedrich filed suit in the United States District Court for the Southern District of Illinois against the current owners of Marvel and their licensees alleging copyright infringement. He did so within three years of the April 14, 2004 letter from Marvel advising of its position that Ghost Rider was a work for hire.
The action was transferred to the Southern District of New York. Marvel filed its answer asserting that Ghost Rider is a “work made for hire.” It then filed an amended answer to include a counterclaim against Friedrich for copyright infringement.
After discovery, both sides moved for summary judgment. Friedrich argued that he was the owner. Defendants argued that Friedrich’s claim was barred by the statute of limitations[iii], and alternatively that Friedrich had assigned his renewal rights to Marvel.
The District Court[iv] concluded that there were genuine issues of material fact concerning the authorship of the work, but that by executing the agreement, even if Friedrich were the sole author, he conveyed those rights to Marvel “forever.” The District Court reasoned that use of the word “forever” in the 1978 form work for hire agreement indicated the parties intent to convey the renewal rights. It dismissed Friedrich’s claims, awarded damages to Marvel for copyright infringement and enjoined Friedrich from using the Ghost Rider copyright.
Friedrich appealed. The Second Circuit vacated the district court judgment and remanded.[v] It held that there were genuine issues of fact in dispute and therefore the summary judgment granted by the trial court was improper.
The first of three issues the Second Circuit held were in dispute involved the construction of the 1978 work for hire agreement. The court looked to New York state law to construe the document and held that it was ambiguous and therefore extrinsic evidence should be used to determine its meaning. It held that the run-on sentences of the document were ambiguous on their face calling them “dense sentences” and “an opaque cluster of clauses.” It also found that the 1978 document was a standard-form created by Marvel and that the language was ambiguous as to whether it was only forward looking or also covered a work created prior to that date such as the Ghost Rider character. It also found that the document was ambiguous as to whether it referred only to the original term of the copyright or also to the renewal term. It found that there was evidence in the record which indicated Friedrich was doing other work for the current owner of Marvel at the time he signed the agreement and that he was specifically told the document only covered that current work and future work. Citing earlier Second Circuit authority, it held that there is a strong presumption against the conveyance of renewal rights[vi] and although a word like “forever” may be indicative of an intent to convey renewal rights, this intent is to be determined by the trier of the facts and not upon summary judgment.[vii]
The second issue upon which the Second Circuit held there were facts in dispute involved when Friedrich’s claim accrued under the 3-year statute of limitations. Following earlier Second Circuit authority[viii], the court held that the claim accrues when a reasonably diligent plaintiff would have been put on inquiry as to the assertion of an adverse claim to the copyright. Friedrich filed suit on April 4, 2007. The court looked to whether Marvel had asserted an adverse claim prior to April 4, 2004. It looked at whether Marvel had publicly repudiated Friedrich’s claim, whether it had privately repudiated Friedrich’s claim, or whether it had impliedly repudiated Friedrich’s claim, and found that there were triable issues of fact as to each.
The third issue upon which the court held that there were facts in dispute involved ownership. The Second Circuit agreed with the trial court that it was improper to grant summary judgment in Friedrich’s favor on the ownership issue. When the facts are viewed in Marvel’s favor, as they would be in determining whether to grant summary judgment to Friedrich on this issue, it would be possible for a jury to conclude that Friedrich had only an uncopyrightable idea for a motorcycle-riding character when he first presented it to Marvel.[ix]
Although the unique facts of this case relate to a work created prior to the effective date of the current copyright act, for employers the overriding lesson is equally applicable now. It is not only to have a written copyright work for hire agreement, but that it fits with the facts of the particular situation, that it clearly defines the relationship between the employer and employee, and that it states who is entitled to the copyright in the work. Failure to do so can not only be costly to both parties in terms of legal fees, but also a great deal of time and money may be expended in exploiting the work only to learn after the fact that the profits may be going to someone else.
[i] Community for Creative Non-Violence v. Reid, 490 U.S. 730, 109 S.Ct. 2166, 104 L.Ed.2d 811 (1989).
[ii] Martha Graham School v. Martha Graham Center, 380 F.3d at 634-35.
[iii] The statute of limitations is three years. The District Court opinion does not mention the statute of limitations argument, but the appellate opinion indicates that defendants raised that issue. It must have appeared in other parts of the record.
[iv] Gary Friedrich Enterprises, LLC, et al. v. Marvel Enterprises, Inc., et al., 837 F. Supp. 337 (S.D.N.Y. 2011).
[v] Gary Friedrich Enterprises, LLC, et al. v. Marvel Characters, Inc., et al., Docket No. 12-893-cv (2d Cir. 2013).
[vi] Corcovado Music Corp. v Hollis Music, Inc. 981 F.2d 679, 684 (2d Cir. 1993).
[vii] Siegel v. Nat’l Periodical Publ’ns, Inc., 508 F.2d 909, 913 (2d Cir. 1974).
[viii] Kwan v. Schlein, 634 F.3d 224, 228 (2d Cir. 2011)
[ix] Under the 1909 Act, federal copyright protection attached to original works only when those works were published and had a notice of copyright affixed. Under the 1976 Act, a copyright subsists in an original work of authorship only when fixed in any tangible medium of expression from which it can be perceived, reproduced or otherwise communicated.