Clancy v. Jack Ryan Enterprises, Ltd.

Alexandra Clancy, widow of the late renowned thriller author Tom Clancy, filed a declaratory judgment action in January 2017 principally against Jack Ryan Enterprises Ltd. (JREL) and Jack Ryan Limited Partnership (JRLP), two business entities that Clancy formed in the 1980s and 1990s and co-owned with his first wife, Wanda King. Plaintiff sought to establish that Clancy’s estate owned the rights in and to various novels written by Clancy and the fictional characters contained therein, including the CIA analyst Jack Ryan, which appeared in several of Clancy’s most famous works. The parties cross-moved for summary judgment, which the court resolved by granting in part and denying in part defendants’ motion and denying plaintiff’s motion.

 

Clancy published his first novel, The Hunt for Red October, which introduced the Jack Ryan character, in 1984. The book was published by the U.S. Naval Institute (USNI) pursuant to a 1983 publishing agreement that granted USNI not only publishing rights in the book but the entire worldwide copyright therein.

 

In 1985, Clancy formed JREL, a corporation with the stated purpose of writing, publishing and selling books, in which Clancy and King each held a 40% interest and each of their four children held a 5% interest. Thereafter, JREL entered into a series of publishing agreements with G.P. Putnam’s Sons to publish several novels written by Clancy, including The Patriot Games (1987), The Cardinal of the Kremlin (1988), Clear and Present Danger (1989) and The Sum of All Fears (1991).

 

In 1987, a dispute arose between Clancy and USNI regarding ownership of the Jack Ryan character. According to Clancy’s counsel, the 1983 USNI publishing agreement constituted a radical departure from normal industry practice in its terms and grant of the full copyright in The Hunt for Red October to USNI. Clancy ultimately commenced arbitration against USNI, which was settled through mediation. Pursuant to a settlement agreement and an assignment agreement, both executed in late 1988, Clancy, through JREL, paid USNI $125,000, and USNI reassigned the copyright in The Hunt for Red October to JREL.

 

In 1992, Clancy formed JRLP, a limited partnership with the same stated purpose of writing, publishing and selling books, in which Clancy and King each held a 50% interest. JRLP entered into additional publishing agreements with Putnam to publish Clancy’s novels, including Without Remorse (1993), Debt of Honor (1994) and Executive Orders (1996). In 1992 and then in 1994, Clancy entered into employment agreements with both JREL and JRLP.

 

In 1995, following his separation from King, Clancy formed a third business entity, Rubicon Inc., which Clancy solely owned and through which he continued to write and publish novels, many featuring Jack Ryan and other characters from his earlier works.

 

Clancy and King divorced in 1999, and Clancy married Alexandra Clancy later that same year. He passed away in 2013, after which Putnam continued to devise new proposals for the publication of certain post-death books attributed to Clancy but authored by a contract writer. As part of those negotiations, Clancy’s former counsel sent a letter to the estate representative and counsel for King, explaining that an agreement was needed regarding the division of proceeds among the Clancy entities. The estate representative responded with a February 2014 letter, copied to plaintiff, referring to JREL’s ownership of the Jack Ryan character. Plaintiff subsequently retained her own counsel, who began to investigate the ownership of Clancy’s characters. Through that investigation, plaintiff learned of the 1983 USNI publishing agreement and the 1988 settlement and assignment agreements concerning The Hunt for Red October.

 

In 2017, the estate’s representative filed an accounting as part of the Clancy probate proceedings, to which plaintiff objected as failing to reflect the proper amounts due to the estate through its ownership of the Jack Ryan character. Plaintiff filed this declaratory judgment action several months later.

 

Against this backdrop, the court first considered whether plaintiff’s claims were barred as a matter of law by the Copyright Act’s three-year statute of limitations. Defendants argued that plaintiff’s ownership claims accrued at the latest in February 2014, when she received a letter from the estate’s representative attributing ownership of the Jack Ryan character to JREL. Defendants argued that this letter expressly repudiated the estate’s ownership claim or, at a minimum, put plaintiff on inquiry notice of this issue. Plaintiff argued, on the other hand, that her claims did not start to accrue until January 2015, when she first learned of the 1988 USNI settlement agreement and assignment to JREL.

 

According to plaintiff, prior to her receipt of these documents, she had no basis for concluding that the estate had any ownership of Clancy’s characters. Because of that, she argued, defendants’ prior assertion of ownership could not have constituted repudiation of the estate’s claim to ownership because, at that point, there was nothing to repudiate. Noting that the determination of reasonable inquiry notice is a fact-intensive analysis, the court found that both sides’ interpretations were plausible and concluded that summary judgment on the statute of limitations question was inappropriate.   

 

Next, the court rejected defendants’ argument that they owned Clancy’s books and characters as works-for-hire created by Clancy within the scope of his employment by JREL and JRLP. Applying the multifactor test established by the U.S. Supreme Court in Community for Creative Non-Violence v. Reid, the court concluded that a genuine dispute of material fact existed as to whether Clancy was an employee or an independent contractor of his businesses. Weighing in favor of defendants’ position that Clancy was an employee, the court noted that JREL paid for the computer that Clancy used to write the books, that Clancy worked for JREL and JRLP for an extended period of time, that Clancy’s work was part of the regular business of the entities, and that Clancy received health benefits from the entities. The court also identified several facts supporting plaintiff’s position that Clancy was not an employee: that neither JREL nor JRLP controlled the manner and means by which Clancy authored his books, that Clancy was a co-owner of both entities, and that Clancy did not receive a regular salary or employee benefits beyond health insurance.

 

The court then considered the question of whether Clancy had validly assigned the copyrights in his books and characters to his business entities (even if those entities did not own the rights therein as works-for-hire). Defendants pointed to several written instruments, signed by Clancy, that they claimed memorialized the transfer of copyright in each book from Clancy to JREL or JRLP, including the publishing agreements with Putnam, the guaranty letters accompanying the publishing agreements, and a separation agreement between Clancy and King, which acknowledged the business entities’ ownership of the books. Plaintiff responded that those documents did not qualify as valid assignments because none of them were between Clancy and the business entities and they did not express an unequivocal intent to transfer as required under Section 204 of the Copyright Act. The court ultimately concluded that these and other documents did, in fact, evidence an intent to transfer sufficient to effect a valid assignment of copyright.

 

The court first noted that each of the Putnam publishing agreements provided that either JREL or JRLP was the “Author” of the relevant book and the “sole and exclusive owner of all rights” granted to the publisher. Furthermore, each publishing agreement annexed a guaranty, signed by Clancy in his personal capacity, confirming that the relevant entity was the “Author” and owner of the copyright in the respective work. The court also found persuasive that several of the employment agreements that Clancy executed with JREL or JRLP contained assignment provisions that could be interpreted as constituting subsequent writings memorializing an earlier agreement to transfer rights in previously written books. Finally, the court viewed as significant the certificates of copyright registration for the books, all of which identified JREL or JRLP as the copyright owners. In view of all this, the court concluded that Clancy had validly assigned the copyrights in his books and characters to JREL and JRLP, warranting summary judgment in favor of defendants and dismissing most of plaintiff’s ownership claims.

 

However, the court separately considered ownership rights with respect to the Jack Ryan character as developed in The Hunt for Red October because that novel was not covered by any of the Putnam publishing agreements or subsequent documents. Plaintiff argued that the 1983 USNI publishing contract did not grant USNI any rights to the characters featured in The Hunt for Red October or to sequels or derivative works, and, as a result, Clancy’s rights to the character passed to his estate upon his death. Plaintiff highlighted the fact that although the 1988 settlement agreement with USNI reassigned the copyright in the book to Clancy (before it was subsequently assigned to JREL), it contained a separate provision stating that “the parties acknowledge that all rights in and to the characters are the sole property” of Clancy.

 

The court observed that this clause was susceptible to two plausible interpretations: “Under one reading of the Settlement Agreement, USNI was reassigning the copyright in Hunt to Clancy, while also acknowledging that Clancy retained the rights to the characters in Hunt. The fact that the agreement mentions the character rights in a separate sentence suggests that those rights were not included in the general reassignment of rights. . . . But, a reasonable person could also read the two sentences of the Settlement Agreement to mean that the character rights were part of what was being reassigned to Clancy. For instance, to the extent that ownership of character rights was part of the dispute that led to the Settlement Agreement, the parties included a separate sentence on character rights for emphasis.” As neither interpretation was compelled as a matter of law, the court denied summary judgment on this issue and reserved for trial the question of Jack Ryan’s ownership.

 

Summary prepared by Frank D’Angelo and Jordan Meddy