The Second Circuit Court of Appeals in New York overturned a summary judgment order, finding material disputes as to Marvel’s claim of copyright ownership of the Ghost Rider superhero. Gary Friedrich Enterprises, LLC, and Gary Friedrich v. Marvel Characters, Inc., et al., Case No.: 12-893-cv (2d Cir. June 11, 2013) (available here). Friedrich sued Marvel for copyright infringement, alleging that he was the creator of the comic book character Ghost Rider. The lower court dismissed his complaint and awarded damages to Marvel on its counterclaim for copyright infringement. The lower court held that Friedrich had assigned any rights he retained in the renewal term of the 1972 Ghost Rider copyrights to the predecessor of Marvel in a 1978 work-for-hire contract. On appeal, the Second Circuit vacated and remanded the case, finding ambiguity in the contract and genuine disputes of material fact.
In 1972, Marvel published the first comic book featuring the Ghost Rider, a superhero with a flaming skull for a head. Friedrich alleged that he conceived the Ghost Rider character, the related characters, and the origin story, and that he owns the renewal rights. Marvel acknowledged that Friedrich did offer his ideas, but argued that the Ghost Rider characters and story were the result of a collaborative effort with Marvel personnel and resources, and therefore Marvel owned the renewal rights. The lower court granted summary judgment in favor of Marvel on the ownership issue, finding that Friedrich had assigned all of his renewal rights to Marvel under a 1978 work-for-hire-contract.
According to Friedrich, the Ghost Rider comic evolved over the years and he presented the written synopsis of the origin story to the then-publisher of Marvel comics. Marvel agreed to publish the story in its series dedicated to testing out new superheroes in exchange for Friedrich assigning over his rights to the Ghost Rider characters. There was no discussion of renewal rights and there was no written contract. Friedrich alleged that he supervised the entire production of the comic book. The final product was published in 1972, with a copyright notice for Marvel, and stating that it was conceived and written by Friedrich. At the same time, Marvel advertised Ghost Rider in another comic book, and the advertisement acknowledged that Friedrich had “dreamed the whole thing up.” Ghost Rider was a success and Friedrich wrote several stories for the comics on a freelance basis until 1978.
Under the 1976 Copyright Act, a work created outside the scope of employment was a work-for-hire only if the parties had an express written agreement to that effect. 17 U.S.C. § 101. Therefore, in 1978 (when the 1976 Copyright Act took effect), Marvel required Friedrich to sign a work-for-hire agreement (“the Agreement”). Friedrich was told that the Agreement only covered future works. Friedrich received nothing for signing the Agreement, and after signing it was never approached by Marvel for additional freelance work. The initial copyright term for Ghost Rider expired at the end of 2000. In 2001, the renewal copyright term would have vested in Friedrich as the original author of Ghost Rider in accordance with the Copyright Act. However, Marvel exploited the Ghost Rider character after 2000 by publishing reprints of the first comic, creating new issues of the comic series, selling Ghost Rider toys, placing Ghost Rider cameos in video games, releasing a Ghost Rider movie, and a Ghost Rider video game. Friedrich notified Sony Pictures, the producer of the Ghost Rider movie, of his rights. Marvel notified Friedrich that Ghost Rider was a work-for-hire but sent him royalty checks for the republication of the original comic. In 2007, Friedrich filed for and received a Renewal Copyright Registration to the original comic and Ghost Rider, and assigned the rights to his company, Plaintiff Gary Friedrich Enterprises, LLC.
On appeal, Friedrich argued that the Agreement did not include the renewal rights of the 1972 Ghost Rider. The renewal term of a copyright is “not merely an extension of the original copyright term but a ‘new estate . . . clear of all rights, interests or licenses granted under the original copyright.'” P.C. Films Corp. v. MGM/UA Home Video Inc., 138 F.3d 453, 456-57 (2d Cir. 1998) (quoting G. Ricordi & Co. v. Paramount Pictures, Inc., 189 F.2d 469, 471 (2d Cir. 1951)). Thus, while an author can assign his renewal rights during the initial copyright term, there is a strong presumption against this conveyance unless there is an express assignment of the renewal rights.
The Second Circuit thus had to determine the intent of Friedrich and Marvel when Friedrich signed the Agreement. The Second Circuit looked at the language of the Agreement and found the Agreement to be ambiguous. For instance, the language of the Agreement was murky as to (a) whether the Agreement covered works already created, or only future Ghost Rider works; and (b) whether renewal rights were conveyed because there was no explicit reference to such rights. As a result, the Second Circuit found that the Agreement did not overcome the strong presumption against the conveyance of renewal rights.
Next, the Second Circuit looked at extrinsic evidence to determine the intent of Marvel and Friedrich. (1) The Agreement was a standard work-for-hire contract that Marvel sent to all of its freelance artists in 1978. (2) Friedrich signed the Agreement believing that it would only cover future freelance work and was not paid for signing the agreement. (3) The Second Circuit noted that Marvel could not make Ghost Rider a work-for-hire after it had already been created.
“Given that context, it is doubtful the parties intended to convey rights in the valuable Ghost Rider copyright without explicitly referencing it.” Friedrich, Slip Op. P. 30. Therefore, there was a genuine issue of fact. Summary judgment was improper.
Marvel also argued that Friedrich’s claim was barred by the Copyright Act’s three-year statute of limitations. The statute of limitations begins running when a reasonably diligent plaintiff would have notice of the existence of a right to sue. Friedrich filed his lawsuit against Marvel on April 4, 2007, meaning that Marvel would have had to repudiate Friedrich’s claim of ownership of the renewal rights before April 4, 2004. However, there were genuine factual disputes as to whether Marvel repudiated Friedrich’s claim of ownership. First, Marvel repeatedly and publicly recognized that Friedrich created the work. Second, Marvel did not register a copyright for the original comic or for Ghost Rider until after Friedrich filed this action. Third, there was also a dispute as to whether Marvel privately repudiated Friedrich’s claim in its communications with Friedrich before April 4, 2004. Fourth, the only evidence that Marvel intended for Ghost Rider to be a work-for-hire was in Marvel’s letter dated April 16, 2004 to Friedrich. Fifth, “there is a genuine dispute as to whether Marvel’s exploitation of the Ghost Rider copyright during the renewal term, without paying royalties, implicitly repudiated Friedrich’s claim to ownership.” Friedrich, Slip Op. P. 38. Sixth, the Second Circuit noted that Marvel’s use of Ghost Rider was intermittent, and several of its uses occurred before the renewal term started. Seventh, Marvel paid Friedrich royalties for the republication of the original comic, suggesting a possibility that Friedrich could have received royalties for the Ghost Rider movie.
Friedrich cross-appealed the lower court’s decision denying his claim of authorship. First, the Second Circuit noted that the Copyright Act only protects expression, not ideas. Second, even though the 1976 Copyright Act requires an express agreement that a work is a work-for-hire, Ghost Rider was created before 1978 (before the 1976 Copyright Act took effect) and therefore is governed by the 1909 Copyright Act. The 1909 Copyright Act did not require an express agreement for a work to be work-for-hire. The Second Circuit found material disputes as to the creation of Ghost Rider. The Second Circuit construed the facts in Marvel’s favor, because Friedrich was the party seeking review on appeal, and found that under Marvel’s fact pattern Friedrich had nothing more than an uncopyrightable idea for a motorcycle-riding superhero.
The Second Circuit vacated the lower court’s summary judgment in favor of Marvel because of the ambiguous Agreement, the genuine dispute of material facts regarding the parties’ intent to assign the renewal rights, the timeliness of Friedrich’s claim, and the authorship of Ghost Rider. The case was remanded back to the trial court to determine who owns the Ghost Rider and its multi-media royalty stream.