A couple of years ago, we had Marvel Characters v. Simon, involving retroactive works for hire and control thereafter of characters created in those works, and Fox Entertainment v. Marvel Enterprises, involving a TV series bearing an uncomfortably close resemblance to Marvel's X-Men franchise. Now we have a "contract dispute" that implicates both of those matters: Lee v. Marvel Enterprises, No. 02–8945 (S.D.N.Y. Jan. 17, 2005) (Sweet, J.) (PDF, 113kb).
Stan Lee created a number of famous Marvel characters, most particularly Spider-Man. Judge Sweet describes the dispute this way:
The plaintiff Stan Lee ("Lee") has cross-moved for partial summary judgment declaring that he is entitled to 10% participation in profits derived by Marvel from television or movie productions, not limited by so-called "Hollywood Accounting," including film/television merchandising when the profits do not result from a fee for licensing.
Slip op. at 2. As noted throughout the opinion, Judge Sweet has difficulty believing that "profit" really means what Hollywood tradition says it does. In the end, he holds that the contract between Lee and Marvel means "profit" as real people would define the term, not as Hollywood might. On the other hand, he's really not too pleased by the disingenuousness of the lawyers (I bet the briefs make fascinating reading and are filled with either near-invective or supercilious condescension toward "learned counsel's error"):
Skilled counsel for both sides praise the clarity of the language of paragraph 4(f) to reach directly contrary results. What follows is an effort to clarify and determine the terms of the contractual language under the applicable principles of procedure and construction. This determination has the potential to affect substantially the financial fortunes of the parties.
Slip op. at 4–5. I'm sorry, guys, but your arguments that the language was "clear" border on the frivolous if it takes the judge thirty pages to declare otherwise.
In any event, what this represents more than anything else is unsuccessful lawyering at the time the agreement was drafted. The terms "profits" and "profit participation" have dictionary meanings that are distinct from the "technical" meanings that are used, inconsistently, in various parts of the entertainment industry. If the parties might have intended those technical meanings, they were obligated to include (or at least reference) them; otherwise, even a first-year law student knows that the judge will resort to Webster's. Of course, if lawyers would just get out of the habit of taking terms that have reasonably clear everyday meanings and redefining the hell out of them—in an all-too-often-successful attempt to deceive someone—this wouldn't be a problem, would it?
And that, in the end, is also one of the problems with fan fiction and the whole character/environment protection struggle. I do not see this primarily as a copyright issue. I see it primarily as a trademark issue. And, over the next few irregular entries, I'll back up and try to show why the line of cases that tries to apply copyright to allusions is inconsistent with advising creators on how to comport their conduct to the law. It's not that the theory is "wrong"; it's that it can only be applied post hoc, and therefore is logically incomplete.