LEGAL ISSUES
Terminating the Phillie Phanatic
by George H. Pike
They don’t really have that much in common. One was born in the 1930s, the other in the 1970s. One traces its origins to the Cleveland area, the other to Manhattan. One reportedly hails from Krypton, the other from the Galapagos Islands. One is “faster than a speeding bullet and can leap tall buildings in a single bound,” the other has a 90" waistline and enjoys cheesesteaks, hoagies, scrapple, Tastykakes, and the movie Rocky. Yet both are world famous and at or near the top of their categories.
I’m talking, of course, about Superman and the Phillie Phanatic, among the most widely recognized superheroes and sports mascots, respectively, in the country. Superman, created in the mid-1930s, has been the nonstop subject of comic books, other books, movies, serials, television shows, and other media and reportedly continues to generate nearly $300 million annually in royalties and revenues for DC Comics. The Phanatic has been in sports arenas, children’s hospitals, and schools and has appeared (often in cameo roles) in many television shows and movies—including one from the Rocky franchise.
SECTION 203
Both characters, however, bookend a unique copyright law problem involving the ability to reclaim the rights to a copyrighted work 35 years after those rights have been given away. The Phillie Phanatic is the subject of a federal court lawsuit, ThePhillies v. Harrison/Erickson, Inc., et al., filed by the Philadelphia Phillies after its creator, the New York costume design firm of Harrison/Erickson, Inc., sent a letter to the Phillies insisting on the right to reclaim its copyright in the Phanatic under Section 203 of the Copyright Act of 1976.
Title 17, Section 203 of the U.S. Code provides that under certain circumstances, a copyright creator who had assigned or licensed their rights to another party can terminate that assignment during a narrow window between 35 and 40 years later. This provision, adopted in the copyright law for the first time in the 1976 act, was inspired at least in part by the creators of Superman, who sold all of their rights to the Superman character for $130.
UNFAIR WINDFALL
The new law recognized that individual creators often are required to license or assign their copyrights to corporate entities such as publishers in order to be able to effectively commercialize their creations. The imbalance between the parties often results in arrangements that can give an unfair or unexpected windfall to the new owner. The law was intended to give creators a chance to reclaim—or, more typically, to renegotiate—rights to their creation.
Some corporate owners would assert that the law fails to account for the risk they assume in attempting to commercialize the work, such as a book or movie that flops. Concerns have also been expressed that the right to reclaim or renegotiate can create a reverse of the previous imbalance, when an author seeks to exploit the new owner’s investment through threats to take back their rights.
‘FOREVER’
In 1978, the Phillies reached out to Harrison/Erickson to create a costume for a new mascot for the team. The Phillies outlined a vision for the character and provided Harrison/Erickson with feedback during its development. Harrison/Erickson was paid for its work and received royalties on promotional items and merchandise based on the character. Over the next few years, Harrison/Erickson and the team went back and forth on various rights and royalties issues, entering into a series of agreements that by 1984 had resulted in an assignment to the Phillies of all of Harrison/Erickson’s rights to the character for a set price. The language of the agreement stated that the assignment was “forever.”
Based on these assertions, the Phillies sued after Harrison/Erickson notified the team of its intention to terminate the 1984 agreement and sought to renegotiate a new agreement. Among the Phillies’ claims is that the team is the co-author of the Phanatic, which is important because as the other co-author, Harrison/Erickson, under Section 203, would not be able to “recapture sole authorship rights” or terminate agreements. The Phillies also assert that the “forever” language in 1984 and the more equal bargaining power between Harrison/Erickson and the Phillies at that time represented Harrison/Erickson’s “single opportunity” to renegotiate based on Section 203.
Harrison/Erickson countersued, asserting that it is the sole author of the Phanatic and that until now, the Phillies have not challenged that. It also asserts that Section 203 applies to its claim to regain copyright, “notwithstanding any agreement to the contrary,” which makes the “forever” claim moot.
SANTA CLAUS AND FRIDAY THE 13TH
The impact of Section 203 has only recently been felt. Because claims to terminate a license could not be filed until 35 years later, and the law went into effect in 1978, the earliest time that a claim could have come up was 2013. Since then, only a few cases have made it into the courts, including claims associated with the songs “Santa Claus Is Coming to Town” and “Caballo Viejo” and the screenplay for the original Friday the 13th movie. In those cases, the court did take notice of the intention of Section 203 to compensate for unequal bargaining power. At least one court noted that Congress adopted Section 203 to allow for determining the true market value of a particular work, then providing an opportunity to renegotiate after that market value is decided.
Harrison/Erickson’s termination letter states that the Phillies’ right to use the Phanatic will expire on June 15, 2020. That is, unless a court determines otherwise. In the meantime, the Phillies made some changes to the Phanatic costume, including some alterations of the green “fur” color, the shoes, the size of its “beak,” facial features, and the tail, possibly to showcase that the new costume is different from the original Harrison/Erickson copyright. Among baseball fanatics (phanatics?), the changes have generated their own controversy, including proposals to drop, and move on from, the Phanatic. (Google “Phillie Phanatic” for a representative sample.)
NO CRYING IN BASEBALL
While a negotiated settlement is the most likely outcome, this case actually represents a good test of many issues that have arisen and remain unsettled under Section 203, including co-authorship, specific clauses such as “forever” in earlier agreements, and the role of unequal bargaining power. The outcome, either way, is going to make someone un happy, but as a wise man said, “There’s no crying in baseball.” |
