A Sonic Victory for Archie

In my book Comics Startup 101: Key Legal and Business Issues for Comic Book Creators, I briefly discuss the Ken Penders litigation against Archie Comics. In summary, Penders wrote Sonic the Hedgehog comics for Archie in the 90s, and he never signed a work-made-for-hire agreement. He sued Archie over ownership of the characters, and the case eventually settled. Similarly, artist Scott Fulop filed a lawsuit against Archie Comics in 2016. He claimed ownership to the Sonic the Hedgehog stories he worked on and that Archie’s use of them was infringement. The district court finally issued its decision in the case, Narrative Ark Entertainment LLC v. Archie Comics Publications, Inc., No. 16CV6109 (VB) (S.D.N.Y.), at the end of August.

Fulop worked as a freelance writer and artist for Archie Comics between 1996 and 1998, creating stories and characters for the Sonic the Hedgehog line of books. During his time working on Sonic, he did not sign a work-made-for-hire agreement, and even though Archie Comics claimed he did, no evidence of one was introduced at trial. After learning from Penders that his creations were still being reprinted, Fulop registered copyrights in his works in 2009 and 2010. Archie claimed authorship and ownership of the works, filed for copyright registrations, and transferred its rights in the same over to Sega between 2011 and 2013. Fulop did not file his lawsuit until 2016, claiming he was evaluating his options and waiting to see the outcome of the Penders litigation.

In its decision, the court ruled against Fulop. The court found that at its heart, the case was about copyright ownership. Fulop claimed he owned rights to the stories he worked on, and Archie claimed he didn’t. In a lawsuit concerning ownership of a copyright, a claim must be brought within three years of discovering evidence of disputed ownership. Since Fulop was aware of the Penders litigation, having submitted an affidavit during it, and was aware of the disputed ownership claims over his works, the court dismissed Fulop’s claims as they were brought later than three years after discovering the dispute. Since Fulop’s ownership claim failed, his lawsuit for infringement could not move forward. As a result, the court dismissed Fulop’s claims against Archie.

Creators should pay attention to this case for two reasons. First, it’s important to know your rights and the details of the contracts you sign. And second, if you think you have a claim or dispute against someone, don’t wait too long in evaluating or asserting it.

Youngblood Lost

            Not too long ago, Rob Liefeld broke the news on social media that he no longer owns the rights to Youngblood, the popular comic book series he launched when helping to found Image Comics. In his statement, he said the rights to his characters had been transferred to someone he would not work with, and he would no longer be associated with the comic book series he created.

            Explaining the situation further, Liefeld detailed how he had transferred the rights to a third-party in the late ’90s, and this person had now transferred the rights to someone else. Even though he worked well with the previous rights-holder over the intervening years, Liefeld called the initial deal in the ’90s a bad deal.

            Liefeld’s calling it a bad deal started me thinking about the nature of deals and transactions. Oftentimes, the ultimate outcome of a deal might not be known for years. The initial deal might seem fair, and each party might be satisfied for a while. However, over time one party’s opinion of the deal might sour and, eventually, said party will regret the transaction.

            As a distant observer, it’s easy to look back on a transaction and criticize what should have been done. Oftentimes, however, deals are a series of compromises and emotional decisions, and the end result can be less than ideal. In order to get a deal done, sometimes you have to agree to or give up something you might not want to. Sometimes, the deal might not turn bad until years later due to something that was negotiated in to or negotiated out of the contract. Ultimately, it comes down to who has the negotiating power, and how eager the parties are to make a deal happen.

            What could Liefeld have done differently in negotiating this deal? Not knowing the particulars, we can only speculate. Assuming the rights were assigned, which is not entirely clear from Liefeld’s post, one option would have been to license the rights instead. If the rights had been licensed, then Liefeld could have included a prohibition against further transfers or assignments and retained some control.

Even though the rights appear to have been assigned without restriction, there are two other options that could have been included. As with a license, the deal could have included a statement prohibiting transfer without Liefeld’s consent. Depending on the nature of the transaction, this might have been difficult to include. If someone is paying good money to acquire rights to something valuable, they do not want their rights to be impaired in any way.

Another possible option would have been to include a right of first refusal. By including a right of first refusal, Liefeld could have matched any future offers for the right to Youngblood. Again, this might not have been possible depending on the negotiations, but it is slightly more palatable to buyers than an outright restriction, even though it might lessen the value of the rights being acquired.

            So, how do you avoid a bad deal? The only sure way to avoid a bad deal is not make a deal in the first place. Otherwise, you should try to understand the deal you are making and all of the likely outcomes.

Plasm v. Plasmer

            I recently ran across an older trademark case that’s worth mentioning. The case is Marvel Comics v. Defiant.[1]

            The case pitted Marvel Comics against a new comic book company founded by former Marvel Editor-in-Chief Jim Shooter. Shooter’s new comic book company, Defiant, was going to launch a new comic book called Plasm. Marvel objected to the title of the new book because they had a Marvel UK comic titled Plasmer. Marvel’s lawyers told Defiant they needed to change the title of the book. They also said that if Defiant provided a list of titles, Marvel would approve one.[2] Defiant provided a list, but they never received a reply from Marvel. So, they went ahead and published the comic with one of the names on the list, Warriors of Plasm.[3]  

            Marvel sued Defiant in an attempt to halt publication of the book by seeking a preliminary injunction. Marvel had filed for a trademark application for Plasmer in the U.K., and its U.S. trademark registration was still pending. Both parties filed arguments in an attempt to have the case dismissed early. Defiant argued the case should be dismissed because Marvel did not have trademark rights in the word Plasmer. The court did an intriguing analysis of what type of pre-sale use can help establish trademark priority, and, using a standard appropriate for evaluating a motion to dismiss, it ultimately concluded Marvel had established enough rights to avoid a motion to dismiss the case.[4] The court also found it inappropriate to grant Marvel’s declaratory judgment due to the pending nature of their trademark application, which would impact Defiant’s liability, and the upcoming trial.[5] Eventually, the court denied Marvel’s preliminary injunction finding there was “little likelihood of confusion between the two.”[6] The case was dismissed shortly thereafter.

The aftermath of the litigation, however, was pronounced. According to Shooter, even though they won, the litigation cost them $300,000.[7] Defiant also lost out on a million dollar toy deal with Mattel because they could not afford to indemnify Mattel against future lawsuits, which Mattel now required because of the Plasmer lawsuit.[8] As a new company, Defiant had limited resources, and the lawsuit took a toll.[9] After only starting publishing in 1992, Defiant closed down in 1995.

Marvel’s U.S. trademark application for Plasmer was never issued.

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[1] Marvel Comics Limited v. Defiant, a division of Enlightened Entertainment Ltd., 837 F.Supp. 546 (1993).

[2] https://www.cbr.com/jim-shooter-interview-part-2/

[3] https://www.cbr.com/jim-shooter-interview-part-2/

[4] Marvel Comics Limited v. Defiant, a division of Enlightened Entertainment Ltd., 837 F.Supp. 546, 549 (1993).

[5] Marvel Comics Limited v. Defiant, a division of Enlightened Entertainment Ltd., 837 F.Supp. 546, 550 (1993).

[6] The Comics Journal, No. 163, Pg. 14(Nov. 1993).

[7] https://www.cbr.com/jim-shooter-interview-part-2/

[8] https://www.cbr.com/jim-shooter-interview-part-2/

[9] https://www.cbr.com/jim-shooter-interview-part-2/; The Comics Journal, No. 163, Pg. 14(Nov. 1993).

Book Review: Comic Book Implosion: An Oral History of DC Comics Circa 1978

           Comic Book Implosion: An Oral History of DC Comics Circa 1978 (affiliate link) is a thorough, detailed look at the lead-up to the DC Implosion in 1978, and its aftermath. However, at times it can be a dry read, and its appeal might be limited to die-hard comic book industry junkies or researchers. Nevertheless, I’m glad this book exists.

            The DC Implosion occurred during the summer of 1978. At the time, DC was planning a massive increase of its comic book line, billed as the DC Explosion, including increased issue sizes at an increased price. However, just as it was launching, DC was forced by Warner Bros., its parent company, to slash its lineup of comics being released by at least 40% and trim its staff. As news of the cuts spread, it gained the name the DC Implosion. 

The book compiles quotes from numerous industry journals, such as The Comics Journal, The Comics Reader, and MediaScene, of the major industry players involved in DC Comics at the time. You get article excerpts from Jeanette Kahn, publisher of DC Comics at the time, Paul Levitz, then DC Comics editorial coordinater, Mike Gold, then DC Comics public relations representative, and many others. There are also recollections pulled from articles, blogs, and biographies years later. It is an impressive piece of research and compilation to put all of these disparate quotes into a readable, valuable book. My only quibble is that it’s billed as an oral history, and from my spot check of the index, there only appeared to be 6 or 7 actual email interviews conducted, and most of them were with current industry insiders who were merely fans at the time of the Implosion. So, I don’t know if this book actually qualifies as an “oral history.”

            Particularly interesting to me were the snippets about contract negotiations, personnel moves, and creator-ownership of characters. The years leading up to the DC Implosion were when the creator-rights movement began to gain steam. Changes in the copyright law, the financial straits of Siegel & Shuster leading up to the release of Superman: The Movie, and the short-lived attempt to form a Comics Creators Guild, all contributed to the creator-rights movement gaining steam in the lead-up to the Implosion. In its aftermath, some comic books that would have been published and owned by DC ended up being published elsewhere and owned by the creators, such as Bucky O’Hare. There are also some interesting snippets about contract disputes with some of the creators, and the rights-clearance process for the Superman vs. Muhammad Ali cover.

The story behind the two Cancelled Comics Cavalcade books was also particularly interesting. The quickly produced books, consisting of only 40 copies, were made from the comics cancelled during the Implosion. It was apparently done to preserve the copyrights to these works, which is somewhat questionable reasoning. The books were primarily distributed to those involved in creating the cancelled works with a few held in the DC archives and some sent to the copyright office. 

            Another interesting piece from the book is its look at the causes leading up to the Implosion, including the massive winter blizzard that impacted sales in early ’78, and the issues with the diminishing returns of newsstand distribution. It concludes by looking at how the Implosion impacted the industry, not only in the short-term, but in the long-term evolution of how publishers did business in its aftermath. It partially attributes the rise of mini-series and the direct market as outcomes of the Implosion.

            Overall, Comic Book Implosion: An Oral History of DC Comics Circa 1978 is a fascinating, well-researched book. For those wanting to learn more about the business of comics, it is an essential read.

Who owns your media rights?

           Over the past few weeks, Lion Forge and Oni Press merged, Dark Horse signed a first-look deal with Netflix, and Atlas Comics, a defunct publisher, sold its library of characters to a production company. The primary driver for all of these moves is to develop comic books, and the characters and stories they contain, into movies or television shows.

Optioning comic book rights to producers is currently where relatively easy money can be found for publishers. Often, publishers are operating on small margins, and the money they can make from these types of deals gives them some breathing room and some profit. Hopefully, it also puts a nice amount of money into the creator’s pockets as well.

            To me, these news stories are a great reminder that creators need to be aware of what they are giving to the publisher when signing a contract. My thoughts on the matter have been documented before, but it’s worth revisiting. To me, when you sign a deal with a publisher, you should only be giving them the right to publish your comic. If they want to do other deals with you, such as shopping your rights to Hollywood, then I believe it should be a separate deal, and it shouldn’t be tied to your publishing agreement.

Your media rights have value. Ideally, you should be getting paid for the privilege of shopping your media rights. If you are not being offered money for the ability to shop your media rights, then you need to ask what value, if any, the publisher adds by merely having the ability to shop your media rights. Do they add more value as an intermediary than doing it yourself or aligning yourself with an agent? Many of these publishers feel like they are entitled to your media rights as part of the publishing deal. After all, they published your book, shouldn’t they get a cut? Maybe. It depends on what the publisher brings to the table. Do they have connections that will benefit you? Have they had many properties optioned in the past? Are they aggressively shopping your project, or just hoarding the rights and hoping to take a cut if someone waving money comes along? Unfortunately, I’ve seen far too many publishers fall into that last category.

            If you have a publisher interested in obtaining your media rights, then – at a minimum – you should (i) be certain you understand how much, if anything, you’ll get paid, (ii) how long the publisher has the ability to shop your media rights and whether they revert to you, and (iii) whether you have approval over the final deal.

            The trend of publishers asking for media rights is on the rise, particularly among newer publishers, and it doesn’t look like it will abate anytime soon. By asking the above questions and understanding what you are agreeing to, you will be in a better position to evaluate the deal. Unfortunately for many newer creators, after evaluating the above, you may come to the conclusion that you’re better off not agreeing to the deal. This is a lament I’ve heard from numerous veteran creators who agreed to unfavorable deals early in their careers and lost control of their work. Sometimes saying no to a deal is the best thing you can do.  

Do Dr. Seuss and Fair Use (Comic)Mix? - Part 2

            I mentioned the Dr. Seuss Enterprises, L.P. v ComicMix, LLC case in two previous blog posts (here and here). Recently, the court District Court for the Southern District of California issued a summary judgment in the case. In its  ruling, the court found that the ComicMix book, Oh, the Places You’ll Boldly Go!, was entitled to a fair use finding and dismissed the case.

            By way of background, ComicMix launched a Kickstarter campaign in 2016 to fund a mash-up book in the style of Dr. Seuss’ Oh, the Places You’ll Go, but instead using characters from Star Trek: The Original Series. The Kickstarter campaign raised almost $30,000, and ComicMix had discussions with publishers and retailers about distributing the book. ComicMix did not seek to license from either the Seuss Enterprises or CBS/Paramount, the owners of Star Trek, because they believed their work to be a parody and hence constituted fair use under copyright law. After some back-and-forth correspondence between Seuss Enterprises and ComicMix, Seuss Enterprises filed a copyright and trademark infringement lawsuit in November 2016.

            During the next two years, the case wound its way through the litigation process. Early on, the court found the work to not be a parody, but did believe it was transformative. However, it declined to rule on the issue. Meanwhile, ComicMix was able to get the trademark claims related to the title dismissed.

            In the most recent summary judgment ruling that addressed the remaining claims, the court again revisited ComicMix’s fair use defense. After weighing all of the fair use factors,[1] the court found that the balance was close, but slightly favored ComicMix. Working in ComicMix’s favor was that even though the work was commercial, the court found it to be transformative. The court also found ComicMix’s book did not take more material than was necessary for the creation of its book, and Seuss Enterprises could not prove there would be market harm to its works, or its licensing programs, if ComicMix’s book were to be released. The court also ruled that Dr. Seuss’ illustration style was not a protectable trademark right, and that the typeface used in the title of the work is also not a protectable trademark.

            A few notes of caution for readers. First, this case is not yet over. Seuss Enterprises could appeal the decision to an appellate court, and the outcome could be different. Personally, I think the court has it right in this scenario, but one can never be certain. Second, this decision only applies to the Dr. Seuss elements incorporated into ComicMix’s book. If CBS/Paramount were to sue over the Star Trek elements used in the book, the analysis of the fair use factors could turn out differently. Finally, as I’ve said before, fair use is a defense to copyright infringement, and it is performed on a case-by-case basis. If someone thinks you are infringing on their work, they will probably sue you, and a court will decide if it’s a fair use. If that happens, it will take a significant amount of time and money to settle the issue, as evidenced by ComicMix’s appeal for help funding this litigation that I talked about last year.

            Overall, it is a good win for ComicMix, and it helps shed some light on how courts view mash-up works in relationship to fair use. However, this does not mean that all mash-up works are automatically entitled to fair use, and anyone creating them should proceed with caution.

The court option can be found here. 

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[1]“(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

  (2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.” 17 U.S.C. Sec. 107.

The Umbrella Academy and Abandoned Trademarks

            I was watching an episode of Netflix’s The Umbrella Academy when a familiar name appeared on a store sign: Gimbel Brothers Department Store. For those unaware, Gimbel Brothers, and its shorter version Gimbels, was a popular department store chain decades ago. Personally, I’m intrigued by Gimbels for a few reasons. First, it traces a substantial part of its origins back to Milwaukee, where I currently reside. Second, it expanded into a large national chain, and even acquired other retailers that still operate today. And, third, it shut down operations in 1986.

            I’d like to discuss that third point today. One of the defining characteristics of trademark law is that you must continually use the trademark in commerce. If you continue to use the trademark in commerce, then your trademark is protected. However, if you cease using the trademark in commerce, then it can be considered abandoned and anyone can use it. Under the federal trademark law, aka the Lanham Act, a trademark is presumed abandoned after three years of non-use or if the trademark owner discontinues use of the trademark with an intent not to resume use.

            I find it fascinating that Gimbels, a trademark abandoned in 1986, or thereabouts, continues to live on in popular media. Because of the store’s former fame, the Gimbels name resonates with consumers and provides an air of realism to the media it appears in. While Gimbels did appear in some popular media before its closure, notably Miracle on 34^th Street, since closure the store has been featured or referenced in the film Elf, as well as the television shows Happy!, The Goldbergs, Once Upon a Time, The Simpsons,[1] and, now, The Umbrella Academy.

            Once a trademark has been abandoned, others are free to use it or register it as a trademark. Theoretically, the appeal of using the Gimbels or Gimbel Brothers name is because the store is no longer operating, and people using its name in media wouldn’t need to worry about infringing on its trademark or damaging its goodwill.

            However, it turns out there is still a store bearing the Gimbels name. It is a small shop based in Maine, called Gimbel & Sons, and it was once sued by the Gimbels department store for trademark infringement.[2] The lawsuit was dismissed, and the Maine store was allowed to continue using its name provided it attached a sign stating it was not affiliated with the bigger department store chain. After Gimbels went out of business, the Maine store acquired the federal trademark registration for Gimbles Department Stores and has licensed it out to Hollywood, reportedly receiving $5,000 for its use in Elf and also licensing it for use in The Goldbergs.[3] I have not been able to determine if The Umbrella Academy licensed the name or attempted to skirt the issue by using the full Gimbel Brothers Department Store name on store signage.

            It’s yet another reminder that if you are seeking to register a trademark or claim trademark protection for your book, brand, or goods, continued use of the trademark is a must, and if you are thinking about using an abandoned trademark, it’s worth your time to make sure it’s actually abandoned. 

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[1] https://en.wikipedia.org/wiki/Gimbels

[2] https://www.upi.com/Archives/1982/02/22/Giant-conglomerate-sues-country-store-for-trademark-infringement/6222383202000/

[3] https://www.boothbayregister.com/article/sometimes-little-guy-wins/19284; see also https://www.nytimes.com/2006/02/19/nyregion/thecity/only-the-store-is-gone.html