As exemplified by movies like The Dark Knight and Iron Man, having a comic book publisher and a film distribution company under a single corporate umbrella creates some powerful synergies. Marvel Comics has film licensing deals with Fox (X-Men) and Sony (Spiderman) but they began producing movies in 2006. In the process, Marvel subsidiaries like Marvel Characters, Inc. became content farms for Marvel Studios by supplying film rights for various characters. A slightly different example is provided by Warner Brothers, who bought DC Comics in 1969. Since the original Superman films, DC Comics has almost exclusively sold film rights to its titles to Warner Brothers. In fact, the Watchmen movie represents one of the rare instances where DC sold film rights to a company besides Warner Brothers. As Warner Brothers is now learning in Siegel v. Time Warner, vertical integration may lead to some problems in copyright litigation.
Among the remaining claims to be resolved in Siegel v. Time Warner is an accounting for profits derived from Superman copyrights. Specifically, both sides are battling over whether profits obtained from a Superman license that DC Comics sold to Warner Bros. Entertainment Inc (WBEI). In 1992, DC Comics sold an exclusive license in the Superman copyright to WBEI to for the remainder of its extended renewal term in movies, television, and home video. One year later, DC entered a separate exclusive license with WBEI’s television division.
Time Warner claims that the Siegels are entitled to an accounting of the profits made by DC Comics (in the form of the licensing fees it has collected), but are not entitled to an accounting of the profits WBEI made as a licensee. This is because licensees owe no duty of accounting to the non-licensor co-owner of a copyright.
The Siegels (through their lawyer Marc Toberoff), on the other hand, argue that WBEI took over DC Comics position as copyright holder when it bought the licenses. If this is the case, WBEI will be viewed as a co-owner of the Superman copyrights who owes an accounting to the Siegels. The argument does not work under general legal principles but it might apply in one situation: where the subsidiary is serving as “alter ego” of the parent corporation in order to avoid having to share fees with lawful co-owners. This issue will be addressed at the February 3, 2009 trial and the outcome might have interesting effects on the way some entertainment companies do business (with themselves).
[...] usually benefits Time Warner, except in the case of Superman, where it served to add one more complication to the insanity that is the Superman copyright battle. Time Warner argued that the Siegel and [...]