Disney (DIS) Files Lawsuits Against Marvel Creators

Investing News

The Marvel franchise has become a dependable money-spinner for The Walt Disney Company (DIS) since the entertainment behemoth purchased it in 2009 for $4 billion. Increasingly, however, the franchise is also becoming a fount of controversy for the company.

In July, Black Widow star Scarlett Johansson sued Disney over its release strategy for the film, claiming that a simultaneous release in theaters and streaming cut into her overall earnings. Now, writers and illustrators who created and wrote the franchise’s popular characters are clamoring to renegotiate their copyrights over Marvel characters.

Key Takeaways

  • Disney has filed a lawsuit against Marvel creators to prevent them from taking over copyrights for their characters.
  • In March, Disney had received a copyright termination notice from creators of popular Marvel characters like Falcon.
  • The company settled a similar case, brought by Iron Man creator Jack Kirby’s heirs, in 2014.
  • Observers say that the case is unlikely to prevent Disney from using the characters for its movies.

They had served the studio with copyright termination notices for popular characters in Marvel’s stable—including Black Widow, Captain Marvel, and Falcon—in March. Last week, the company struck back with its own set of suits to invalidate the termination notices.

Work-for-Hire or Freelancers?    

A copyright termination notice ends the exclusive license of an author’s copyright in a work or of any right under a copyright. In simple words, this means that creators of best-selling Marvel characters could regain ownership of their work. For Disney, it could mean a return to the negotiating table to redraw licensing contracts with these creators or their estates.

The studio contends that the artists wrote the characters under “work-made-for-hire” contracts that entitled only them to a flat fee and royalty payments. “Since these were works made for hire and thus owned by Marvel, we filed these lawsuits to confirm that the termination notices are invalid and of no legal effect,” Dan Petrocelli, the lawyer representing Disney in this case, told the LA Times in an emailed statement. The company’s complaint also states that it paid a per-page rate to Lawrence Leiber, creator of the Iron Man series, for his contribution.

“These guys were all freelancers or independent contractors, working piecemeal for car fare out of their basements,” Marc Toberoff, who served the copyright termination notices, told The New York Times. According to him, the legal interpretation of “work-made-for-hire” is “anachronistic and highly-criticized” and “needs to be rectified.”

Back in 2009, when the heirs of Iron Man creator Jack Kirby sued Disney, the courts ruled in favor of the studio. Kirby’s team challenged the ruling and the case was winding its way to the Supreme Court until it was settled by Disney for an undisclosed amount.

Can the Case Hurts Disney’s Bottom Line?  

Characters from the Marvel universe have netted handsome revenues for Disney over the years. But comic book artists, some of who created new storyline arcs from the original cast, have not shared the profits.

Recent articles have catalogued problems with artist copyrights in the Marvel universe. For example, a Guardian piece stated that it was harder to get paid at Marvel for creators. Creator payments for contributions to the Marvel Universe ranged from $5,000 to royalty contracts and producing credits to, in some cases, “special character contracts” that allow them to claim a payment whenever their characters are used. But these were not a given and were often shielded in terms outlined in legalese in contracts, according to the piece. Media attention on creator contracts may force the studio to rework them on terms more favorable to Marvel writers and illustrators.

But it is not likely to make a substantial difference to the studio’s revenue from the franchise. The LA Times piece quotes people familiar with the case as saying that even a win for the artists suing Disney would not “impede” Disney’s use of the characters from the Marvel Universe. An adverse ruling would only force the studio to “compensate the artists for use of characters from the Marvel Universe.”

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