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Warner Bros. wins key ruling in Superman fight

Judge sez heirs of co-creator Joseph Shuster can't reclaim copyrights

A federal judge has handed Warner Bros. a significant victory in its efforts to prevent the heirs of Superman co-creator Joseph Shuster from reclaiming rights to the Man of Steel.

In a decision issued Wednesday, U.S. District Judge Otis Wright asserted that a 1992 pact prevents the family from exercising a portion of copyright law that allows authors to recapture their works.

The ruling means that, at least for the time being, Warner Bros. and subsidiary DC Comics won’t have to seek permission from the estates of the co-creators of Superman as the studio pursues future projects.

In his summary judgment ruling, Wright wrote that the effort by Shuster’s sister Jean Peavy and her son, Mark Warren Peary, to exercise a so-called termination right was superseded by a 1992 pact made shortly after Shuster’s death. In that deal, Peavy and her brother Frank signed a deal with DC Comics to cover Joseph Shuster’s debts and pay Jean Peavy $25,000 a year for the rest of her life. Wright noted in his opinion that DC’s then-executive vice president Paul Levitz admonished them that by taking the agreement, they “would fully resolve any past, present or future claims against DC.”

Wright wrote that the 1992 agreement “unmistakably operates to supersede all prior grants” and that Peavy and her brother Frank “were aware of the Copyright Act’s termination rights when they bargained for and entered into the 1992 agreement.”

“By taking advantage of this opportunity, she exhausted the single opportunity provided by statute to the Shuster heirs to revisit the terms of Shuster’s original grants of his copyrights,” Wright wrote.

Wright noted that when he was alive, Shuster never terminated his copyright, and the “heirs essentially struck a deal that binds all other heirs.” He noted that the Copyright Act provides only for a termination of a copyright grant made before Jan. 1, 1978, and the 1992 agreement superseded it. Jean Peavy’s son, Mark Peary, as executor of the estate, served a termination notice on DC in 2003 for the early Superman works from the late 1930s.

The story of how Shuster and Superman co-creator Jerome Siegel sold their creation to a predecessor to DC Comics in 1938 for $130 is legendary. As the Man of Steel franchise went on to reap millions and then billions, they wrangled at several points in their lives to recapture the franchise.

A revision of copyright law in 1976 gave authors the ability to recapture their works, under a complex series of conditions, and the legal wrangle over Superman has been among the highest-profile and hardest-fought recent cases involving termination rights.

The stakes are huge for Warner Bros. and DC given plans for the release next year of the “Man of Steel” feature reboot and the potential loss of rights in October 2013 if the Shuster heirs prevail.

The studio and its attorney, Dan Petrocelli, declined to comment.

Represented by Marc Toberoff, the heirs to Siegel won court victories in 2008 and 2009 to reclaim the early Superman works. Without the Shuster portion of the copyright, the Siegel heirs do not exercise control over the franchise but are still entitled to a share of the returns from Superman. The calculations that will determine the Siegel heir shares remain to be determined as their portion of the case has been appealed to the Ninth Circuit. Oral arguments are scheduled for Nov. 5.

An appeal of the Shuster decision is likely. Toberoff, who is also representing the Shuster heirs, said in a statement: “The order for the most part is the tentative order issued over six weeks ago. We respectfully disagree with its factual and legal conclusions, and it is surprising given that the judge appeared to emphatically agree with our position at the summary judgment hearing.”

Wright had issued a tentative ruling in Warner Bros.’ favor but held a hearing in early September before issuing his latest opinion.

In a brief filed earlier this month, Toberoff challenged the notion that the one-page 1992 agreement essentially represented a revocation and regrant — given that DC already owned the rights to the Man of Steel. He wrote that the studio’s argument was that “in 1992, for unknown reasons, DC decided, in raising a small pension (to Peavy and her brother), to tear up its venerated pre-1978 Superman grants and replace them with an ‘ephemeral’ one-paragraph quitclaim. It further asks this Court to believe that this boilerplate silently worked to (i) revoke all of Shuster’s copyright grants, (ii) give those copyrights to his siblings and (iii) regrant those copyrights back to DC.”

In the brief, Toberoff noted that during the September hearing Wright had called the studio’s argument “lunacy.”

Toberoff further argued that Peavy and her brother Frank could not have bargained away the termination right because at the time it could only have passed to a spouse, child and grandchild, and only years later was the Copyright Act amended to allow additional heirs to reclaim copyrights.

But in his ultimate opinion, Wright noted that Peavy asked for bonuses from DC in the years since the 1992 agreement. But he wrote that even after the Siegel heirs moved to terminate their copyright grants, Peavy “reiterated her commitment to ‘honor’ ” the 1992 pact.

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