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NEW YORK (Hollywood Reporter) - A New York federal judge has weighed in on an important case that could be worth billions of dollars and impact the future of Iron Man, X-Men, The Incredible Hulk, Spider-Man, and other superhero characters.
The case involves an attempt by the estate of comic book artist Jack Kirby to terminate a copyright grant over his work. After Kirby's children served 45 notices of copyright termination, Marvel Entertainment sued the estate in New York District Court, seeking a declaration that the creations were "works-made-for-hire" and not eligible for termination. The estate countersued, seeking its own declaration that the termination notices were served properly to Marvel.
Last week, New York federal judge Colleen McMahon rejected a bid by Marvel to throw out the Kirby estate's main counterclaim. The judge decided it wasn't a "redundant" claim, meaning she will soon have an opportunity to shake up Marvel's universe, if she so decides, with a potentially devastating future ruling.
But the judge's decision wasn't a complete loss for Marvel. Far from it.
The studio was successful in avoiding an accounting on how much money is potentially at stake. Judge McMahon agreed with Marvel's contention that it would be premature to adjudicate the issue before it's decided whether the Kirby material can be terminated.
Marvel also scored more victories in trimming counterclaims made by the Kirby estate, which is being represented by Marc Toberoff, the same attorney who is giving Warner Bros. quite a few headaches over terminated rights to Superman.
Judge McMahon has ruled that the estate's attempt to get Marvel to return Kirby's original artwork is "untimely," barred by the statute of limitations. She has also thrown out Kirby's other counterclaims of breach-of-contract and violations under the Lanham Act. The estate had argued that Kirby was not credited with being the author or co-author of works that served as the basis for recent films "The Incredible Hulk" and "X-Men Origins: Wolverine."
In sum, the judge has narrowed the case to its most crucial issue. Both sides disagree about Kirby's working environment in the 1950s and 1960s when he, along with Stan Lee, conceived many of Marvel's most popular characters. The judge will soon be tasked with looking at Kirby's work history and some of the loose contracts and oral agreements that guided his efforts in those years.
Finally, Walt Disney Co. will be a part of this lawsuit, whether it wants to or not. Marvel, which was purchased by Disney for $4 billion late last year, had attempted to dismiss its new corporate parent from the proceedings, shielding it from liability. Marvel had argued that the termination notices were sent a few months prior to the Disney acquisition.
However, Judge McMahon rules that it's immaterial, that Disney is now in the position to exploit Marvel's assets -- including the rights that Marvel has to Kirby-created characters -- and that Kirby's claim for declaratory relief must include Disney as well.