Under the Copyright Act, authors of copyrighted works may terminate prior transfers of their copyrights to third parties, regardless of any conflicting contract terms, after 35 years have passed. Derivative works are excluded from the scope of the termination right. And, under the so-called work-for-hire doctrine, an employee who creates a work within the scope of his employment or as a specially commissioned independent contractor cannot exercise his right to terminate the transfer. In a work-for-hire arrangement, the employer is deemed to be the “author” for purposes of copyright ownership even though the work for hire person actually did the writing or illustrating. Thus, the ability of authors to terminate the transfer turns on whether he worked as a hired hand or produced the material on his own and then sold it to a publisher. The Supreme Court, in Community for Creative Non-Violence (CCNV) v. Reid, listed 11 factors in determining whether someone is an independent contractor or an employee.
The Work-For-Hire Doctrine in Action
A little over a month ago, the Walt Disney Company filed several lawsuits seeking to invalidate copyright termination notices sent by a former writer and the estates of several former artists involved with creating ubiquitous superheroes such as Spider-Man and Iron Man. Marvel’s position is that they were paid a per-page rate for their work and that Marvel had the right to exercise creative control of the characters, therefore rendering the writer and artists’ contributions works for hire.
In 2010, this exact issue was litigated over creations of famed comic book artist/writer, Jack Kirby. His heirs sought to terminate the copyright transfers and obtain the rights to several of Marvel’s iconic characters. Kirby’s heirs lost at the trial court and lost their appeal as well. The court held that the works were created at Marvel’s instance and expense, and the heirs did not produce evidence to the contrary. Though Kirby was a freelancer for Marvel, his work was done primarily at the insistence of Marvel or in reliance on Kirby’s relationship with Marvel, and Marvel had the right to reject Kirby’s work or make him redo it.
In 2014, Jack Kirby’s heirs announced a settlement with Marvel two days before the Supreme Court was to decide whether or not to hear the case. The details of the settlement are confidential. Many creators were disappointed that the Supreme Court was not able clarify allegedly inaccurate lower court rulings on the work-for-hire doctrine and the enforcement of termination rights. The lawsuits filed by Disney bring these issues back into the limelight.
Independent contractor agreements are more prevalent than ever in a labor market increasingly comprised of short-term employment, i.e., the gig economy. The percentage of freelance workers is expected to increase from 35-40% to about 50% the U.S. population within the next decade. In recent years, commentators have argued that the treatment of work-for-hire cases under the current legal framework exacerbates existing inequities, fails to address an evolving economy, and extends benefits of the copyright termination right beyond the lives of its intended beneficiaries. It will be interesting to see how the Marvel litigation plays out—if the case goes to trial, litigation and appeals could drag on for years. If the case isn’t settled, a judicial decision could have wide-reaching effects across the areas of IP and employment law.