Picture it – federal court Riverside, California – on the stand? Superman, Iron Man, Tarzan and the X-Men are offering expert testimony on just how much they’re worth in today’s market. That was the decision before Judge Stephen Larson who has just determined that there was no insider hanky panky between corporate siblings DC Comics and Warner Bro. Entertainment Inc.
First let’s take a look at the deal’s family tree. Back in 1938, Superman’s parents, Jerome Siegel and Joseph Shuster, granted a license to Detective Comics which eventually assigned that right to DC Comics, whose corporate sibling is now Warner Bros. Entertainment Inc. In March 2008, Judge Larson determined that Shuster and now Siegel’s estate had terminated that 1938 grant and the question which remained was whether between 1999 and 2002, when one Batman flick was released, Warner Bros. paid DC Comics a fair market value for audiovisual licensing………….or did DC give Warner a so-called “sweetheart deal” because of their close family ties? Further, DC was no fool and held onto the coveted merchandising rights with a commission payback to Warner if any elements of the Batman movies were used in merchandising.
The Judge noted that the film agreement between DC and Warner also “provided that, despite DC Comics’ reservation of its television rights, its ability to exploit those reserved rights was limited to an affiliate of Warner Bros., a provision not surprising given the Superman television rights agreement that the parties had entered into just prior to the Superman film agreement.” And lo and behold “Smallville” on the WB television network was born.
Judge Larson, who impressed me with a keen understanding of the complexities of the film industry in his decision, was not to keen himself with the experts offered by either party but especially by DC and Warner. He found “each film industry expert attempted to couch or shape answers to benefit the party paying their fees.” So the learned Judge was forced to look to industry standards in making his determination. He even went so far as to do his own research due to the paucity of evidence presented by the parties and looked to Iron Man, Tarzan and the X-Men for guidance. The bad news for Superman fans is that the caped crusader is not as glorious as in his golden days and is most likely about as valuable as the X-Men were from 1999 to 2002 but more valuable than Iron Man or Tarzan.
Now, an important part of the financing required Warner to market the hell out of Superman to bolster his reduced value in today’s marketplace. “Simply put, the continued development and exploitation of the property in the marketplace is the economic lifeblood for the film rights to a literary property such as Superman. Without continued theatrical release, DC Comics (nor any similar rights holder, for that matter) would not receive payment under the contingent compensation package nor would there be…….any “uplift” in the merchandising realized from the property……………and without a mechanism to ensure the continued development and exploitation of the Superman property in film there raises the very real specter that nothing is exactly what DC Comics would receive in exchange for those rights.”
Bottom line, Warner would really have to work it to make the caped crusader soar faster than a speeding bullet to the tops of the charts and Larson wondered why DC did not include a standard reversion clause if Warner failed to live up to its end of the exploitation efforts. He didn’t, however, see the agreement as a sweetheart bargain and determined that it is DC and not Warner who will owe Plaintiffs anything. He has set a December hearing on damages.
So, where does that leave Superman? Come 2013, the entire original copyright in Superman reverts back to the estate of Siegel and Shuster and neither DC nor Warner will be able to do a thing with any new Superman works without a new license from his creators.
For a detailed analysis of the decision and the case history, visit THR,Esq. Blog at The Hollywood Reporter.