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The artist/author who created Captain America can invoke the termination provisions of the Copyright Act of 1976, the 2nd U.S. Circuit Court of Appeals has ruled. Deciding a case of first impression, the court found that comic creator Joseph H. Simon’s settlement agreement with a comic book company, in which he acknowledged he devised the character Captain America while working for hire, does not prevent him from terminating the company’s copyright under the act. The 2nd Circuit, finding that Simon’s “for hire” status was still in dispute, reversed a lower court’s grant of summary judgment for the company in Marvel Characters, Inc. v. Simon, 02-7221. At issue in the appeal was 17 U.S.C. � 304(c) which grants authors or their heirs the right to terminate a copyright grant 56 years after the original grant “notwithstanding any agreement to the contrary.” Senior Circuit Judge Joseph M. McLaughlin said the termination provision in subsections (c)(3) and (5) of the act have one exception: “Copyright grants in works created for hire cannot be terminated.” The novel question presented to the 2nd Circuit, he said, was “whether a settlement agreement, entered into long after a work’s creation, stipulating that a work was created for hire constitutes ‘any agreement to the contrary’ under the 1976 Act.” “We conclude that it does,” McLaighlin said. Although Simon had signed a settlement agreement in November 1969, in 1999 he sought to take advantage of changes in the copyright law that gave authors greater rights. He filed termination notices claiming he had independently created Captain America, and not as a work for hire as he had conceded in the settlement agreement. Marvel filed suit in the Southern District of New York seeking a declaratory judgment stating the termination notices were invalid and the company was sole owner of the copyright. Southern District Judge Richard C. Casey ruled for Marvel, finding that Simon had, in the settlement agreement, clearly acknowledged that he created the works for hire — and that � 304(c) barred him from exercising his termination rights. On appeal, McLaughlin said the district court “never addressed” whether the settlement agreement was “an agreement to the contrary” under the act. Simon argued the legislative purpose of � 304(c) required a ruling that he be allowed to terminate the copyright grant. Moreover, McLaughlin said, Simon submitted testimony that at least raised the question of whether he was “for hire.” “Marvel’s only response to Simon’s contentions is that if Simon’s reading of the statute is upheld, no litigation concerning a claim to authorship could ever be resolved by settlement,” McLaughlin said. “We find Simon’s arguments persuasive and Marvel’s prediction unfounded.” The judge said the U.S. Supreme Court, as well as legislative history and intent, have shown that � 304(c) was passed to relieve authors from ill-considered copyright grants that were made before the true value of a work could be appreciated. “If an agreement between an author and publisher that a work was created for hire were outside the purview of Section 304(c)(5), the termination provision would be rendered a nullity,” he said. “Litigation-savvy publishers would be able to utilize their superior bargaining position to compel authors to agree that a work was created for hire in order to get their works published.” Moreover, McLaughlin said, courts interpreting the “work for hire” provision in the original 1909 copyright act, “have focused on the actual relationship between the parties, rather than the language of their agreements, in determining authorship of the work.” As for “Marvel’s dire prediction” about the impossibility of future settlements, McLaughlin said, “We believe that parties will still be able to resolve their authorship disputes by settlement.” To craft a sustainable settlement, he said, the parties “need only comply with the requirements of collateral estoppel by filing a detailed stipulation of settlement, compete with sufficient factual findings on authorship, with the court.” Senior Judge Amalya Kearse and Southern District Senior Judge Charles S. Haight Jr., sitting by designation, joined in the opinion. Ethan Horwitz and Kandis M. Kahn of Boston-based Goodwin Procter, and Ross J. Charap of New York’s Moses & Singer represented Simon. David Fleischer and Jodi A. Kleinick of Los Angeles-based Paul, Hastings, Janofsky & Walker represented Marvel Characters Inc.

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