Marvel Comics is finding itself pinched by separate legal actions taken by two of the comic book publishing company's legendary creators.

The U.S. Court of Appeals for the Second Circuit (based in New York) has reversed a ruling by the U.S. District Court for the Southern District of New York. Joe Simon, who created the popular Marvel Comics superhero patriot Captain America in 1941, can now proceed with a suit to retrieve copyright ownership of the character.

Also, Stan Lee, chairman emeritus of Marvel and the creator of SpiderMan and many other lucrative Marvel properties, has filed suit against Marvel, claiming the company is violating a 1998 agreement that gives him a share in the profits of any productions that use his characters.

A spokesperson for Marvel told PW that it does not comment on pending litigation.

Both suits are filed in the wake of Marvel's recent successes in turning its comic book heroes into lucrative motion pictures, book projects and merchandising franchises. But the suits are also reminders that comic book publishers have long profited from the works of virtually anonymous creators who were often forced to relinquish copyright ownership before the real value of their creations was understood.

In Marvel Characters v. Joseph Simon, Simon claims that under a provision in the copyright act of 1976, freelance creators can reclaim copyright ownership of their works after 56 years. The provision cannot be used to reclaim ownership of works created by employees—"works for hire." Indeed, the ruling notes that the provision was included in the 1976 copyright act expressly to protect freelance creators and to compensate them for ill-advised, inequitable or forced transfers of now-lucrative copyrights.

Even if the freelance creator has signed away these rights—Simon signed an agreement in 1969 stating that Captain America was a work for hire—the provision overrides "any agreement to the contrary," and still allows the original creator to reclaim the copyright. Simon provided evidence that he was a freelance creator when he offered Captain America to Marvel (then called Timely Comics). If Simon wins, Marvel would still control all Captain America properties created since 1941. Simon would control the licensing of any future projects.

The appellate court agreed with Simon, noting that the courts must be "focused on the actual relationship between the parties, rather than the language of their agreements, in determining authorship."

In financial news, Marvel reported that for the third quarter ended September 30, sales in its publishing segment rose 19.5%, to $15.3 million. Sales were given a significant boost by the sale of graphic novels to mainstream retailers, which grew from approximately $100,000 in last year's third quarter to $900,000 in the most recent period. Sales of comic books and graphic novels to comic specialty stores rose 22.8%, to $12.4 million. For the first nine months of the year, publishing sales were up nearly 40%, to $47.8 million, with an operating profit of $14.3 million.