Larson v. Warner Bros. Entertainment, Inc.

Ninth Circuit affirms district court’s decision that 2001 letter operated as agreement by heirs of Superman co-creator to transfer to DC Comics rights in Superman, Superboy and Superman advertisements.

This appeal arises from a long line of litigation stemming from the 1938 transfer of the Superman copyright from Jerome Siegel, co-creator of Superman, to DC Comics. In 2013, the Ninth Circuit held that an October 19, 2001, letter from the attorney for Siegel’s heirs to the attorney for DC constituted a binding settlement agreement that potentially resolved all questions in the dispute. (Read our summary of the Ninth Circuit’s decision here.) On remand the district court rejected the argument of the heirs that the agreement had been rescinded or breached. (Read our summary of the district court’s March 20, 2013, decision here.) After additional briefing, the district court also found that the 2001 letter included the rights in Superboy and early Superman advertisements. (Read our summary of the district court’s April 13, 2013, decision here.) Laura Larson, the successor in interest to original plaintiff Joanne Siegel, Jerome Siegel’s wife, appealed.

First, Larson argued that the 2001 letter did not constitute a present assignment of rights and was conditioned on a future signing of a formal contractual agreement. However, the court noted that since it found in the first appeal that the letter finalized the material terms of the contract to which the parties had agreed, the district court did not err in ruling that the 2001 letter constituted a present assignment of rights.

Larson next argued that even if the 2001 letter were an agreement transferring rights to Superman, it could not have transferred the copyrights to Superboy and early Superman promotions because, when the letter was written, the heirs had not yet terminated DC’s rights to Superboy and the Superman promotions. The court disagreed. It noted that in a previous decision, it had rejected the argument that Congress intended to preclude parties from alienating their statutory termination rights by contract. In Milne ex rel. Coyne v. Stephen Slesinger, Inc., the Ninth Circuit found that neither § 304 (c)(5) nor § 304 (c)(6)(D) of the Copyright Act invalidated an heir’s regrant of copyrights by contract in lieu of statutory termination because the heir had done exactly what Congress intended: using “increased bargaining power confirmed by the imminent threat of statutory termination to enter into new, more advantageous grants.” The same reasoning applied in the case before it. Despite the fact that the 1999 attempt by the heirs to terminate the grant of rights to DC had been ineffective, the heirs believed that they had recaptured the rights and were bargaining from a position of perceived increased bargaining power when they negotiated the settlement with DC. The court also rejected Larson’s argument that she had recaptured the rights through notices of termination in 2002 and 2012, reasoning that because the 2001 agreement replaced and superseded the earlier grants of the Superboy and ad copyrights, Larson’s attempts to recapture these copyrights through her 2002 and 2012 notices were ineffective.

The court also found that Larson had waived the argument that Larson’s mother, Joanne Siegel, had rescinded the 2001 contractual settlement agreement in subsequent letters and that DC had acquiesced in the rescission because Larson had only raised the argument for the first time on remand. The court concluded that allowing Larson to raise these arguments at this point in the litigation would substantially prejudice DC.

Finally, the court refused to revisit the district court judge’s ruling that the Superman works were not made for hire, finding no error in the judge’s finding that those works were not made at DC’s “instance and expense.”