Hollywood’s Marvel-Disney Horror Story

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Photo by Jeff Gritchen, Orange County Register/SCNG
Eriq Gardner
April 18, 2022

I have a horror story to share. It’s about The Thing, and the shapeshifting monster that promises to devour much of Hollywood. Studios are now bracing for mass casualties. But there’s more to this bloody story. 

This tale begins in the 1970s, when federal lawmakers added decades to the lifespan of copyrights. Sounds straightforward, but there was a twist. It was also decided that authors of copyrighted works (and their heirs) should enjoy the newly lengthened term rather than publishers and studios. Why? Congress knew that many creatives possess little bargaining power early in their careers and they often assign rights for very little. The idea was to give them a second bite at the apple. These creators would have to wait a while (35 years for works created after 1978; 56 years for older works), but once the ticking clock hits the mark, these individuals can terminate copyright grants and reclaim ownership.

Guess what? That clock is now running out for a plethora of properties, as my colleague Matt Belloni wrote this past week. Amazon shouldn’t feel too bad about spending $8.5 billion for a leaky I.P. studio like MGM, which is primed in the next few months to lose both Robocop and Hannibal Lecter, and then next year, One Flew Over the Cuckoo’s Nest, Hoosiers, and Logan’s Run. Indeed, a trip to the Copyright Office reveals that expiring rights are a growing phenomenon across the industry. According to records, Sony is facing termination on Bad Boys while Paramount is facing the situation on Grease and Belloni’s all-time favorite movie, Mommie Dearest. Warner Bros. has received termination notices for Nightmare on Elm Street, Beetlejuice, and Ace Ventura. Disney has Mrs. Doubtfire, Who Framed Roger Rabbit?, and partial ownership of most of the Marvel superheroes (more on that in a second). And outside the major studios, everything from the musical variety show Soul Train to the infamous ‘70s porn classic Deep Throat are in play.

Not all these franchises will end up reclaimed by script authors. What often happens—this is especially common in the music industry—is that a termination notice becomes a prelude to a negotiation. The creator might agree to a new grant of rights to the studio (or record label or publisher) in exchange for a fatter royalty check. Or, sometimes, the studio will put up a fight, arguing that a property isn’t eligible for termination for this or that reason. 

No surprise, then, that this aspect of the entertainment industry invites the involvement of both dealmakers and litigators (not to mention divorce lawyers and probate specialists). For instance, on Friday, in a lawsuit alleging that Universal Music Group is systematically and improperly rejecting termination notices, recording artists asked a federal judge to certify a class action. Here’s the memorandum they filed, helpfully forwarded to me by a keen observer. (I had already seen this one, but I nevertheless appreciate comments and tips. Email me at eriq@puck.news.) 

All of this brings me to a Malibu lawyer named Marc Toberoff, who has made a career off of arguably knowing more about the termination provisions of copyright law than anyone else. Plus, quite importantly, he keeps a good calendar. He recently scored a massive win, representing Friday the 13th screenwriter Victor Miller in a landmark court battle against the horror franchise’s producer Sean Cunningham. He successfully argued the screenplay was not a work made for hire and thus eligible for termination. 

Toberoff is now seeking to achieve something similar for the heirs of some Marvel freelancers from the 1960s who helped create iconic characters such as Iron Man, Spider-Man, Dr. Strange, Ant-Man, Hawkeye, Black Widow, Falcon, Thor and others. Last September, Disney filed suit in federal court in an attempt to hold on to full control of Avengers characters, and it’s no exaggeration to say that the outcome is worth billions of dollars.

Toberoff is a pretty unusual lawyer. Just check out his IMDB page, where he is a credited producer on the remakes of I Spy, Piranha, Roots, and most recently, Hellraiser. How did he pull this off? Well, he works on contingency, and that fee can be structured so he shares in his clients’ copyright successes, meaning their post-termination licensing endeavors. He’s now lawyer slash producer Marc Toberoff, thank you very much.

What will Toberoff’s stake be if he beats Disney? I don’t know the answer for sure, but I can surmise he’ll end up becoming an important and controversial player. That’s because I’ve been paying attention to The Thing.

Earlier this century, Toberoff achieved notoriety in a copyright termination fight over Superman. At one point in the long-running court battle, DC Comics filed claims against a company that Toberoff co-founded with Endeavor C.E.O. Ari Emanuel for allegedly manipulating the heirs of Joe Shuster and Jerry Siegel, and interfering with the comic studio’s Superman contracts. A judge later ruled this claim had come too late, and Toberoff defended the contingency relationship at the time as “proper.”

I mention this because Toberoff quietly filed his own suit last summer where he alleges tortious interference. Until 2018, Toberoff was representing the heirs of John W. Campbell, Jr., who wrote the novel Who Goes There?, which was the basis for Universal’s 1982 and 2011 horror films entitled The Thing. Toberoff was successful in recapturing the rights, and he took a 50 percent stake in the property thanks to his fee arrangement. Later, he alleges, Blumhouse Productions (the Jason Blum company that has overseen such horror hits as Get Out, Paranormal Activity, and The Purge) tendered a “lowball offer” to option those rights. Toberoff countered by requesting a portion of Blumhouse’s profit participation from the lucrative deal it has with Universal. No dice. 

What happened next, according to Toberoff’s suit, is that several individuals got involved—including Alan Donnes, a small-time producer who once ran National Lampoon before dying in 2020—and they started making disparaging comments about him to his clients. It was all part of an “illicit scheme,” Toberoff alleges, to manipulate his clients to fire him and remake The Thing with Blumhouse/Universal for a cheaper price. 

Even by Hollywood standards, this is a pretty wild case—and a sign of how valuable even B-level I.P. is these days. In November, a Los Angeles judge rejected part of the suit and left some clues that Toberoff’s remaining claims might ultimately not survive the statute of limitations. The dispute is now headed to a California appeals court.

Meanwhile, the Marvel heroes case is heating up. Disney is represented by Daniel Petrocelli, the same attorney who once successfully defended DC’s continued ability to make Superman movies—and who is currently representing CNN against Chris Cuomo—and Toberoff has been privately updating Emanuel about it. Endeavor denies that it has a direct stake in the litigation over Iron Man and his buddies, although the company boasted in its first-ever amicus brief at the Supreme Court late last year that it has a “growing practice representing the estates and heirs of creators.” (Read here.) Speaking up about a copyright termination situation, WME urged the high court to adopt an interpretation of “work for hire” that would benefit creators rather than studios (and would be a disastrous development for Disney and its new C.E.O. Bob Chapek). The justices declined to take up the case—probably a disappointment for the survivors of the termination apocalypse.

Disney and Toberoff will now litigate the issue of whether Marvel’s freelancers contributed characters as works made for hire. That will entail an investigation into the 1960s-era working conditions for the comic house’s authors and illustrators. Even if a district judge rules in Disney’s favor that these characters are not eligible for termination, the battle will continue on appeal where Toberoff will insist that lower courts are using the wrong legal standards under old copyright law. How am I sure? That’s exactly what happened a decade ago in his case involving comic book legend Jack Kirby. In fact, Petrocelli has already drawn in his firm’s appellate attorneys to the newest case in anticipation of this coming stage of the fight.

Back in 2014, the Kirby termination case got to the Supreme Court’s doorstep whereupon Disney settled it for tens of millions of dollars rather than take the small chance the justices would intervene. It’s easy to imagine, with so much at stake, that Disney would make a similar offer.

But would Toberoff accept? That amount of money would be hard to turn down, and he certainly would have an obligation to proceed in his clients’ best interests. Then again, the incentive of a lawyer working on contingency is a fascinating issue. And being a producer on a Marvel blockbuster has got to be awfully tempting.