Opinion
00 Civ. 1393 (RCC)
February 27, 2002
Opinion and Order
Plaintiff Marvel Characters, Inc. ("Marvel"), successor in interest of Timely Publications and Timely Comics, Inc. ("Timely"), commenced this action against Defendant Joseph H. Simon ("Simon") in February 2000. Pursuant to 28 U.S.C. § 2201, Marvel sought declaratory judgment stating that certain written notices ("Notices") issued by Simon, pursuant to section 304(c) of the Copyright Act of 1976, are invalid and have no legal force or effect, and that Marvel is the sole owner of the challenged copyrights. In response, Simon asserted a counterclaim, seeking a declaration that the Notices are valid, that he is the author of the copyrighted works and that the copyrights revert to him on the effective date of the Notices. After the parties conducted discovery, Marvel moved for summary judgment. Amici curiae filed a brief in support of Simon's opposition.
The Authors Guild, Inc., the American Society of Journalists and Authors, the National Writers Union, Novelists Inc., the Science Fiction and Fantasy Writers Association, the Society of Children's Book Writers and Illustrators and the Text and Academic Authors Association submitted papers as amici curiae.
I. JURISDICTION
The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331 and 1338.
II. BACKGROUND
In December 1940, Martin and Jean Goodman (the "Goodmans"), doing business as Timely, published the First issue of "Captain America Comics." Compl. ¶ 1. Shortly after, Timely applied for and received registration of the copyrights in and to the First ten issues of "Captain America Comics," including the Captain America character (the "Works"). In November 1966, Simon filed suit in the Supreme Court of the State of New York, County of New York (the "State Action") against several defendants, including the Goodmans. Simon claimed that he had originated, conceived and created the Works, that the defendants' use of the Captain America character constituted unfair competition and misappropriation of his state law property rights, and that, as a result, he was entitled to an accounting, damages, and injunctive relief. State Action Compl., Exhibit 3 of Declaration of Carol Platt, dated May 29, 2001 [Platt Decl.]. Subsequently, in November 1967, Simon filed another action in the Southern District of New York (the "Federal Action") against the Goodmans and Timely. Simon alleged that he was the sole author and creator of the Works for copyright purposes, and sought declaratory judgment that he had the exclusive right to the renewal term of the copyrights as well as an injunction to bar defendants from applying for renewals of such copyrights. Federal Action Compl., Exh. 6 of Platt Decl.
The State Action was entitled Joseph H. Simon v. Martin Goodman and Jean Goodman, individually and d/b/a/ Magazine Management Company, Krantz Films, Inc., R.K.O. General, Inc. and Weston Merchandising Corp.
The Federal Action was entitled Joseph H. Simon v. Martin Goodman and Jean Goodman, individually and d/b/a/ magazine management company and Timely Comics, Inc.
The defendants in both actions responded by denying that Simon was the sole author of the Works and, in the State Action, the defendants specifically argued that Simon's contributions to the Works were made as an "employee for hire." State Action Answer, Exh. 4 of Platt Decl. at 7; Federal Action Answer, Exh. 7 of Platt Decl. Simon was represented by counsel, namely, the New York law firm of Friend Reiskind, in both actions.
After more than two years of litigation, the parties to both actions entered into a written agreement ("Settlement Agreement"), settling "all of the claims and areas of conflict between them, including these suits and all claims therein referred to or relating thereto." Exh. 10 of Platt Decl at 1. Paragraph 13 of the Settlement Agreement states that "Simon acknowledges and agrees that all his work on the Materials, and all his work which created or related to the Rights, was done as an employee for hire of the Goodmans." Id. ¶ 13 (emphasis added). Simon signed the Settlement Agreement and dated it November 5, 1969. In accordance with the Settlement Agreement, the parties to both actions filed stipulations dated November 5, 1969, dismissing with prejudice "all claims and matters alleged, threatened or implied or set forth in any of the pleadings filed by Plaintiff. . ." Stipulations, Exh. 11 of Platt Decl.
Thirty years later, on December 7, 1999, Simon filed notices with the United States Copyright Office (the "Notices") under Section 304(c) of the Copyright Act of 1976, purporting to terminate the transfers of the copyrights as of December 7, 2001. Exh. 12 of Platt Decl. In the Notices, Simon claimed that he independently created the Captain America character and that he was "neither an employee for hire nor a creator of a work for hire." Id. at 4. Marvel commenced this action in February 2000 and after discovery, filed for summary judgment.
In his papers, Simon alleges that he created the Captain America character independently and then, in 1940, shopped his character and a plot outlined to Timely. Declaration of Joseph H. Simon [Simon Decl.] ¶ 5-6, 10, 13. He states that, in exchange for publishing an entire comic book featuring the Captain America character, Martin Goodman agreed to pay Simon a page rate of $12 for the book and 25% of the profits. Id. ¶ 9. He alleges further that: he created the supporting characters; that all the work on the first two issues was done in his studio, by himself or by others he paid and under his direction; and that Martin Goodman made no editorial contribution. Id. ¶ 10. According to Simon, he moved into the Timely offices after Martin Goodman asked him to begin editing all Timely comic books, but he worked on a freelance basis and not as a Timely employee. Id. ¶ 10.
Neither party disputes that Timely had copyrighted the Works in December 1940, when the first issue was published, and that Simon was fired from Timely at the end of 1941. Id. ¶¶ 11, 14. Simon explains that until December 1941, he had not been receiving a full 25% share of the profits, and that, between that date until the mid-1960s, he received no financial benefit at all from the creation of the Captain America character. Id. ¶¶ 14-15.
With reference to the previous litigation in the 1960s, Simon states that when the original copyrights were about to expire after a twenty-eight year term, he retained counsel to help him reclaim the copyrights, for purposes of the renewal term. Id. ¶ 15. After three years of litigation however, he no longer had the resources to continue the suits against Marvel's predecessors in interest, which is why he agreed to settle his claims. Id. ¶ 18. Simon claims that he did not understand the legal significance of the "for hire" language in paragraph 13 of the Settlement Agreement at that time. Moreover, he did not ask about the legal meaning because he understood the overall intent of the Settlement Agreement to be that he was assigning to Marvel all of his then-remaining copyright renewal rights as the author of Captain America. Id. ¶ 19. Simon now claims that paragraph 13 of the Settlement Agreement is not true and that he was not Timely's or Goodman's employee when he created Captain America in 1940. Id. ¶ 20. Simon further explains that he made no claim to ownership of Captain America from 1969 until 1999 because he had settled the prior actions and because he was unaware that Congress had amended the copyright provisions. Id. ¶ 20.
The Copyright Act of 1976 extended the term of copyright for works created prior to January 1978 and also added a termination provision, which states that:
[i]n the case of any copyright subsisting in either its first or renewal term on January 1, 1978, other than a copyright in a work made for hire, the exclusive or non-exclusive grant of a transfer or license of the renewal copyright or any right under it, executed before January 1, 1978, by any of the persons designated by subsection (a)(1)(C) of this section, otherwise than by will, is subject to termination under the following conditions . . .17 U.S.C. § 304(c). The conditions are then set forth. Condition 5 states that "[t]ermination of the grant may be effected notwithstanding any agreement to the contrary, including an agreement to make a will or to make any future grant." Id. Simon argues that the transfer of the copyright and the renewal rights in the Settlement Agreement should be terminated as such an "agreement to the contrary." However, Marvel argues that, based on the "for hire" language in paragraph 13 of the Settlement Agreement, it is entitled to a declaratory judgment that the Notices are invalid and of no legal force or effect, and that Marvel is the sole owner of the Captain America copyrights.
III. SUMMARY JUDGMENT STANDARD
The Court's role in a motion for summary judgment is not to resolve disputed issues of fact but to determine whether there are any genuine issues of material fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). Rule 56(c) provides that summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). When viewing the evidence, the Court must "assess the record in the light most favorable to the nonmovant and resolve all ambiguities and "draw all reasonable inferences in its favor." Delaware Hudson Ry. Co. v. Consolidated Rail Corp., 902 F.2d 174, 177 (2d Cir. 1990).
The movant bears the initial burden of informing the court of the basis for its motion and demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant meets this burden, the party opposing the motion must come forward with specific evidence demonstrating the existence of a genuine dispute of material fact. Fed.R.Civ.P. 56(e); Anderson, 477 U.S. at 249;Celotex, 477 U.S. at 323-24. Where the nonmovant "propounds a reasonable conflicting interpretation of a material disputed fact," summary judgment is inappropriate. Schering Corp. v. Home Ins. Co., 712 F.2d 4, 9-10 (2d Cir. 1983).
Conversely, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Bald assertions or conjecture unsupported by evidence are insufficient to overcome a motion for summary judgment. Casey v. Crescenzi, 923 F.2d 18, 21 (2d Cir. 1991).
An issue of fact is genuine when "a reasonable jury could return a verdict for the nonmoving party," and such contested facts are material to the outcome of the particular litigation if the substantive law at issue so renders them. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). "If, as to the issue on which summary judgment is sought, there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the moving party, summary judgment is improper." Chambers v. TRM Copy Centers Corp., 43 F.3d 29, 37 (2d Cir. 1994). Only when it is apparent that no rational trier of fact "could find in favor of the nonmoving party because the evidence to support its case is so slight" should a court grant summary judgment.Gallo v. Prudential Residential Services, Ltd. Partnership, 22 F.3d 1219, 1223-24 (2d Cir. 1994).
IV. DISCUSSION
Marvel bases its motion for summary judgment on three different arguments: res judicata, equitable estoppel and basic contract interpretation principles. First, Marvel argues that the validity of the Notices depends upon Simon's claim to have authored the Works, which is the same claim he asserted as part of the earlier litigation in the 1960s. Consequently, Simon is now barred from relitigating that claim under the doctrine of res judicata or claim preclusion. Next, Marvel points out that over the last thirty years: all the witnesses it would have called as witnesses have died; it has held itself out as the rightful owner of the Works; and it has "invested in the exploitation of the Captain America." Plaintiff's. Memorandum at 2. Marvel argues that Simon is therefore equitably estopped from relitigating the same claim he resolved with prejudice when the parties entered into a Settlement Agreement. Lastly, Marvel argues that Simon made an unambiguous admission that he created the Works as an employee for hire when he entered into the Settlement Agreement. This language clearly falls within the exception of the termination provision of section 304(c), which states that any copyright in effect as of January 1978, "other than a copyright in a work made for hire . . . is subject to termination . . . 17 U.S.C. § 304(c). Accordingly, basic contract principles bar Simon from proceeding.
A. Equitable Estoppel
In response to Marvel's equitable estoppel argument, Simon argues that the plain language of section 304(c) contemplates that authors have the inalienable right to terminate copyrights so long at is within a specified time period and that he did file the Notices in a timely fashion. Simon argues further that Marvel profited by exploiting the Works over the past thirty years but he did not. As a result, equitable considerations weigh in his favor.
The statute allows termination of the grant of copyright to be effected "at any time during a period of five years beginning at the end of fifty-six years from the date copyright was originally secured . . ." 17 U.S.C. § 304(c)(3).
The Court notes that Simon did file timely Notices and that none of the cases cited by Marvel in support of this argument relate to the termination provisions of the Copyright Act. See Plaintiff's Mem. at 17-19 (citing Broadcast Music, Inc. v. Hearst et al., 746 F. Supp. 320 (S.D.N.Y. 1990); DeCarlo v. Archie Comic Publications, Inc., 2001 WL 46979 (S.D.N.Y. Jan. 22, 2001); General Elec. Capital Corp. v. Armadora, S.A., 37 F.3d 41 (2d Cir. 1994); Merchant v. Lymon, 828 F. Supp. 1048 (S.D.N.Y. 1993); Boone v. Mechanical Specialties, Co., 609 F.2d 956 (9th Cir.)). The plain language of the statute envisions one exception to the termination right, for works for hire; it does not permit any exception for equitable considerations. It is not unimaginable that most holders of copyrights could fashion this type of an argument in response to the exercise of an author's termination rights. This would, however, contravene Congress's intent to permit authors an opportunity to benefit from ownership of their works. See H.R. REP. No. 94-1476, reprinted in 17 U.S.CA. § 304, at 415-16 (West 1996). The Court therefore declines to grant summary judgment on these grounds.
B. Preclusion
With respect to Marvel's res judicata argument, Simon's main arguments appear to be: (1) that a settlement agreement is merely a contract and any preclusive effect it may have on a subsequent lawsuit must be determined according to ordinary contract principles; and (2) that the claim raised in the earlier litigation, Simon's entitlement to the renewal term of the copyright, is different from the claim raised in the instant action, his right to terminate the assignments.
Res judicata "prevents a party from litigating any issue or defense that could have been raised or decided in a previous suit." Waldman v. Village of Kiryas Joel, 39 F. Supp.2d 370, 377 (S.D.N.Y. 1999) (citation omitted). It is also well-established that a dismissal with prejudice arising out of a settlement agreement operates as a final judgment on the merits for res judicata purposes on all claims asserted or which could have been asserted in the suit. Nemaizer v. Baker, 793 F.2d 58 (2d Cir. 1986). Based on a slim line of cases, Simon argues that the stipulations of dismissal are merely contracts open to interpretation for purposes of determining their preclusive effect. These cases appear inapposite however. The Second Circuit has emphatically held that "a stipulation of dismissal `with prejudice' as to a pending action is unambiguous; like any such dismissal, it is "deemed a final adjudication on the merits for res judicata purposes on the claims asserted or which could have been asserted in the suit." Israel v. Carpenter, 120 F.3d 361, 364 (2d Cir. 1997) (emphasis omitted) (quoting NBN Broadcasting, Inc., v. Sheridan Broadcasting Networks, Inc., 105 F.3d 72, 78 (2d Cir. 1997)).
Nishman v. De Marco, 430 N.Y.S.2d 339 (App.Div. 2d Dep't 1980), did not involve a stipulation of discontinuance but rather a stipulation between counsel to limit the issues presented to a jury for purposes of determining liability and damages. When the parties began disputing the effect and application of the stipulation, the court turned to contract principles.
Citing De Marco, the court in Dunleavy v. First Am. Title Ins. Co., 499 N.Y.S.2d 264 (App.Div. 3d Dep't 1986), took the position that neither res judicata nor collateral estoppel could be used as defenses in later litigation because an in-court stipulation of settlement did not consist of a final determination of issues in the prior litigation. Consequently, it interpreted the stipulation in the same manner as a contract to determine whether all claims against defendant were to be released. Id.
In a case in this district, Willsea v. Theis, the court cited Dunleavy and stated that "[u]nder New York law, the preclusive effect of a stipulation of dismissal is governed by ordinary contract principles." 1999 WL 595629, at *7 (S.D.N.Y. Aug. 6, 1999).
The fourth case that Simon cites in support of his argument is Marshal v. Reed, in which an order of dismissal with prejudice had been filed in accordance with a stipulation of settlement during earlier litigation. 2001 WL 92225 (E.D.N.Y. Feb 1, 2001). The court held that compelling policies favoring the enforcement of settlement agreements and principles of res judicata barred further litigation. Id. at *16. The court then cited Willsea for the holding that, while the preclusive effect of a stipulated dismissal is termed res judicata, it is more properly understood to be the subject of a contractual agreement. Id.
Other than these cases, there appear to be a number of short opinions by the various Appellate Divisions of New York Supreme Court, which similarly appear inapplicable to the case at hand, primarily because they do not refer to the preclusive effect of stipulations of dismissal. See, e.g., Novak Co. v. New York Convention Center Dev. Corp., 608 N.Y.S.2d 219 (App.Div. 1st Dep't 1994) (interpreting a stipulation of settlement, entered into in open court, as if it were a contract, for purposes of enforcing a particular term); Fernandez v. Fernandez, 718 N.Y.S.2d 509 (App.Div. 4th Dep't 2000) (interpreting specific term of stipulation of settlement, which had been incorporated into judgment, in accordance with contract principles).
In Israel, the Second Circuit first affirmed its consistent reluctance to limit the effect of stipulation of dismissal with prejudice by looking behind its plain meaning. The court then noted that the plaintiff had raised significant issues of fact as to the intent of the relevant stipulation and that under Massachusetts law, courts are to consider the intended scope and effect of such a stipulation. Based on the relevant circumstances therefore, it affirmed the district court's decision to deny summary judgment on the grounds that the stipulation of dismissal did not preclude later litigation.
Here, there can be no doubt that the parties intended to settle all claims that existed between them when they signed the Settlement Agreement and stipulations. "The above action and all claims and matters alleged, threatened, implied or set forth in any of the pleadings filed by plaintiff in this action be and the same hereby are dismissed with prejudice." Federal Action Stipulation of Dismissal ¶ 1, Exh. 11 of Platt Decl. "The above-entitled action and all claims and matters alleged, threatened, implied or set forth in any of the pleadings filed by plaintiff in this action be and the same hereby are discontinued with prejudice." State Action Stipulation of Dismissal ¶ 2, Exh. 11 of Platt Decl. This Court cannot read any ambiguity in the language of the stipulations, which might suggest that the parties intended to reserve the right to bring future litigation on the same claims.
Additionally, as explained supra note 5, New York law does not require courts to apply contract principles to determine the preclusive effects of a stipulation of dismissal. Even if New York courts do apply contract principles in such instances, New York law could not apply to determine the preclusive effect of the Federal Action. Federal law determines the preclusive effect of federal court judgments. PRC Harris, Inc. v. Boeing Co., 700 F.2d 894, 896 n. 1 (2d Cir. 1983). Because we have determined that under both New York and federal law, stipulations of dismissal are granted preclusive effect for res judicata purposes, the Court need not engage in separate analysis.
Simon's second res judicata argument is that the claims in this litigation, his right to terminate the copyrights, are inherently different from the claims raised in the earlier litigation, his right to renew the copyrights, and therefore cannot be precluded. Quoting Woods v. Dunlop, 972 F.2d 36 (2d Cir. 1992), however, Marvel argues that both the rights rest on Simon's claim to authorship, which was conclusively resolved in 1960s and thereby precludes him from raising it now.
[A] judgment upon the merits on one suit is res judicata in another where the parties and subject-matter are the same, not only as respects matters actually presented to sustain or defeat the right asserted, but also as respects any other available matter which might have been presented to that end. . . .
Whether or not the first judgment will have preclusive effect depends in part on whether the same transaction or connected series of transactions is at issue, whether the same evidence is needed to support both claims, and whether the facts essential to the second were present in the first.Id. at 38 (citations omitted). Marvel argues that because the same facts are essential to, and the same evidence is needed to support, both Simon's earlier claim to the renewal rights as well as his present claim to the termination rights, namely, proof of his authorship, the second claim is precluded.
Firstly, the Dunlop court only stated that the preclusive effect of a judgment rests "in part"on a transactional analysis. Moreover, in a recent decision, B. Man Yoon v. Fordham University Faculty, the Second Circuit held that res judicata did not preclude the plaintiff from proceeding on certain claims in a second lawsuit. 263 F.3d 196 (2d Cir. 2001). The plaintiff in that case had already litigated and defaulted on his claims to salary in an earlier state court lawsuit. He subsequently filed suit in federal court, in order to claim his pension pursuant to ERISA, and the defendant argued that his claim was barred by res judicata. On appeal, the Second Circuit reasoned that:
[T]he fact that, because of res judicata, Yoon cannot raise the question of his right to salary for purposes of getting salary (past, present, future) does not mean that he is barred from raising the question of his entitlement to salary in order to establish a contractual basis for the payment of pensions. For to deprive Yoon of the right to litigate the issue of his entitlement to salary would be to estop him collaterally from doing so. And, under New York law, collateral estoppel forecloses only those actions that have been actually litigated and determined in a prior action. . . . Thus the fact that we herein affirm the district court's conclusion that Yoon is barred by res judicata from recovering salary is not germane to the question of whether he is permitted to argue his rights to salaried status for purposes of establishing the predicate for his pension claims.Id. at 202 n. 7 (citations omitted). This analysis appears relevant to the facts of the instant case.
The Second Circuit has explained that the functional difference between claim preclusion, or res judicata, and issue preclusion, otherwise known as collateral estoppel, is that "while only the former can operate to prevent the litigation of a matter that has never been decided, both prevent relitigation of an issue of fact or law that has already been necessarily decided as part of a valid, final judgment." Stone v. Williams, 970 F.2d 1043, 1054 (2d Cir. 1992). Collateral estoppel "comes into play when the subsequent action is upon a different claim or demand. In such case, the inquiry is whether the point or question presented for determination in the subsequent action is the same as that determined in the original action." Id. (citations omitted).
As a preliminary matter, the Court is persuaded by the arguments by both Simon and amici curiae that the termination right is an entirely new and wholly separate right from the renewal right. Congress clearly intended to create a new property right for authors when it enacted the Copyright Act of 1976. See HR. REP. No. 94-1476, reprinted in 17 USCA. § 304, at 415-16 (West 1996). Because the earlier lawsuits in the 1960s could not have resolved the legal question of whether Simon was entitled to the termination rights, the claims raised in both the sets of litigation are necessarily different. Whether the earlier litigation resolved the matter of Simon's alleged authorship is a different question.
It is quite apparent that the authorship of Captain America was central to the previous lawsuits. In the State Action, Simon alleged that he had originated, conceived and created the Works; in the Federal Action, Simon alleged that he was the sole author of the Works. Defendants in both actions disputed these allegations. Additionally, in the State Action, the defendants' third affirmative defense stated:
That to the extent that the plaintiff, Joseph H. Simon, contributed to the origination, conception and creation of the "Captain America" episodes and the characters thereof, such work was done for and on behalf of Marvel, under the supervision and direction of Marvel, and as an employee for hire of Marvel whereby any rights arising out of such contribution by the plaintiff inured to Marvel.
State Action Answer, Exh. 4 of Platt Decl. 6.
Moreover, in the present lawsuit, Simon's alleged authorship has been raised as a specific counterclaim, in which Simon requests this Court to provide declaratory relief stating that he is the author of the Works. None of the parties in the earlier litigation requested similar relief in the form of a declaratory judgment that Simon was or was not the author. But the Court notes that they could have.
Res judicata "operates to prevent the parties or their privies from litigating any matter that was or could have been decided in a previous suit." Stone, 970 F.2d at 1054. This Court holds, therefore, that the question of whether Simon is precluded from relitigating his alleged authorship of the Works must be determined under both claim and issue preclusion principles.
It is clear, based on the pleadings as well as the unambiguous language of the stipulations, that when Simon entered into the stipulations of dismissal in the 1960s, he was resolving "all claims," thereby including his claim to the renewal term of the copyrights, as well as the matter of the authorship of the Works. As stated earlier, voluntary dismissals with prejudice have the same preclusive effects for res judicata purposes as a final adjudication on the merits. "To have a preclusive effect on specific issues or facts, however, a voluntary dismissal also must be accompanied by specific findings sufficient for a subsequent court to conclude that certain matters were actually decided." Motrade v. Rizkozaan, Inc., 1998 WL 108013, *5 (S.D.N.Y. Mar. 11, 1998); see Lawlor v. National Screen Service Corp., 349 U.S. 322, 327 (1955) (holding that where parties entered into a settlement agreement and court's judgment, dismissing case with prejudice, was not accompanied by findings of fact, collateral estoppel did not preclude further litigation of issues.) In the matter at hand, there were no findings of fact by either court in the State Action or the Federal Action; stipulations were filed with the court dismissing the suits and nothing more.
As in Yoon therefore, res judicata precludes Simon from seeking a declaratory judgment that he is the author. Neither res judicata nor collateral estoppel, however, preclude Simon from proceeding on his claim to the termination rights, even though it requires him to relitigate the issue of his authorship. Marvel's motion for summary judgment is therefore GRANTED but only as to Simon's counterclaim seeking a declaration that he is the author of the Captain America works and not as to any other claims.
C. Contract Principles
Marvel's last argument is that the "for hire" language in paragraph 13 of the Settlement Agreement falls within the sole exception of section 304(c). In response, Simon and amici curiae appear to make policy arguments. Both briefs provide a historical analysis of copyright law, including congressional intent and judicial application. Both briefs suggest that holding Simon to the plainly unambiguous "for hire" language would thwart congressional intent to protect authors. They argue that publishers, who are more sophisticated and have greater bargaining power than individual authors, would be able to circumvent section 304(c) merely by including "for hire" language in every contract.
Although Congress intended that the amended copyright laws would provide important protection to authors of copyrighted works, Congress clearly carved out "works made for hire" from such protection. Accordingly, the ultimate issue in this case is whether the Works, including the Captain America character, are "works made for hire" within the meaning of the statute. Simon argues that whether he was an "employee for hire" and whether the Captain America Works were "works for hire" are questions of fact that should withstand a motion for summary judgment. Marvel counters that such issues were determined conclusively in the Settlement Agreement.
Settlement agreements are contracts, and therefore are governed by contract law. Goldman v. C.I.R., 39 F.3d 402, 405 (2d Cir. 1994). It is a basic principle of contract interpretation that where the language is unambiguous, courts should subscribe its plain meaning to it. Krumme v. Westpoint Stevens, Inc. et al., 238 F.3d 133, 138-39 (2d Cir. 2000). The meaning of paragraph 13 is clear and unambiguous; however, Simon now argues that he was not aware of the legal meaning of that term and that he should not be held to this contract. In essence, he disputes that there was a meeting of the minds between the parties on the "employee for hire" language set forth in the Settlement Agreement.
By signing the Settlement Agreement, Simon, as well as all the defendants in the earlier lawsuits, agreed to the terms contained therein. Specifically, the parties agreed that "Simon acknowledges and agrees that all his work on the Materials, and all his work which created or related to the Rights, was done as an employee for hire of the Goodmans." Settlement Agreement at 7, Exh. 10 of Platt Decl. As the Court has already stated, the issue of whether Simon's involvement in the creation of the Captain America Works consisted of work for hire was the crux of the previous lawsuits.
Although the new protections provided by the Copyright Laws were not yet enacted at the time the parties entered into the Settlement Agreement, the term "work for hire" was a term of art in the copyright world. Indeed, by 1966, when the first of the previous actions was filed, Second Circuit caselaw made clear that if works were done for hire, the copyright belonged to the employer. See Brattleboro Publishing Co. v. Winmill Publishing Corp., 369 F.2d 565, 567 (2d Cir. 1966).
Moreover, the Second Circuit has explicitly rejected this type of argument, stating that: "Mere dissatisfaction in hindsight with choices deliberately made by counsel is not grounds . . . to justify [such] relief." Nemaizer v. Baker, 793 F.2d 58 (2d Cir. 1986). Because the Settlement Agreement was a negotiated agreement between the parties, settling disputes initially raised and litigated by Simon and involving rights over which he claimed ownership; because Simon was represented by counsel at all times during the litigations and settlement of the previous actions; because the term "work for hire" was a negotiated part of the contract which carries specific legal significance; Defendant's argument that he was unaware of the legal significance of his actions at the time he entered into the Settlement Agreement has no legal merit.
Simon further argues that the fact that the Settlement Agreement purported to assign Simon's rights to the remaining renewal term to Marvel "constituted a conclusive admission by Marvel that Simon — as the author of the Captain America works — was the valid owner of the copyright renewal rights." Defendant's Memorandum at 5. However, this argument fails because the Settlement Agreement expressly states that "Simon shall and hereby does sign . . . any and all right, title and interest he may have or control or which he has had or controlled in and to the following (without warranty that he has had or controlled any such right, title or interest). . . ." Settlement Agreement at 2, Exh. 10 of Platt Decl. (emphasis added). The language of the Settlement Agreement does not constitute an admission by Marvel that Simon ever owned the copyright renewal rights. Rather, the language in the Settlement Agreement explicitly makes clear that it should not be read as admitting that Simon ever had any rights.
The Court will not interfere in this legally-binding agreement. Because the Captain America Works were created for hire and all work done on the Captain America Works by Simon was done as an employee for hire, the protection offered by section 304(c) of the Copyright Act of 1976 is unavailable to him. Accordingly, the Court holds that Simon's claims of ownership of the Captain America Works in the Notices, and, therefore, the Notices themselves, are invalid and of no legal force and effect. In accordance with the Settlement Agreement, the Court awards Marvel declaratory judgment that Marvel is the sole owner of the copyrights in and to the Captain America Works.
Marvel's motion for summary judgment is GRANTED as to all claims. The Clerk of the Court is hereby directed to close this case and remove it from the Court's active docket.