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Larson v. Warner Bros. Entertainment, Inc.

Ninth Circuit reverses grant of summary judgment in favor of heirs of Superman co-creator in litigation concerning ownership of copyrights in comic book character Superman, finding that letter from heirs’ then-attorney constituted acceptance of oral settlement offer and created binding settlement agreement.

In this protracted litigation concerning the ownership of intellectual property rights to the famous comic book character Superman, the district court in March 2008 granted partial summary judgment to plaintiffs, holding that in 1999 co-creator Jerome Siegel’s widow and daughter had successfully terminated their share of grants that Siegel and co-creator Joseph Schuster conveyed to DC Comics’ predecessor-in-interest to the copyright in the Superman material published in Action Comics No. 1. (Read our summary of the district court’s opinion here.) In that opinion, the court also rejected defendants’ assertion that the heirs’ termination notices were no longer effective because the parties had reached a settlement of their dispute in 2001 and 2002. The district court granted summary judgment in favor of plaintiffs on defendants’ counterclaims related to that alleged settlement of their dispute, holding that no meeting of the minds existed as to the terms of that settlement, and that, as a matter of law, no binding settlement agreement existed.

The district court later issued decisions addressing the ownership of copyrights to other early Superman material. For example, in August 2009, the district court decided that Siegel’s heirs had properly terminated Siegel’s grants of copyright ownership to certain Superman material published in the 1930s and ’40s, including Action Comics No. 4, portions of Superman No. 1, and two weeks’ worth of daily newspaper strips, while other Superman material was created by Siegel and Schuster as works made for hire, and was therefore not subject to termination (read our summary of the district court’s August 2009 opinion here).

On appeal, the Ninth Circuit reversed the district court’s March 2008 grant of summary judgment, finding that an October 19, 2001, letter from the Siegel heirs’ then-attorney constituted acceptance of an oral settlement offer made on October 16, 2001, and created a binding settlement under California law (which all the parties agreed applied to the issue). “The October 19, 2001, letter itself plainly states that the heirs have ‘accepted DC Comics’ offer of October 16, 2001, in respect of the ‘Superman’ and ‘Spectre’ properties.” The letter also included “five pages of terms outlining substantial compensation for the heirs in exchange for DC’s continued right to produce Superman works[,]” and ends with plaintiffs’ attorney thanking DC’s attorney for his “’help and patience in reaching this monumental accord.’” Noting that the objective, not subjective, understandings of the parties determine whether they reached an agreement, and that extrinsic evidence of the parties’ actions may be used to determine whether the oral offer referred to in the letter had, in fact, been made, the Ninth Circuit concluded: “Statements from the attorneys for both parties establish that the parties had undertaken years of negotiations, that they had resolved the last outstanding point in the deal during a conversation on October 16, 2001, and that the letter accurately reflected the material terms they had orally agreed to on that day.”

The Ninth Circuit rejected plaintiffs’ argument that either state or federal law precluded a finding that an agreement could have been created by the October 19, 2001, letter, reasoning that California law permits parties to bind themselves to a contract even when they anticipate that some material aspects of the deal will be reduced to writing later, and even absent an express reference to a future agreement, “as long as the terms of any contract that may have been formed are sufficiently definite that a court could enforce them (as is undoubtedly the case here).” The appellate court likewise rejected plaintiffs’ argument that the Copyright Act precluded the finding of a binding agreement: “Nor is 17 U.S.C. § 204(a) a bar to the validity of any such contract; that statute expressly permits an agreement transferring ownership of a copyright to be signed by a ‘duly authorized agent’ of the copyright owner, and [plaintiffs do] not contest that the heirs’ attorney was such an agent.”

The court remanded the case to the district court with directions to reconsider the counterclaims related to the 2001 settlement agreement. Noting that a judgment in favor of the defendants on those counterclaims would “appear to render moot all of the other questions in this lawsuit,” the court declined to address any other issues raised in the appeal.