Marvel Suing to Keep Rights to ‘Avengers’ Characters From Copyright Termination

[Lightning]

Still waiting to hear what legal principles allow two parties to sign a contract and negate the separate contract of a third non-participating party.

I'd love to see someone win a small judgement against Disney (I could see Disney lawyers not showing up to small claims court), have Disney ignore them, then they call the Sheriff and start seizing assets at Disneyland.

 

[Riceball]

Still waiting to hear what legal principles allow two parties to sign a contract and negate the separate contract of a third non-participating party.

I'd love to see someone win a small judgement against Disney (I could see Disney lawyers not showing up to small claims court), have Disney ignore them, then they call the Sheriff and start seizing assets at Disneyland.

I could believe that there's such a thing as an exclusionary clause where it could be written in to a contract that says the new owner is not obligated to honor any previous monetary or contractual agreements with a 3rd party by the company being bought out. I'm not saying that there is such a thing (I'm not a lawyer or even a law student) but I can believe that such a thing exists.

 

[batguy]

I could believe that there's such a thing as an exclusionary clause where it could be written in to a contract that says the new owner is not obligated to honor any previous monetary or contractual agreements with a 3rd party by the company being bought out. I'm not saying that there is such a thing (I'm not a lawyer or even a law student) but I can believe that such a thing exists.

I don't see how it would matter.

The old (selling) company can put a clause in a sale contract that says the buyer gets 100% full IP rights without owing royalties anymore. But it still boils down to me selling my neighbor's driveway. I don't own my neighbor's driveway, like the old company didn't own 100% of the IP rights. It doesn't legally matter what the sale contract says if the seller doesn't own the item he is selling.

 

[Moviefreak]

I don't see how it would matter.

The old (selling) company can put a clause in a sale contract that says the buyer gets 100% full IP rights without owing royalties anymore. But it still boils down to me selling my neighbor's driveway. I don't own my neighbor's driveway, like the old company didn't own 100% of the IP rights. It doesn't legally matter what the sale contract says if the seller doesn't own the item he is selling.

Who didn’t own the rights in this situation or own the item they are selling? Marvel, who sold it? The artists who worked for them didn’t own anything. Marvel did. So this whole argument, is moot and off topic. This thread was about Disney and the lawsuit with the artists… who don’t own the IP, or a stake in it. At some point this thread has drifted into the hypothetical, and become a debate over fictitious deals, companies, and what ifs.

 

[batguy]

Who didn’t own the rights in this situation or own the item they are selling? Marvel, who sold it? The artists who worked for them didn’t own anything. Marvel did. So this whole argument, is moot and off topic. This thread was about Disney and the lawsuit with the artists… who don’t own the IP, or a stake in it. At some point this thread has drifted into the hypothetical, and become a debate over fictitious deals, companies, and what ifs.

So?

What's wrong with debating a hypothetical?

This stuff has implications all over the entertainment industries. The deal between Disney & Marvel isn't the only game in town. Media has changed a lot in the last few decades and that inevitably calls for legal changes.

The RPF forum isn't a site about football. It's about understanding & copying the nuances of IP owned by studios. These issues are relevant here in the general sense.

 

[Moviefreak]

So?

What's wrong with debating a hypothetical?

This stuff has implications all over the entertainment industries. The deal between Disney & Marvel isn't the only game in town. Media has changed a lot in the last few decades and that inevitably calls for legal changes.

The RPF forum isn't a site about football. It's about understanding & copying the nuances of IP owned by studios. These issues are relevant here in the general sense.

There is nothing wrong with having a hypothetical discussion, but maybe put it in its own thread, and not derail this one off topic. The hypothetical has muddied up this thread to the point where people are confusing the hypothetical situations with what is going on with the Disney lawsuit, and people are confusing information.

 

[Riceball]

Depending on what's in the contract, it looks like the law is on Disney's side as far as the issue of owing back royalties are concerned. Unless specifically specified in the contract, a buyer of another company is not liable for the other company's debts and liabilities.

Understanding Mergers and Acquisitions: Rights and Liabilities

When one business merges with another, or when a business is bought or "acquired" by another business, both parties can benefit.

www.lawyers.com

 

[ScourgiousJinx]

I'm not an expert in mergers&acquisitions/contract legalities but my inclination has always been Disney is likely to prevail in court here, but I may be wrong, The way I look at this is that this is more of an image issue than a legal issue. If you present yourself as a family "value" driven corporation you better make damn sure your decisions outwardly appear to the public to reflect that. If they don't you're going to have problems and image problems Disney surely has as a result of this and other issues. I may not agree with all of the complaints against them but they're there and certainly hurting Disney's bottom line more so than the money they'd likely spend making these creators whole. Not that that would fix everything. Anyway...carry on.

.

 

[batguy]

Unless specifically specified in the contract, a buyer of another company is not liable for the other company's debts and liabilities

That legal interpretation still sounds questionable to me.

Royalties to the IP creator are only "old debts" if it's for old works that were already published. If the new company sells reissues of the old IP, or makes new content that uses the old IP, those are additional new debts being incurred to the IP creators. The new company is incurring them.


If Lucasfilm had a stack of unsold Star Wars Blu-Rays at the time Disney bought them out, then I can see how Disney has the right to sell them without paying out any IP royalties on them. Those are pre-existing products. It was the old company's problem to pay whatever IP royalties were due.

But if the new owner puts the legacy IP into new products (without giving C-3PO a red arm or something) then they are incurring new debts to the IP creators today.

 

[batguy]

There is nothing wrong with having a hypothetical discussion, but maybe put it in its own thread, and not derail this one off topic. The hypothetical has muddied up this thread to the point where people are confusing the hypothetical situations with what is going on with the Disney lawsuit, and people are confusing information.

I agree that it's not the most on-topic thread we've ever had. But, whatever. Big deal. Nobody is being intentionally deceptive.

 

[cboath]

That legal interpretation still sounds questionable to me.

Royalties to the IP creator are only "old debts" if it's for old works that were already published. If the new company sells reissues of the old IP, or makes new content that uses the old IP, those are additional new debts being incurred to the IP creators. The new company is incurring them.


If Lucasfilm had a stack of unsold Star Wars Blu-Rays at the time Disney bought them out, then I can see how Disney has the right to sell them without paying out any IP royalties on them. Those are pre-existing products. It was the old company's problem to pay whatever IP royalties were due.

But if the new owner puts the legacy IP into new products (without giving C-3PO a red arm or something) then they are incurring new debts to the IP creators today.

I'd imagine the only way that would be possible is if the company wasn't sold, just it assets.

If, for example, Lucasfilm owed a billion dollars to authors then sold the rights, past, present, and future, of everything Star Wars to Disney and then went out of business - then, yeah, Disney gets Star Wars and isn't beholden to any pre-existing deals because they bought some IP and not the company. However, not sure how you can sell the entire company and exclude the obligations. The obligations are under Lucasfilm. Now, sure, you could create a sale where since George was a sole owner, that responsibility is retained by him. However, that would be things like debt incurred in buying the Presidio or something like that. The logic people are trying to use here would be right up there with saying Lucasfilm would now no longer be required to pay royalties to Mark Hamill, Carrie Fisher (estate), and Harrison Ford, among others for the OT because the company changed hands.

The only other way you get out of debts and obligations would be if the deals signed by those parties said they relinquish rights to those payments if Lucasfilm is sold. If there's nothing in the deals signed by the third party, you can't exclude them when selling the company.

The differences you see out there are Time Warner sells HBO to Amazon. Now, i know that didn't happen, but still..In that case HBO can be sold to Amazon and Time Warner can retain debt - they can't keep royalties because those are tied to what was sold. But you do see deals where things like this happen and it says Time Warner will keep 2B in debt and things like that.

 

[Riceball]

I'd imagine the only way that would be possible is if the company wasn't sold, just it assets.

If, for example, Lucasfilm owed a billion dollars to authors then sold the rights, past, present, and future, of everything Star Wars to Disney and then went out of business - then, yeah, Disney gets Star Wars and isn't beholden to any pre-existing deals because they bought some IP and not the company. However, not sure how you can sell the entire company and exclude the obligations. The obligations are under Lucasfilm. Now, sure, you could create a sale where since George was a sole owner, that responsibility is retained by him. However, that would be things like debt incurred in buying the Presidio or something like that. The logic people are trying to use here would be right up there with saying Lucasfilm would now no longer be required to pay royalties to Mark Hamill, Carrie Fisher (estate), and Harrison Ford, among others for the OT because the company changed hands.

The only other way you get out of debts and obligations would be if the deals signed by those parties said they relinquish rights to those payments if Lucasfilm is sold. If there's nothing in the deals signed by the third party, you can't exclude them when selling the company.

The differences you see out there are Time Warner sells HBO to Amazon. Now, i know that didn't happen, but still..In that case HBO can be sold to Amazon and Time Warner can retain debt - they can't keep royalties because those are tied to what was sold. But you do see deals where things like this happen and it says Time Warner will keep 2B in debt and things like that.

Based on what I read in the article I linked to previously, normally, as a result of a buyout, the buyer does not normally take on the debts/liabilities of the company or entity they're buying. However, the article does mention that there are exceptions and the primary example is when the buyer agrees to take on the debts & liabilities in order to get a lower price.

So in the case of Disney and LucasFilms, the hypothetical would be that Lucas told Disney that he'd sell them LF lock stock and barrel for $100 million, no strings attached and they (Disney) aren't responsible for any debts and liabilities that LF still has. But Disney could turn around and say $100 million is too much, we, instead, offer you $90 million but in return, we'll take on all of the debts and liabilities.

So, in the case of Disney owing past royalties, that's going to come down to what was in the contract, whether Disney bought LuafFilms completely for full price or negotiated for a lower price but taking on LF's debts and liabilities. It's also going to be an argument about what constitutes a debt or liability and whether or not past contractual agreements about royalties counts or not.

 

[Lightning]

We've established that the liabilities exist and someone has to be responsible for them. In the case of new royalties being generated, there is no way Lucas, for example, could be responsible for paying them because he has no way of knowing new payments are necessary. Even the Authors don't know unless someone tells them.

 

[cboath]

Based on what I read in the article I linked to previously, normally, as a result of a buyout, the buyer does not normally take on the debts/liabilities of the company or entity they're buying. However, the article does mention that there are exceptions and the primary example is when the buyer agrees to take on the debts & liabilities in order to get a lower price.

So in the case of Disney and LucasFilms, the hypothetical would be that Lucas told Disney that he'd sell them LF lock stock and barrel for $100 million, no strings attached and they (Disney) aren't responsible for any debts and liabilities that LF still has. But Disney could turn around and say $100 million is too much, we, instead, offer you $90 million but in return, we'll take on all of the debts and liabilities.

So, in the case of Disney owing past royalties, that's going to come down to what was in the contract, whether Disney bought LuafFilms completely for full price or negotiated for a lower price but taking on LF's debts and liabilities. It's also going to be an argument about what constitutes a debt or liability and whether or not past contractual agreements about royalties counts or not.

I'd love an explanation of how they can skip the debts, etc. Someone has to take them on, or the company has to file bankruptcy, etc....there is no, sell the company, debts erased, end of story scenario.

 

[signeddiamond]

The idea is that in such a case the previous owner would spend a portion of the money they made off the sale to settle those liabilities and remove the royalties.

George Lucas for an example here. Say Lucasfilm has a royalties agreement with some obscure company for work they did on Attack of the Clones. Maybe they did significant character design and get a percentage of a percentage. Disney wants to buy the IP but none of the liabilities. George can go to this royalty holder he made an agreement with and say
”Hey, I’m selling the company and they don’t want to deal with you. How about I give you your same percentage of the final sale price and we dissolve the royalties contract?”
George can also decide not to go to this person and just assume he can settle things later. Surely there are a lot of people he’s made agreements with.

Say this royalty holder says no. I’m sure some bigger components like leading cast would reject giving up royalties. Now George comes back to the negotiating table and says, ”Hey, they won’t give up the royalties. How about you take on that liability and in exchange I will lower the price I’m willing to sell for?”

Its that grey spot in the middle of these 2 situations that is tricky. People fall through the cracks when you are dealing with hundreds if not thousands of individual contractors. Making the assumption that they definatly fall on the obligation of the buyer or the seller is careless because in the contract they should be named or classed one way or another.

Sorry to say that giant multimedia corporation buyouts arnt black and white deals like selling a shiny stone. No “to bads“ or “so what’s“ until you can back it up with contact language specifying such.

 

[cboath]

The idea is that in such a case the previous owner would spend a portion of the money they made off the sale to settle those liabilities and remove the royalties.

George Lucas for an example here. Say Lucasfilm has a royalties agreement with some obscure company for work they did on Attack of the Clones. Maybe they did significant character design and get a percentage of a percentage. Disney wants to buy the IP but none of the liabilities. George can go to this royalty holder he made an agreement with and say
”Hey, I’m selling the company and they don’t want to deal with you. How about I give you your same percentage of the final sale price and we dissolve the royalties contract?”
George can also decide not to go to this person and just assume he can settle things later. Surely there are a lot of people he’s made agreements with.

Say this royalty holder says no. I’m sure some bigger components like leading cast would reject giving up royalties. Now George comes back to the negotiating table and says, ”Hey, they won’t give up the royalties. How about you take on that liability and in exchange I will lower the price I’m willing to sell for?”

Its that grey spot in the middle of these 2 situations that is tricky. People fall through the cracks when you are dealing with hundreds if not thousands of individual contractors. Making the assumption that they definatly fall on the obligation of the buyer or the seller is careless because in the contract they should be named or classed one way or another.

Sorry to say that giant multimedia corporation buyouts arnt black and white deals like selling a shiny stone. No “to bads“ or “so what’s“ until you can back it up with contact language specifying such.

I think that's the point a lot of people are tying to say. George can't unilaterally remove those rights from those people, unless of course, their deals with LFL say so. And, yes, there's nothing to say that type of thing didn't happen where people gave up the royalties for a payment. However, in the absence of those things, they buyer's still on the hook for them.

 

[signeddiamond]

I think that's the point a lot of people are tying to say. George can't unilaterally remove those rights from those people, unless of course, their deals with LFL say so. And, yes, there's nothing to say that type of thing didn't happen where people gave up the royalties for a payment. However, in the absence of those things, they buyer's still on the hook for them.

The idea isn’t that George can’t remove the obligation to the royalty holders but he can inadvertently sell the IP while keeping the liability. If the language of the contact specifically states certain peoples royalties move with the IP to the new owner (like Harrison Ford) then it stands to reason that those names not mentioned will remain the responsibility of the seller. If not then why specify anyone at all? Of course the sale may state that all existing contracts must be honored which would mean Disney is at fault. We just don’t know.

I’m going to play my cards a bit here say that while I am a humble military guy my wife practices tax and business law. This is why I feel pretty reasonably invested in this chat. While I admit I only understand about 20% of what she says about work I have brought this topic up. There was plenty of flashy language but the basic idea was that it was all conditional. The wording of the contract means absolutely everything because if there is room to pass the liabilities from the current owner to the previous one then a good lawyer will do so. Is it fair? Well that depends on what side of the contract you stand on at the end of the day. If a vague poorly outlined contract is what you signed then you run the risk of it being argued about in court for years. Maybe after all those legal costs it wouldn’t have been worth it at all. If you signed the contract you need to own that possibility. Disney may have great lawyers but a solid contract is something that would anticipate a buyout and protect you from it. She says that if indeed Disney is knowingly or unknowingly disregarding the amount of contracts that people seem to believe then either their lawyers and accountants are far from the best or they are setting themselves up for a needlessly damaging PR battle and neither of those options make much sense to save a few bucks on royalties. She’s not very invested in the kind of nonsense that I bring her (The last case I brought her regarded the ownership of the Seamonkeys company) so I’m not planning on bothering her more. Just her 2 cents.

 

[joberg]

It's not just about IP, it's also about image! Example: "The Uncensored Mouse", published in 1989 by Eternity Comics (Dave Olbrich, publisher).
The artist Floyd Gottfredson, along with Walt Disney himself, worked for a week or so together, developing the comic strip's first narrated story. Disney gave free rein to Floyd because his success was too much and he could not check constantly on the content/stories of the strip.
The strip showed a scrappy, tough, brutal, no-holds-barred Mickey! It was, over several years, wholly suppressed by Disney studio procedures.
This Mouse was perceived to be a black eye for the studio's prim and proper image (Mickey is also representing children in the U.N.).
These small comic strips were to contain 3 volumes. Alas, it was not meant to be. The lawyers got hold of the publishing company and they had to remove, physically, all of volume 3 from the store's shelves because of a C&D.
Censoring is never a good idea and the Mouse Corp has, successfully done so over many years; re-writing its history over and over again...for an image it wants to control at every turn and on every aspects.

 

[Moviefreak]

It's not just about IP, it's also about image! Example: "The Uncensored Mouse", published in 1989 by Eternity Comics (Dave Olbrich, publisher).
The artist Floyd Gottfredson, along with Walt Disney himself, worked for a week or so together, developing the comic strip's first narrated story. Disney gave free rein to Floyd because his success was too much and he could not check constantly on the content/stories of the strip.
The strip showed a scrappy, tough, brutal, no-holds-barred Mickey! It was, over several years, wholly suppressed by Disney studio procedures.
This Mouse was perceived to be a black eye for the studio's prim and proper image (Mickey is also representing children in the U.N.).
These small comic strips were to contain 3 volumes. Alas, it was not meant to be. The lawyers got hold of the publishing company and they had to remove, physically, all of volume 3 from the store's shelves because of a C&D.
Censoring is never a good idea and the Mouse Corp has, successfully done so over many years; re-writing its history over and over again...for an image it wants to control at every turn and on every aspects.

I don’t see an issue there. Disney built the character of Mickey to be a certain way and with a certain image. That is something Walt was adamant about, that Mickey be pure and wholesome. So when they developed something that they deemed wasn’t in alignment with that image, they decided to squash it. That was their right to choose to do so. And I’m sure they still owned the artwork, so if it go leaked, they have every right to demand it be removed. It’s not rewriting history, it is running a company and keeping up the standard they set for their characters and product. It’s not censorship, it is what every company does, as they have editors, human resource officers, and a whole other list of people who keep their mission and image on track. If that is censorship, then every company that stops an idea from going from concept to final product, are all censors. And that would be 100% of companies out there.

 

[Treadwell]

Thing is, Uncensored Mouse was using material that had fallen into public domain. The publisher had every right. Disney got it squashed anyway. Because they can.