Copyright and LLCs

 

            Something I have seen discussed in the general entertainment realm, but less so in comics is the use of loan-out companies or LLCs and the implications on copyright. As I believe this is a valuable topic, I want to briefly touch on the issues below.

            For those unfamiliar with the concept, a loan-out company is when a person, usually a creative individual, forms a company. This company then hires the performer, and contracts their services out to other companies. It is primarily done to lower the ultimate tax burden on the creative. However, because the company is hiring the creative, the creative could be considered an employee of the creative’s company. This might have serious implications on the copyright status of any works created.

            As a brief reminder, copyright protection initially vests in the author of the work.[1] If the work is being created as a work-made-for-hire, then the initial owner of the work would be the person or entity for whom the work was prepared.[2] A work-for-hire is a work created by an employee, or a work created pursuant to a written agreement and falling within one of the nine categories of works specified in the Copyright Act.[3] (Click the link for a more detailed summary of work-made-for-hire.)

            If a work is not a work-made-for-hire, then the length of copyright protection for works created after 1978 is typically the life of the author plus 70 years.[4] If the work is a work-made-for-hire, then the term of copyright protection for works created after 1978 is “95 years from the year of its first publication, or a term of 120 years from the year of its creation, whichever expires first.”[5] The 1976 Copyright Act also that an author can terminate a transfer of copyright 35 years after the date of the transfer, or publication of the work.[6] However, the right to terminate a transfer does not apply to a work-made-for-hire.[7]

            If a creator is using an LLC or other type of company to hire out their services, then they could be inadvertently impacting their copyright rights. They may be changing the term of copyright protection for the work, and they may be removing their ability to reclaim a work after it has been assigned pursuant to the transfer termination provision mentioned above.

            It is important for creator’s considering utilizing a corporate entity for their work to consult with both their accountant and a copyright lawyer. By doing so, the creator might be able to craft a plan to utilize the tax benefits while also protecting their copyright rights.

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[1] 17 U.S.C. §201(a)

[2] 17 U.S.C. §201(b)

[3] 17 U.S.C. §101

[4] 17 U.S.C. §301(a)

[5] 17 U.S.C. §301(c)

[6] 17 U.S.C. §203(a)(3)

[7] 17 U.S.C. §203(a)

Pixels & Panels Podcast Interview

     With what little free time I have lately, I have been working on a long article on a specific area of copyright law. I could have whipped up a quick post that what have likely been a rehash of something I've written before. Instead, I'll leave you with a link to a recent podcast interview I did. I hope you enjoy.

https://podcasts.apple.com/mx/podcast/13-what-does-a-comic-lawyer-do-and-why-do-you-need/id1591270391?i=1000558630458

Book Review: Words for Pictures

 

            I recently read Brian Michael Bendis’ Words for Pictures (affiliate link). It was a well-written and informative book. It is a must for any aspiring comic book creator, particularly writers.
            This book has been on my list to read for some time, but I kept putting it off until multiple people recommended my reading it. I was worried it wouldn’t be relevant to my interests, as I thought it would be primarily focused on the craft of writing, working with artists, and making comics. To my pleasant surprise, Bendis included an entire chapter on the business of comics, which touched on some major legal issues.
            In Chapter 6, Bendis included an interview with his wife Alisa, who runs their company. This section includes many nuggets of great advice, including some great information on important contractual terms. One piece of advice that really spoke to me, besides hire a lawyer, was to treat each of your projects as if they will be big successes and plan and negotiate accordingly. Even though I write and talk about many of the topics they discuss in this chapter, it was refreshing to see it from a different perspective.
            Creators, new and old, will definitely benefit from reading the book, but I urge readers to pay attention to chapter 6. If you won’t take my advice, I hope you’ll at least listen to Alisa and Brian Bendis.

Top 5 Questions to Answer Before Signing a Creator-owned Contract

 

        This year marks the 30^th anniversary of Image Comics. As most of the readers of this blog should know, Image Comics was formed when a group of top Marvel artists decided they wanted to strike out on their own and reap the rewards of owning the characters they created. To this day, I still believe that the main line of Image Comics is the truest version of creator-owned comics. Image takes a reasonable fee for publishing the book, and it doesn’t take a creator’s media rights. In honor of Image’s anniversary, below are some of the key I think creator’s should answer when evaluating a creator-owned deal.

 

1) How long is the deal?

This is often called the Term in a contract. The Term of an agreement can vary. Sometimes, it can be a set number of years. Sometimes, it can be tied to the length of a series. Sometimes, a publisher can ask for the rights to last indefinitely. It is important to know how long your work could be tied up by a publisher. I am strongly of the opinion that a publishing contract should have a defined end date. If it does, make sure you are comfortable with how long it is. If it doesn't, then you need to see point 2 below.

 

2) How and when do the rights revert?

This can fall under both termination rights and reversion. Are there clear instances where you can terminate the agreement if the publisher takes, or doesn’t take, certain actions? For example, if the publisher goes out of business or stops publishing comics, can you terminate the agreement? If the publisher doesn’t release your work within a certain period of time, can you terminate the agreement? These are all important. Additionally, you’ll want to make sure that at some point, either via termination or a reversion clause, the rights to your work revert to you. This is particularly important if there is not a defined Term to the publishing agreement.

 

3) How much are you being paid?

Are you receiving an advance? What’s the royalty percentage? How often are you being paid? All of these should be considered when you are evaluating whether a publishing agreement is right for you.

Pay attention to what percentage the publisher is taking from sales of the book and any other rights they might have. Also, pay close attention to what they are recouping before paying you your percentage. Most deals are structured in a way where the publisher will earn back any money it has spent in connection with publishing and distributing your book, once those fees are recouped, there might not be much left for your split of the profits.

 

4) What rights are you giving up?

Be wary of what you are giving up. Some publishers like to bill themselves as creator-owned or creator-friendly, but they still try to take all of your rights and leave you with no control over your work.

Also, I’ve talked about this before, but I’m strongly of the belief that publishers should only get publishing rights. However, more and more creator-owned publishers are demanding the ability to profit from a comic’s media rights as well. You will need to carefully evaluate whether this makes sense for your work, and if you are comfortable giving up whatever control the publisher may ask for.

 

5) What does the publisher bring to the table?

Are they paying you? Are they a top publisher who can substantially expand your reach? Do they have a history of launching and promoting successful books? Can they actually help you shop and/or exploit your media rights? In today’s world where it has never been easier to self-publish quality comics, it is important to evaluate what a publisher can do you for you.

 

While these are not all of the things you should watch out for, these are some of the top things I look for while evaluating a contract. You should carefully weigh pros and cons of working with a particular publisher before signing a contract, and taking into consideration these points will help.

 

An Invincible Lawsuit

 

            News recently broke that William Crabtree, the colorist on the first 50 issues of Invincible, sued Robert Kirkman and his companies. In the complaint, Crabtree is seeking rescission of an agreement that purportedly transferred his copyright interests to Kirkman, an accounting of money due to him, and a declaration of joint ownership in the Invincible series.

            For those familiar with the dispute between Kirkman and Tony Moore over The Walking Dead, the facts alleged in the complaint are very similar.[1] Crabtree worked as the colorist on Invincible for the first 50 issues, and there was no written agreement. The complaint states that Crabtree and Kirkman agreed that he would receive 20% “of single issue sales…with a minimum of $40 per page” and 10% of any adaptations.

 Kirkman approached Crabtree in 2005 at SDCC, and asked him to sign a document, titled a Certificate of Authorship, that would give Kirkman the rights to Invincible. The reason given to Crabtree for signing the document was to make the rights ownership simpler so that Invincible could be sold to Hollywood for adaptation. The complaint states that the 2005 document retroactively declared Crabtree’s contributions as a work-made-for-hire. The complaint also alleges that Crabtree was not given the opportunity to have an attorney review the document. Crabtree was told that it was urgent the document was signed because of meetings that would take place. Kirkman verbally told him that the basics of their deal would remain the same. Crabtree signed the document and never received a copy.

After signing the deal, Crabtree continued to receive the same amounts, if not greater, from Kirkman. He also received additional payments when the comic book was optioned by MTV and Paramount. However, when Crabtree approached Kirkman in 2020 about additional payments from the recent Amazon adaptation, he was told that he had no ownership in the work, was not entitled to additional payments, and any previous payments had been discretionary bonuses. Crabtree subsequently filed this lawsuit.

We will see what happens with this lawsuit. Most likely it will settle, but if it doesn’t, it could provide an interesting look at how copyright law views the contributions of colorists in relation to comic books. In Gaiman v. McFarlane, the court recognized that the contributions of the writer, illustrator, inker, and colorist are essential to creating the final, copyrightable comic book, even though some of their contributions, on their own, may not be separately copyrightable.[2] The complaint makes the argument that Crabtree’s colors were instrumental in creating the look and feel of Invincible, and his contributions entitle him to be a joint-owner and joint-author of the work. Since there was no written agreement, his work cannot be a work-made-for-hire, and his contributions could likely make him a co-owner of the final work. If he is a co-owner of the work, then he could assign his rights, but you cannot retroactively deem something a work-made-for-hire if it is not. So, the facts surrounding the meeting between Kirkman and Crabtree in 2005 will be key to determining whether there was a valid transfer of rights.

Overall, this is a strong reminder to get it in writing, have it reviewed by an attorney, and don’t let anyone pressure you to sign a deal until you’re comfortable with it.

 

A copy of the complaint can be found here.

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[1] It should be noted that the same attorney who represented Moore is also representing Crabtree.

[2] Gaiman v. McFarlane, 360 F.3d 644, 659.

Contract Negotiation - More Red Flags

 

        I previously wrote about what I considered to be the biggest contract negotiation red flag -- a steadfast refusal to negotiate at all. Below, I’m listing a few more red flags that I look for in negotiations. If you encounter any of them, take a moment to think about how problematic it might be.

1) Won’t put it in writing

If a party makes a lot of promises to you, but they won’t put them in the contract, it is a major red flag. If it’s not part of the contract, it will be difficult, if not impossible to enforce, and if they’re unwilling to put it in writing, it’s a sign they might not mean what they say.

2) Urgency

If a party is pushing you to sign a deal quickly, then it is a red flag. Negotiations take time, and most legitimate businesses know this. If they are pushing for a deal to get done quickly it is (i) to serve their own agenda and/or (ii) to sneak a bad deal past you without proper vetting by an attorney/agent/etc.

3) Don’t know their own agreement

If a party is unable to explain the terms in their agreement to you, or if they don’t see how terms might conflict in the contract, it is a red flag. They either lack an attention to detail, or they are deliberately misrepresenting the deal.

4) Overly willing to make changes

This might seem counterintuitive, but a party that gives you all of your requested changes could be a red flag. It could be a secondary sign of the “don’t know their own agreement” red flag I mentioned above, or it could be that they just don’t care or don’t intend to honor the contract.

Comic Book Recommendations - 2021

 

            Another year is almost over, and once again, I’m going to provide a list of some of the creator-owned books I enjoyed this year. They may have been released in 2021; they may not have. As I stated in my 2020 list, I’m often woefully behind in reading. (Check out the 2020 list for some more great books.)

            I’ve provided links where I can. Links to Amazon will be affiliate links. Anywhere else is not. Even so, if you’re intrigued by these books, try to buy them from your local comic shop or book store.

 Chu, vol. 1 by John Layman and Dan Boultwood

I was a big fan of Chew, and I’m glad to have a return to its world. This time, it follows a sister of Tony Chu, the lead from Chew. While there are nice nods to the original series, this book stands alone and is easy to dive into for new readers.

 

The Good Asian, vol. 1 by Pornsak Pichetshote and Alexandre Tefenkgi

I’m a sucker for good film noir, and Pichetshote and Tefenkgi are nailing the vibe in this book. It’s an engaging read that explores some heavy topics around immigration and fitting in.

 

 Bowie: Stardust, Rayguns, & Moonage Daydreams by Michael Allred and Steve Horton

The initial attraction for me was the trippy Allred art, but Horton and Allred also craft an interesting and informative book charting the beginning of Bowie’s career.

 

The Department of Truth, vol. 1, but James Tynion IV and Martin Simmonds

A fascinating book exploring what would happen if false narratives became real.

 

Y: The Last Man, Book 5, by Brian K. Vaughn and Pia Guerra

I was incredibly late to reading this book, but it is excellent. The story follows the lone male survivor after a virus wipes out the male population on Earth.

 Murder Falcon by Daniel Warren Johnston

A surprisingly fun and emotional book with an interesting story and great art.

 

Black Magick: The First Book of Shadows by Greg Rucka and Nicola Scott

A solid detective/murder story following a police detective who is also secretly a witch.