Gaiman v. McFarlane

360 F.3d 644

Neil GAIMAN and Marvels and Miracles, LLC, Plaintiffs-Appellees/Cross-Appellants, v. Todd McFARLANE, et al., Defendants-Appellants/Cross-Appellees.

No. 03-1331.

No. 03-1461.

United States Court of Appeals, Seventh Circuit.

Argued January 5, 2004.

Decided February 24, 2004.

Rehearing and Rehearing En Banc Denied March 31, 2004.

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Kenneth F. Levin (Argued), Levin & Associates, Chicago, IL, Allen A. Arntsen, Foley & Lardner, Madison, WI, for Plaintiffs-Appellees in 03-1331, 03-1461.

Michael A. Kahn (Argued), Blackwell, Sanders, Peper, Martin, St. Louis, MO, R. Scott Feldmann, Crowell & Morning, Irvine, CA, for Defendants-Appellants in 03-1331.

Todd G. Smith, Lafollette, Godfrey & Kahn, Madison, WI, Michael A. Kahn (Argued), Blackwell, Sanders, Peper, Martin, St. Louis, MO, R. Scott Feldmann, Crowell & Morning, Irvine, CA, for Defendants-Appellees in 03-1461.

Before POSNER, KANNE, and ROVNER, Circuit Judges.

POSNER, Circuit Judge.

Neil Gaiman brought suit under the Copyright Act against Todd McFarlane and corporations controlled by him that we can ignore, seeking a declaration that he (Gaiman) owns copyrights jointly with McFarlane in certain comic-book characters. Merchant v. Levy, 92 F.3d 51 (2d Cir.1996); Zuill v. Shanahan, 80 F.3d 1366 (9th Cir.1996); Shapiro, Bernstein & Co. v. Jerry Vogel Music Co., 161 F.2d 406 (2d Cir.1946). He sought additional relief under the Act, other provisions of federal law, and state law, as well. The case was tried to a jury, which brought in a verdict for Gaiman. The judge entered a judgment that declared Gaiman to be the co-owner of the characters in question, ordered McFarlane to so designate Gaiman on undistributed copies in which these characters appear, provided modest monetary relief in respect of Gaiman's supplemental claim for damages for breach of his right of publicity, and ordered an accounting of the profits that McFarlane has obtained that are rightfully Gaiman's. The accounting is not yet complete, and so the judgment is not final; McFarlane's appeal is therefore limited to the injunction requiring him to acknowledge Gaiman's co-ownership.

McFarlane contends that a reasonable jury would not have rejected his statute of limitations defense and that in any event two of the comic-book characters at issue are not copyrightable. The parties agree that the alternative defense, the defense of uncopyrightability, is strictly an issue for the court. We have found only a handful of appellate cases addressing the issue, and they are split. Matthew Bender & Co. v. West Publishing Co., 158 F.3d 674, 681 (2d Cir.1998), and North Coast Industries v. Jason Maxwell, Inc., 972 F.2d 1031, 1035 (9th Cir.1992), hold that copyrightability is a mixed question of law and fact, at least when it depends (as it usually does) on originality, and that it is therefore an issue for the jury or other factfinder. But Yankee Candle Co. v. Bridgewater Candle Co., 259 F.3d 25, 34 n. 5 (1st Cir. 2001), and our own Publications Int'l, Ltd. v. Meredith Corp., 88 F.3d 473, 478 (7th Cir.1996), along with a number of district court cases, e.g., Collezione Europa U.S.A., Inc. v. Hillsdale House, Ltd., 243 F.Supp.2d 444, 451-52 (M.D.N.C.2003); Newton v. Diamond, 204 F.Supp.2d 1244, 1253 (C.D.Cal.2002), hold that copyrightability is always an issue of law. Whether a particular work is copyrightable is fact-specific, which argues against treating the question as one of law, but tugging the other way is the concern that property rights not be placed at the mercy of a jury. A nice issue, but this is not an apt occasion on which to reexamine our resolution of it in Publications Int'l.

Gaiman's cross-appeal, in which he is joined by a company controlled by him, is from the dismissal of his auxiliary claim for breach of contract. The cross-appeal is contingent on our reversing the copyright judgment, since Gaiman seeks no additional relief on his contract claim; it's just a backstop to his copyright claim.

We need to do some stage setting. Gaiman and McFarlane are both celebrated figures in the world of comic books, but they play different though overlapping roles. Gaiman just writes scripts; McFarlane writes scripts too, but he also illustrates and publishes the comic books. In 1992, shortly after forming his own publishing house, McFarlane began publishing a series of comic books entitled Spawn, which at first he wrote and illustrated himself. "Spawn," more precisely "Hellspawn," are officers in an army of the damned commanded by a devil named Malebolgia, who hopes one day to launch his army against Heaven. The leading character in the series is a man named Al Simmons, who is dead but has returned to the world of the living as a Hellspawn.

Al's story is an affecting one. Born in a quiet neighborhood outside of Pittsburgh, he was recruited by the CIA and eventually became a member of an elite military unit that guards the President. He saved the President from an assassin's bullet and was rewarded with a promotion to lieutenant colonel. He was placed under the command of Jason Wynn, who became his mentor and inducted him into the sinister inner recesses of the intelligence community. When Al began to question Wynn's motives, Wynn sent two agents, significantly named Chapel and Priest, to kill Al with laser weapons, and they did, burning him beyond recognition. Al was buried with great fanfare in Arlington National Cemetery.

Now Al had always had an Achilles' heel, namely that he loved his wife beyond bearing and so, dying, he vowed that he would do anything to see her again. Malebolgia took him at his word ("would do anything") and returned Al to Earth. But a deal with the devil is always a Faustian pact. Al discovered that he was now one of Malebolgia's handpicked Hellspawn and had been remade (a full makeover, as we'll see) and infused with Hell-born energy.

Returned to Earth in his new persona, Al discovers that his wife has remarried his best friend, who was able to give her the child he never could. He absorbs the blow but thirsts for revenge against Jason Wynn. He bides his time, living with homeless people and pondering the unhappy fact that once he exhausts his Hell-born energy he will be returned to Malebolgia's domain and become a slave in an army of the damned with no hope of redemption. He must try somehow to break his pact with the devil.

The early issues in the series were criticized for bad writing, so McFarlane decided to invite four top writers each to write the script for one issue of Spawn. One of those invited was Gaiman. He accepted the invitation and wrote the script for Spawn issue No. 9. Their contract, made in 1992, was oral. There was no mention of copyright, nor, for that matter, of how Gaiman would be compensated for his work, beyond McFarlane's assuring Gaiman that he would treat him "better than the big guys" did. The reference was to the two leading comic book publishers, Marvel Comics (not to be confused with Gaiman's company, Marvels and Miracles) and DC Comics, for which Gaiman and other writers write on a "work made for hire" basis. 17 U.S.C. § 101. This means that the publishers own the copyrights on their work. § 201(b).

It might seem that when McFarlane told Gaiman that he would treat Gaiman "better than the big guys" did, he just meant he'd compensate him more generously for work made for hire. But McFarlane rightly does not argue this. Gaiman's work for him was not work made for hire. It was neither (1) work created by an employee within the scope of his employment nor (2) "a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire." 17 U.S.C. § 101. There was no written agreement between Gaiman and McFarlane, and Gaiman was not an employee of McFarlane.

Now it is true that a commissioned work not falling under (2) may be deemed a work for hire under (1) if, for example, the commissioning party pays the author a monthly stipend, pays health and other fringe benefits during the time the author works on the project, and exercises overall though not necessarily daily supervision. See Community for Creative Non-Violence v. Reid, 490 U.S. 730, 750-52, 109 S.Ct. 2166, 104 L.Ed.2d 811 (1989); Saenger Organization, Inc. v. Nationwide Ins. Licensing Associates, Inc., 119 F.3d 55, 59-60 (1st Cir.1997). The work for hire concept isn't limited to formal employment because a functionally identical relationship can be created by skillful drafting of contracts that purport to treat the (de facto) employee as an independent contractor. The work for hire provision is not unique in sensibly forgoing a definition of "employee" or "employment" and by doing so empowering the courts to define these terms from case to case on a practical rather than formal basis, using the principles of agency law to prevent evasion of the statutory purpose. E.g., Clackamas Gastroenterology Associates, P.C. v. Wells, 538 U.S. 440, 123 S.Ct. 1673, 155 L.Ed.2d 615 (2003); EEOC v. Sidley Austin Brown & Wood, 315 F.3d 696, 704-07 (7th Cir. 2002). But there is nothing to suggest that Gaiman ever became a de facto employee of McFarlane. And while Gaiman could have assigned to McFarlane his copyright in any work he did under the oral contract, copyright assignments must be in writing, 17 U.S.C. § 204(a); Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410, 413 (7th Cir.1992), and there was no written assignment.

In his script for Spawn No. 9, Gaiman introduced three new characters — Medieval Spawn (as he was later called by McFarlane — Gaiman had not...