Last week, in Gary Friedrich Enters., LLC v. Marvel Enters., Inc., the Second Circuit reversed the lower court’s dismissal of a lawsuit brought by Gary Friedrich, who created the comic book super hero “Ghost Rider,” ruling that Friedrich could maintain his lawsuit against Marvel Enterprises Inc. regarding his ownership rights in the character.

As we previously reported, SDNY’s summary judgment dismissal of the case hinged on its determination that Friedrich had definitively conveyed by contract to Marvel “all rights . . . including any renewal rights” to Ghost Rider. This turned on two dispositive findings by the Court: 1) at the time of Friedrich’s payment for the initial creation of the character in 1971 and 1972, and his endorsement on the back of his pay check that he was assigning all rights to Marvel; and 2) in a separate contract signed by the parties in 1978, when Friedrich was a freelancer for Marvel and relinquished all rights to the character in exchange for future freelance work.

On appeal, Friedrich argued that Marvel’s copyright in Ghost Rider lapsed in 2001 and reverted to him, the author of the work, under the renewal term of the Copyright Act, 17 U.S.C. § 304(a)(1)(A). Renewal term rights, which last for 67 years, are more than an extension of the original 28-year copyright term, but rather, are a “new estate” that is clear of all rights, interests or licenses that were granted under the original copyright. These renewal rights are intended to give artists a second chance to exploit their works. Importantly, the Second Circuit explained that an author may assign renewal rights during the copyright’s initial term, but noted the “strong presumption against the conveyance of renewal rights.”

Construing the 1978 contract under New York law, the Court made three findings: 1) the definition of “Work” was “ungrammatical and awkwardly phrased”; 2) it was unclear whether the contract covered a work published six years earlier, as opposed to future works; and 3) it was unclear whether the contract conveyed renewal rights. This is despite the contract having a provision “grant[ing] to MARVEL forever all rights of any kind and nature in and to the Work” because this language could be “construed as a form work-for-hire contract having nothing to do with renewal rights.”

Finding the contract ambiguous, the Court turned to extrinsic evidence. The evidence demonstrated that “[i]t is more likely that the Agreement only covered ongoing or future work” because Friedrich was told as much and not paid anything for signing the contract; the parties were unlikely to convey such a valuable copyright without explicitly referencing it in the contract; and Friedrich likely did not agree to convey renewal rights. The Court also determined that Marvel was not entitled to summary judgment on its statute of limitations defense because “a jury could find that a reasonably diligent person would not have known that Marvel was exploiting Ghost Rider, without paying royalties, during the renewal term, but before April 4, 2004.”

The news, however, was not all good for Friedrich. The Second Circuit affirmed the District Court’s denial of Friedrich’s request for summary judgment that he was an author (or joint author) of Ghost Rider. Specifically, the record could be construed such that “Friedrich had nothing more than an uncopyrightable idea for a motorcycle-riding character” and that Marvel “commissioned the work by authorizing the comic’s production . . . [meaning] a jury could easily conclude that Ghost Rider was a ‘work made for hire.’”

Gibbons will continue to monitor the status of this case upon remand. A status conference is scheduled for June 27, in SDNY.

Owen J. McKeon is a Director in the Gibbons Intellectual Property Department. Ralph A. Dengler, a former Director in the Gibbons Intellectual Property Department, and Andrew P. MacArthur, a former Associate in the Gibbons Intellectual Property Department, co-authored this post.