Decarlo v. Archie Comic Publications, Inc.

• Decision Date: 22 January 2001
• Docket Number: No. 00 Civ. 2344(LAK).,00 Civ. 2344(LAK).
• Citation: 127 F.Supp.2d 497
• Parties: Daniel S. DECARLO, Plaintiff, v. ARCHIE COMIC PUBLICATIONS, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

127 F.Supp.2d 497

Daniel S. DECARLO, Plaintiff, v. ARCHIE COMIC PUBLICATIONS, INC., Defendant.

No. 00 Civ. 2344(LAK).

United States District Court, S.D. New York.

January 22, 2001.

Whitney North Seymour, Jr., Sharron Ash, Landy & Seymour, New York City, for Plaintiff.

Leora Herrmann, Edmund J. Ferdinand, III, Grimes & Battersby, for Defendant.

MEMORANDUM OPINION

KAPLAN, District Judge.

Plaintiff Daniel S. DeCarlo long has drawn the She's Josie comic strip, including the characters Josie, Melody and Pepper, for defendant Archie Comic Publications, Inc. ("ACP") and been compensated on a flat per-page rate and by certain royalties. Now that ACP is embarked on much more extensive and lucrative commercialization of these characters, including a motion picture, DeCarlo claims that he owns the characters and that ACP's commercialization exceeds the rights he granted to it.

The matter now is before the Court on DeCarlo's motions to remand the case to the state court from which it was removed and to disqualify ACP's attorneys and ACP's motion for summary judgment dismissing the complaint and granting their counterclaim, as well as DeCarlo's cross motion for summary judgment striking ACP's affirmative defenses and dismissing its counterclaim.

Facts

Plaintiff's Claim

The Start of the Relationship

DeCarlo has been a comic book artist since the 1950's. He claims to have begun developing the character Josie in the mid 1950's at about which time he began working full time as a freelancer for a number of enterprises, including ACP for which he continues to work.¹ He contends that he showed a Josie comic strip, including the Melody and Pepper characters, which he claims also to have created, to ACP in or about 1961.² Following an unsuccessful effort to syndicate the proposed strip, ACP itself decided to publish it and brought out the first She's Josie comic book in 1963.³ It paid DeCarlo $23 per page for his work on the Josie comic books and, according to the complaint, paid him a 5 percent royalty on revenues earned therefrom from June 1966 through October 1969.⁴ In addition, it sent him a check for $1,406.25 in 1998 without any explanation.⁵

The 1988 Agreement

On October 25, 1988, DeCarlo and ACP entered into a so-called Newsstand Comic Independent Contractor's Agreement (the "1988 Agreement"). The contract began with a series of recitals, including that

• ACP "is the publisher of comic strips and comic books ... of which [ACP] is the sole and exclusive owner,"

• ACP "seeks to supplement its own existing comic strips and comic books (hereinafter the `Existing Archie Works') by the purchase of the entire right, title and interest in existing third party comic strips and pages for its comic books (hereinafter the `Existing Third Party Works'),"

• ACP "desires to retain third parties to modify or otherwise work with the Existing Archie Works and/or the Existing Third Party Works ... on a work made for hire basis, to create modified comic strips and pages for its comic books (hereinafter the `Modified Works')," and

• [T]he Contractor [i.e., DeCarlo] desires to confirm the assignment to [ACP] of the Contractor's entire right, title and interest in and to whatever comic strips and pages for comic books the Contractor may have heretofore provided [ACP] in furtherance of this project and further desires to work with [ACP] in the future under the terms and conditions hereinafter expressed."⁶

It then set forth covenants in relevant part as follows:

"1. (a) The Contractor hereby assigns and conveys to [ACP] all of its rights, title and interest in the Existing Third Party Works heretofore submitted to [ACP].

"(b) The Contractor further agrees to work with [ACP] on a work for hire basis to:

"(i) create and develop for [ACP's] exclusive use Additional Works, and

"(ii) perform modifications of Existing Archie Works, Existing Third Party Works (including Existing Third Party Works of others) and Additional Works ..."⁷

* * * * * *

"2. (a) The Contractor hereby assigns to [ACP] all right, title and interest in and to all Works submitted under this Agreement as well as to any patent rights, copyrights, trademark rights and/or applications therefore which relate thereto. The Contractor agrees to execute all documents which are reasonably required to perfect such assignment. It is agreed and understood that such Works shall constitute Works Made for Hire and shall be the sole and exclusive property of [ACP]. To the extent any work of Contractor shall not be deemed under law to constitute subject matter which may be treated as work made on a Work Made for Hire basis, then Contractor hereby assigns and conveys to [ACP] all of its rights, title and interest in any such work.

"(b) The Contractor hereby expressly waives all claim of right which it may have to any ownership interest in such Works and/or the ARCHIE property."⁸

The 1996 Agreement

The 1996 Agreement is entitled a Work for Hire Agreement between DeCarlo and ACP. It began with a series of introductory recitals:

• ACP "is in the business of producing and/or publishing comic strips and comic books that include characters, artwork, stories, plots, trademarks, logos, and other creative expressions (`Properties'). All references to `Properties' in this Agreement will include existing and future-created Properties that are commission by [ACP] and/or used in any of [ACP's] publications or licensed products."⁹

• "All past, pending and future uses of all Properties, including uses by [ACP's] licensees, will be collectively referred to in this Agreement as `Works.'"¹⁰

The 1996 Agreement then set forth provisions defining the relationship of the parties, their understanding regarding compensation, and so on. The key provisions included the following:

"5. Contractor's full and complete compensation for each assignment ... will be a fixed sum based on a rate to be mutually agreed upon.... Contractor will not be entitled to royalties, to income derived from licensing or merchandising, or to additional compensation for the creation of new Properties...."

"19. To the extent that any past, pending or future contributions by Contractor to the Works or Properties do not qualify as a Work for Hire, Contractor will and hereby does assign to [ACP] any right, title and interest that he/she has or may obtain therein, including all copyrights, patents, trademarks and other proprietary rights. Contractor will sign, upon request, any documents needed to confirm that any specific Works or Properties are Works for Hire, to effectuate the assignment of his/her rights in any Works or Properties to [ACP] and/or to obtain copyright, trademark and/or patent protection for any of the Works or Properties."

The Conduct of the Parties

The foundations of plaintiff's position here are that he was the sole creator of the Josie strips and characters, that he granted to ACP only the right to use his drawings in its comic books and strips, and that plaintiff retains all other ownership interests in the characters Josie, Melody and Pepper. He alleges that ACP, in derogation of his retained rights, has licensed or otherwise used the Josie, Melody and Pepper characters for purposes other than comic strips and comic books — purposes such as dolls, recordings, animated cartoons and live action motion pictures — without his consent and without payment of fair and reasonable compensation.¹¹ Defendant disputes each of these propositions, but that is immaterial for present purposes.

DeCarlo admits having known for many years that ACP claimed rights in his alleged work product far more extensive than he now acknowledges having granted. He concedes, for example, that he understood in 1963 that Radio Comics, an ACP subsidiary, claimed sole ownership of the copyright in She's Josie # 1, one of the comic books, and, indeed, that he "didn't think it was right" for it to have done so.¹² He knew that the creator credits on the covers of Josie # 22 (published in 1966) through Josie and the Pussycats # 47 (published in 1970) with the exception of one issue read "by Dan `n Dick," a reference to DeCarlo and Richard Goldwater of ACP, despite DeCarlo's contention that he was the sole creator of these characters.¹³ Indeed, he knew that ACP licensed the Josie property to Hanna-Barbera for the production of animated programs that were telecast on CBS from 1970 to 1974 and that ACP, in his words, was "making a fortune" from the shows, yet DeCarlo neither received nor then demanded any additional compensation.¹⁴ He knew also that ACP had authorized release of Josie cartoons on videocassette and licensed the production of Josie underwear.¹⁵ Indeed, when he learned in 1993 that Josie and the Pussycats cartoons were being aired on The Cartoon Network, he was, in his words, "pretty much hardened. * * * They're doing anything they want with the show, the character. And they were."¹⁶ Yet through this entire period, plaintiff concededly never voiced any discontent to ACP about its use of the Josie characters or asserted any of the claims of ownership he now asserts.¹⁷

In due course, ACP entered into negotiations with Universal City Studios with a view to licensing motion picture rights in the Josie property. Not surprisingly, particularly in view of DeCarlo's reticence over the decades, it acted on the premise that it owned the entire right, title and interest in it. When Universal inquired in 1998 whether DeCarlo ever had made any claim to ownership or co-ownership in the property, ACP truthfully responded that he had not. Indeed, based on DeCarlo's silence, ACP took the position that Universal's "concerns vis-a-vis the copyright issue . . . are without any merit" and a "non-issue." Indeed, when it succeeded in licensing the motion picture rights, it relied upon DeCarlo's silence in agreeing to indemnify Universal against the consequences of any dispute that might arise as to ownership of the Josie characters.¹⁸

Prior...