By Jeff Trexler
In the book of Genesis, Esau sells his birthright to his younger brother Jacob for some lentil soup.
Yesterday, a judge ruled that Joe Shuster’s sister sold the family’s claim on the Superman copyright for a meager pension.
Superman may be a modern myth, but that’s not always a good thing.
When I read that the district court had ruled in favor of DC Comics in regard to the Shuster termination claim, my immediate response was well, of course.
And then I got angry, but not for the reason you might think.
The Termination of the Shuster Termination Rights
In 1992, Joe Shuster’s sister signed an agreement waiving all future claims in exchange for a $25,000 a year pension and DC’s covering Joe’s outstanding debts. At the time she thought she had struck a fantastic bargain, and she repeatedly told DC that she was not going to try to reclaim Shuster’s half of the Superman copyright.
As I indicated in previous posts, this posed a real threat to both the termination claim filed by Shuster’s nephew, Mark Peary, as well as the Siegel victory. If–as seemed quite possible–the court ruled against the Shuster termination, DC would own half of Superman outright, leaving the Siegel family with far less leverage to get the company to be more generous.
The case seemed pretty strong in DC’s favor, but still, there was a shot it could go in the other direction. As we’ve seen in the landmark Siegel case sometimes a court can find creative ways to reach what it deems be a more equitable result. Indeed, Judge Otis Wright had made some comments in a recent hearing that could have been interpreted as a sign that he was going to be as creative with the Shuster claim as the previous judge had been with Siegels.
Not this time.
The problem was that the Shuster claim was not the first of its kind. Other families have tried to get out similar bargains–most famously, the heirs of A.A. Milne and John Steinbeck–but the precedent established in these cases worked against the Shuster claim. As Judge Wright observed yesterday, courts have not interpreted copyright law to allow families to reclaim termination rights after using them as a bargaining chip in a deal. Like Esau, Joe Shuster’s sister had traded long-term rights for short-term gain, thereby cutting her child out of a far greater inheritance.
The Hollow Victory of Superman’s Lawyer
Why didn’t the judge take a flyer and try to find a clever way to help Mark Peary? Perhaps it truly was the force of the law, but the ruling also indicates that the actions of attorney Marc Toberoff did not make Peary’s claim seem just.
To see why, we need to look at a part of the case that most news reports have ignored–namely, the judge’s other finding that went against DC Comics.
Besides relying on the 1992 agreement, DC Comics had argued in the alternative that Peary’s termination claim was invalid because Peary had transferred his share of the Superman copyright to Marc Toberoff’s production company, Pacific Pictures. Given that the judge had already found the claim invalid because of the 1992 agreement, this issue was technically moot and the judge really didn’t need to decide it.
But decide it he did. Judge Wright wryly noted that Peary hadn’t relinquished his share–Toberoff himself conceded that Peary never actually sold his rights because the sale itself was illegal. Copyright law does not allow the prospective sale of rights to be granted by termination prior to the filing of a termination notice. Since the transaction between Peary and Toberoff took place before such a filing, it was null and void.
Judge Wright agreed with Toberoff on this point, but the ruling makes clear that this is not a victory for the defense. Peary and Toberoff willfully entered into an illegal contract, one that Toberoff, as a copyright lawyer, should have known was illegal and void. Peary then failed to disclose pertinent details affecting the Superman copyright to the Copyright Office. The judge went on to note that while it is a general principle of law that defendants can’t rely on the illegality of their actions to get out of a contract, in this case ratifying the agreement between Toberoff and Peary would constitute a fundamental violation of the copyright statute.
In short, in Judge Wright’s eyes Peary and Toberoff were not the good guys here. He not so subtly portrayed them as bad faith lawbreakers trying to take what they do not deserve.
Last week we saw a public letter by Laura Siegel praising her noble attorney Marc Toberoff as he fought the good fight against DC. Assuming she wrote that letter and conducted the PR campaign by herself (cough cough), I have to say Judge Wright’s latest decision only underscores the need to think seriously about what the Siegel family could lose.
The 2008 victory was historic, but it was not a slam dunk. It could have easily gone the other way with far less legal stretching, and it is still possible that the Ninth Circuit Court of Appeals could reverse or vacate it. The effect would arguably be even more devastating than if the Siegels had never won at all.
Even if they win, it’s not clear how much the Siegel family will actually gain–there is still a rigorous allocation process to go through, with a substantive chance for a finding that the Siegel share of the current property is far less that 50 percent. A successful termination by the Shuster estate could have provided leverage to get DC to strike a better a deal, but that’s gone–and the odds are in DC’s favor that it will not be reversed.
What should the Siegel side do next? They could fight to the bitter end, but they need to ask what they’re fighting for–Jerry Siegel’s legacy or Marc Toberoff’s?
Perhaps it’s time to pursue two settlements.
The Shuster ruling, coupled with the material provided in DC’s ongoing action against Toberoff and Pacific Pictures, gives the Siegel family ammunition in pursuing a settlement (under threat of a lawsuit) that could reduce if not eliminate Toberoff’s financial interest in their claim.
They could then pursue a settlement with DC under the previously agreed upon terms. The earlier settlement offered by DC wasn’t perfect–indeed, if you read it with an eye to legalese & corporate accounting you’ll see it wasn’t all that great in terms of the overall value of the Superman property. However, it was exponentially better than the 1976 stipend and what Joe Shuster’s sister got in 1992, and it gave the Siegel family a multimillion dollar payout with no risk, no turmoil and little money going to lawyers.