Since the Quicksilver��character came into being in the��Uncanny X-Men��comics, but became a member of��The Avengers��in 1965, each upcoming summer sequel (X-men��produced by 20th Century Fox and��Avengers��produced by Marvel Studios) will feature a different actor playing dissimilar versions of Quicksilver on the silver screen with likely disparate back stories and characterizations.

Researching the Marvel Cinematic Universe reveals an interesting occurrence – commonly called����– which pertains to trade-mark, copyright and licensing issues surrounding Marvel Studios’ creative assets and intellectual property. This ��in��a 1993��licence agreement��is the source of the division of various intellectual properties between Marvel and Fox.

Twentieth Century Fox Film Corp v Marvel: A��Rip-Off Use of Fox’s Mutants by Marvel?

Between the late 1970s and the early 90s, Marvel��licensed-out the names and likenesses of��many of��its superheroes.��This trade-mark strategy enabled Marvel to distribute its comic-book characters across multiple media formats – including film, television, and video games. One of these licensees was Twentieth Century Fox Film Corp (Fox), which acquired certain rights from Marvel in the X-Men comic book series such that they could produce theatrical motion pictures. Fox painstakingly developed its��X-Men��film franchise, finally releasing the first live-action installment in 2000. It was an instant success, both critically and financially, but led to litigation primarily centered on the following key contractual clauses of the 1993��between Fox and Marvel:

“The ‘X-Men’ comic book series, referred to in the [1993] Agreement as the ‘Property’, includes the X-Men Characters, specifically the ‘core’ Characters and the Characters of the ‘X-Universe’; their origin stories; storylines from individual comic books; and ‘all other elements relating to the Property and the Characters’. The rights granted to Fox included ‘the right to use the title (or subtitle or portion of the title) of the Property or any component of the Property as the title of any Picture or related exploitation’. The Agreement reserved all television rights to Marvel, subject to a proviso, critical to Fox’s pending contract claim, that Marvel would not ‘produce, distribute or exploit or authorize the production, distribution or exploitation of any live-action motion picture’ without Fox’s consent (the ‘Freeze’)”.

This provision proved problematic mostly because Marvel then made a��Mutant X��live-action television series and released it one year later in 2001. Fox complained of infringement of its exclusive rights to develop��X-Men,��and essentially claimed that��these “hour-long episodes of movies made for TV” were so substantially similar that “Mutant X [became] a��” of the X-men film. However, Fox’s efforts proved unfruitful – both at the and levels – which ultimately allowed��Mutant X��to go forward until 2004.��At this point,��the parties ��signed a��confidential��settlement��agreement to resolve the dispute. Nonetheless, a key contractual term can be inferred, largely based on subsequent developments in the following years such as the establishment of the mutant-less Marvel Cinematic Universe in 2006.

It is reasonable to presume that the agreement requires Marvel to abstain from using mutant characters in either film, or television. This is likely what has led to a bifurcation of the Quicksilver character into a mutant character in X-Men, and a non-mutant variety that will likely appear in The Avengers.

Can Marvel Studios Ever Get All Their IP Rights Back?

Now that Fox has the rights to X-Men mutants, it has been reported that they��are keen to��hold onto the source of��a lucrative revenue stream:

“Word on the street is Fox has made it very clear that they will not let go of any of the properties under their control for any live action medium. We’ve also been told that if it ever came to the point where they were going to lose any property they own because of failing to have a movie in production, they would simply produce a low budget, straight-to-DVD feature and stick it in any theater to fulfill their theatrical release clause…”.

The one avenue for Marvel to reacquire their IP rights, and what is alluded to in the quote above, is what is known as a theatrical release clause. This clause is included in Marvel’s contracts, and has been public knowledge since the��. In that dispute, it was revealed that the rights to��X-Men��would revert back to Marvel if Fox failed to film sequels by contractually-set control dates.

Over the years, the reversion of other character IP rights back to Marvel have shown this specific clause appears in most, if not all, of the company’s confidential licensing agreements. Furthermore, past experiences show this is also the primary means by which Marvel can claw back some of its desired film rights in the��future. For instance, after New Line Cinema spent several years unsuccessfully developing��Iron Man, the rights����back to Marvel in 2005 and the character’s use in his own film trilogy as well as��The Avengers��was thus made possible. Similarly, when Universal Studios failed to initiate principal photography of a��Hulk��sequel and make significant payments towards filming by a specified date in 2006, the rights also����back and made the Hulk available for use in��The Incredible Hulk,��The Avengers,��and at least five other films.

Other than the theatrical release clause, Marvel’s primary contractual protection in the case of licensed-out characters concerns its right to define the logistics of the licensee’s film production plans. In the 2002��X-Men��dispute, the following��was also revealed to exist which requires that Marvel must approve:

“(i) the “fundamental elements” of the story, namely the basic storyline, character integrity, living habitat, and conformity with the so-called “X-Men Handbook” written by Marvel; (ii) the screenplay, to the extent it substantially alters a fundamental element; (iii) costumes; (iv) the photography of scenes, to the extent it substantially alters a fundamental element; and (v) the content of director’s cuts, to the extent it substantially alters a fundamental element.”

However, even without these contractual provisions, it should be noted that Marvel is still financially protected to some extent by its trade-mark strategy should it ultimately be unable to regain control of its characters’ film rights in the future. Over the years, Marvel’s merchandising reach has been shown to have few limits, as it can include anything ranging from perfume to toys and luxury cars to clothing. Indeed, protecting the names and likenesses of its characters has allowed Marvel to significantly profit from film-related merchandise sales even when the film (produced by another studio) itself disappointed at the box office. This was the case with Ang Lee’s 2003 Hulk film where costumes and role-play toys like “Hulk Hands” became valued at $100 million.

Conclusion

So when you're checking out X-Men: Days of Future Past and Avengers: Age of Ultron and Quicksilver doesn't seem to look quite the same - don't worry! There's nothing wrong with your eyes or 3D glasses, it's simply uncanny intellectual property rights dealings at play. If you're seeing��double��in the coming years, don’t think your eyes have mutated, its only��strange licensing agreements that��have created parallel universes for our beloved characters.

Harjot Atwal is an IPilogue Editor and recent graduate of the JD program at Osgoode Hall Law School.

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Unfortunately for the estate of Toronto born Joe Shuster, it appears Superman’s kryptonite, at least in regards to termination rights under of the American , is subsequent agreements which have the effect of eliminating a termination right.

Superman’s journey from his 1930s birth to his modern inception is enough to fill a .�� Of relevance to Superman’s termination right is that Jerry Siegel and Joe Shuster were the co-creators of the character. The duo owned the copyright in the character Superman. In 1938, Siegel and Shuster licensed DC Comics the “exclusive right to the use of the [Superman] characters and story”. Once the copyright was assigned to DC Comics, Siegel and Shuster continued to work on Superman’s character development pursuant to a work-for-hire agreement. In 1992, Shuster passed away and his sister, Jean Peavy, was named sole beneficiary of his estate.

The above discussion brings us to our first copyright issue - a slight distinction of relevance to the case. At issue in DC Comics is the termination of copyright in the character ��granted under the 1938 agreement (similar to����from June 1938), since that is the work created and licensed by Siegel and Shuster. Any other derivative additions to the Superman character which has led to are owned by DC Comics under the work made for hire doctrine. Prior to the Copyright Act, 1976, it was generally understood that copyright would belong to the employer if the work was created at the employer’s “instance and expense”. Thus, Siegel and Shuster’s contribution post-licence, and any derivative additions to Superman, are not at issue in DC Comics since works created under work made for hire agreements cannot be terminated. What is at issue is the termination of the original Superman character’s copyright - not the totality of his modern appearance.

Under the Copyright Act, 1976, the United States Congress provides authors and their statutory successors with the opportunity to regain rights that were granted away via agreements and licences. This “second bite of the apple” allows authors and their heirs to regain their copyrights in order to re-bargain for beneficial agreements with licensees. For copyrighted works which were licensed prior to January 1, 1978, termination rights may be claimed at the end of the 56th or 75th year from the date copyright was originally secured.�� For the estate of Shuster, they are wishing to terminate the copyright in Superman after the end of the 75th year, in October of 2013.

In order to terminate under §304, notice must be filed within a five-year window and must meet the of the United States’ Copyright Office. Shuster’s estate does not encounter issues with meeting the time frame nor the requirements; the biggest stumbling block is a 1992 agreement between Shuster’s estate and DC Comics. ��In 1992, Shuster’s sister (and brother, Frank Shuster) signed an agreement with DC which stated DC would pay Peavy $25,000 per year for life as well as pay off Shuster’s debts in exchange to settle “all claims to any payments or other rights or remedies which [Peavy] may have under any other agreement or otherwise, whether now or hereafter existing regarding any copyrights […] in any and all work created in whole or in part by […] , Joseph Shuster, or any works based thereon.”

The 1992 agreement has surfaced as Superman’s (or at least Shuster’s estates) kryptonite. Despite the language of which states, “termination may be effected notwithstanding any agreement to the contrary”, American courts in the Ninth and Second circuit have interpreted §304(��)(5) otherwise. Courts have permitted subsequent agreements to revoke and replace the original agreement, thus eliminating the statutory termination right. Based on the American jurisprudence, the key for the subsequent agreement is that it must be substantially more beneficial to the authors or their heirs in order to eliminate the statutory termination right.

In , the Ninth Circuit held that a 1983 re-grant agreement, which superseded 1930 and 1961 licences of Winnie the Pooh, eliminated the statutory termination right. The 1983 agreement, which was described as an adjustment of royalties, increased the royalties of the heirs in question by 400% in exchange to not exercise their statutory termination right. The new grant, which was a more lucrative deal for the author’s heirs, was upheld by the Ninth Circuit as not being an “agreement to the contrary” under §304(��)(5). The Milnes were denied their statutory termination right since they “were able to obtain considerably more money as a result of the bargaining power wielded by the author’s son”.

Following suit, the Second Circuit court in discussed a 1994 agreement by Elaine Steinbeck which re-licensed her late-husband John Steinbeck’s copyrighted literary works. Several of John Steinbeck’s works were governed by a 1938 agreement with Penguin Group. In 1994, Elaine Steinbeck, the owner of John’s copyrights, entered into a “new agreement for continued publication” with Penguin. The agreement included prior licensed works and additional literary works and “changed the economic terms of the 1938 agreement, mostly to Elaine Steinbeck’s benefit…”. Under the 1994 agreement, Penguin was required to provide larger annual guaranteed advanced and royalties. The language of the 1994 agreement stated it would “cancel and supersede the previous agreements”.

The court in Steinbeck held the 1994 agreement eliminated Elaine Steinbeck’s statutory termination right. In reaching their conclusion, the court emphasized Elaine Steinbeck’s substantial benefits under the new agreement. Since Steinbeck had the ability in 1994 to renegotiate the terms of her previous agreement “to her benefit…”, the court found that “by taking advantage of this opportunity, she exhausted the single opportunity provided by statute to Steinbeck's statutory heirs to revisit the terms of her late husband's original grants of licences to his copyrights”.

Despite the above cases, illustrates subsequent agreements will not supersede previous agreements if the benefit to the authors or authors’ heirs is insubstantial. In Classic Media, various copyrights were assigned for Lassie by the defendant Mewborn (one of three heirs of the original author Eric Knight) in 1976 for $11,000. In March of 1978, another agreement was signed which granted nearly-identical copyrights in exchange for $3,000. The plaintiff-licensee objected to Mewborn’s notice of termination in 1996, and pointed to the 1978 subsequent agreement.�� Here, the Ninth Circuit distinguished Steinbeck and Milne and held that the 1978 agreement did not eliminate Mewborn’s termination rights since the 1978 agreement was only a transfer of ancillary rights for $3,000; it did not revoke and supersede the previous assignment of rights.

The above cases were cited in DC Comics, but U.S. District Court Judge Otis Wright did not mention whether or not the substantiality of the benefit obtained by the author or author’s heirs is relevant in subsequent agreements. As Eriq Gardner of The Hollywood Reporter , Judge Wright’s reasoning in DC Comics is likely to “trigger an appeal”. Whether or not the substantiality of the benefit received by Shuster’s heirs will be a major issue on appeal remains to be seen. It is clear that a spectrum exists between the benefits received in Milne/Steinbeck and Mewborn, and the $25,000 per year and additional debt clearing provided by DC Comics lays somewhere in the middle… perhaps, in my opinion, leaning a bit closer to Milne/Steinbeck's substantiality.

Adam Jacobs is a JD Candidate at Western University, Faculty of Law and is currently on exchange at Southwestern Law School in Los Angeles, California.

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Jack Kirby (1917-1994) is well-known to comic book fans as one of the most influential artists and authors in the history of the industry, particularly noted for his groundbreaking work with Marvel Comics during the 1960s. Kirby had a hand in the development of many of Marvel's most valuable properties, including the X-Men, The Fantastic Four, Iron Man, and many others. Recently, however, his estate has been making waves of a different sort. The estate, represented by Marc Toberoff, has launched the opening salvos in a battle to reclaim ownership of the characters developed by Kirby and now owned by Marvel by filing numerous notices of termination of copyright transfer.

The claims revolve around . This complicated mechanism was first introduced in the 1976 copyright overhaul in an effort to balance the interests of the authors of copyrighted works and the owners of those works. Prior to 1976 copyright in the US lasted for an initial period of 28 years with the possibility of renewing the copyright for a further 28 years, for a grand total of 56 years. The 1976 reforms introduced a copyright duration of the lifetime of the author plus 50 years, but for works authored before 1978 (when the new Act took effect), the 28 year renewal term was extended to 47 years, for a maximum of 75 – effectively, a 19 year extension.

From some authors' perspective, this posed a problem. It was argued that this was an unfair windfall for publishers who had received a transfer of copyright prior to the extension, since the original transfer would have been negotiated on the assumption of a 56 year protection period, not 75. Congress accepted this, and so created a mechanism by which the author (or heirs) could reclaim the copyrights for the balance of the extension once the original period would have expired. When copyright protection was extended yet again in 1998 (adding another 20 years for works published before 1978 for a new total of 95 years of protection), Congress included a similar termination process, leading to the current s. 304(c).

The most prominent use of these powers so far has concerned another comic-book superhero: Superman. Superman was created by Joe Shuster and Jerry Siegel in 1932 and sold to (what would become) DC Comics for $130 and vague promises of future work. The pair would come to rue the deal, and sued twice in an effort to reclaim ownership of the copyrights (first in 1947 and then in 1973), losing both times. In 1999 Siegel's estate filed a notice of termination of transfer, which has resulted in (in which the Siegel estate has been represented by Marc Toberoff). In 2004 the Schuster estate followed suit. The dust hasn't fully settled yet, but following the conclusion of a recent round in the courtroom looking into the accounting of the most recent Superman film, that “in 2013, the Siegels, along with the estate of Joe Shuster, will own the entire original copyright to Superman, and neither DC Comics nor Warner Bros. will be able to exploit any new Superman works without a license from the Siegels and Shusters."

There are important differences between the Siegel/Schuster and Kirby claims, however. There was no doubt about the authorship of Superman, or that he was created outside of any employment relationship. Works for hire, however, are explicitly excluded from s. 304(c), which will certainly lead to a close examination of Kirby's working relationship with Marvel. Crucially, there is also uncertainty regarding the authorship of many of the characters in question. Kirby collaborated with other artists and writers (most notably Stan Lee), and untangling who did what will prove challenging. The most controversial claim amongst comic fans is that for Spiderman, who has .

The notices filed by the Kirby estate are just the first step in the termination process. The estate won't be able to actually receive ownership of any characters until 2017 (when the original 56 year periods will start to run out). Until then, neither side need take any steps. What is clear is that big money is involved. Just a week before the notices were sent out, Disney announced that it was buying Marvel for $4 billion. The X-Men and Iron Man are two of the hottest contemporary movie franchises. With such high stakes, it seems certain that we are only at the beginning of what will be a long and hard-fought battle.

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