Hi, I’m Eriq Gardner.
Welcome back to The Rainmaker, my new private email at Puck focused on the underbelly of the legal industry: the most influential lawyers, most incredible lawsuits, and the power players in Hollywood, Silicon Valley, Washington, and Wall Street who are leveraging the courts to reshape industry and culture.
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In today’s email: Malibu super lawyer-producer Marc Toberoff, Hollywood superagent Ari Emanuel, and Jason Blum, Les Moonves, LeBron James, and the Superman heirs, among others.
Hot on the Docket
I previously wrote about the Fair Act, which is pending in California and would, in its current form, prevent employers from locking up talent on an exclusive basis. There’s a committee hearing tomorrow, and I don’t think this audacious act of progressive lawmaking is getting the attention it truly deserves. So let me throw out this teaser: Now that the L.A. Lakers failed to make the playoffs, what is stopping LeBron James from joining a rival squad? If your answer is his Lakers contract or NBA bylaws, well, you might want to tune into that hearing.
Fifty years ago, Washington created a legal time bomb that allows the creators behind everything from Robocop and Beetlejuice to The Avengers multiverse to terminate their copyright grants and renegotiate. Welcome to the I.P. apocalypse.
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 email@example.com.)
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 can fee 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.
Decision of the Week
Is virtual reality a public space? On Friday, in Dylan Panarra v. HTC Corporation, U.S. District Court Judge Frank Gerachi, Jr., ruled that devicemaker HTC must face a lawsuit over the lack of closed captioning on its virtual reality subscription service, Viveport Infinity. The complaint comes from a deaf individual who is invoking the American with Disabilities Act. In seeking a dismissal, HTC argued that Viveport is “software” and not tied to a physical location.
That web-only businesses have obligations under the ADA has been a controversial topic in many cases, and just last month, the Department of Justice released guidance that websites must be accessible to those with disabilities. Here, the New York federal judge applied other recent ADA cases involving digital sites and rules that the plaintiff had adequately alleged that virtual reality is a place of public accommodation too. The judge also wouldn’t allow HTC’s argument that it lacks control over VR content to stop the case from moving forward. Read the full opinion here.
Also on the Docket…
– In February, I wrote about a new federal law that prevents sexual misconduct claims from being forced into arbitration. Specifically, I said CNN could face a lawsuit arising from the Jeff Zucker–Allison Gollust situation but maybe Fox News will test the new law before CNN. That’s because Andrea Tantaros, a former co-host of The Five who has been pressing a sexual harassment complaint for seemingly forever, is now invoking the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act. On April 11, Fox told a judge that the new law won’t apply retroactively, that the plain language doesn’t apply to something that happened six years ago. Here’s the Fox News filing.
– Photographers are lining up against Jay-Z in a suit the hip hop star is pursuing against Jonathan Mannion, the shutterbug who snapped the image that adorns the cover of Reasonable Doubt, his highly acclaimed first album. Mannion has licensed images from the shoot for merchandise—and in response, Jay-Z claims a violation of his right of publicity. Mannion argues the claim is preempted by copyright law and flouts the First Amendment. The suit is now due for a summary judgment ruling—and, recognizing the importance of the case, several photographer associations have submitted an amicus brief. I.P. professors have one too. The hearing is set for May 16.
– Legal briefs: The soap opera saga that is California’s case over sexual harassment at Activision Blizzard has taken yet another turn, with a resignation and an accusation of meddling by Governor Gavin Newsom … As I first reported, CBS has resolved shareholder litigation over failing to disclose the #MeToo problems of former C.E.O. Leslie Moonves. A motion for approval submitted on Friday reveals the settlement is worth $14.75 million … The U.S.F.L. has returned? The football league, showcasing televised games this past weekend, is likely infringing a trademark, but according to a judge in a rather unusual decision, there’s just too much money invested to stop it from appearing on network television … And finally, Johnny Depp is set to testify tomorrow in his U.S. libel lawsuit against ex Amber Heard. Set your DVR for Court TV….
FOUR STORIES WE’RE TALKING ABOUT
M.I.A. Murdoch, the possible home of Sunday Ticket, Jeopardy’s Mike Richards, the future of WarnerMedia’s TV assets, and more.
Musk is serious about buying Twitter. The company’s board, Goldman, and its management team better get serious, too.
Puck co-founder Jon Kelly joins Peter to discuss MSNBC’s vexing inactivity to plug its Maddow-sized hole in prime time.
Pence’s attempt to get canceled, Trump’s latest endorsement fool’s errand, and a head-scratching story of a fallen meme-lord dynasty.
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