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The Key to the Stan Lee Case, At Least for Me
posted January 24, 2005
 

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The big story this week in North American comics was Stan Lee's round-one win against Marvel in his pursuit of money related to movies and TV, money Lee claims he's due according to the terms of a 1998 employment contract.

Stan Lee sued Marvel Enterprises and Marvel Characters in the Fall of 2002 at the point Jordan Raphael and I were finishing up our biography of Lee, Stan Lee and the Rise and Fall of the American Comic Book. Jordan and I wanted to make sure we worked the case and whatever it might reveal about Stan's business dealings with Marvel into the book, despite the fact we had already approached much of what would be revealed from different angles and sources.

I don't recall if the suit was the first place we heard of the section of Lee's 1998 employment contract on which the case hinges -- you know the one:
f) In addition, you shall be paid participation equal to 10% of the profits derived during your life by Marvel (including subsidiaries and affiliates) from the profits of any live action or animation television or movie (including ancillary rights) productions utilizing Marvel characters. This participation is not to be derived from the fee charged by Marvel for the licensing of the product or of the characters for merchandise or otherwise. Marvel will compute, account and pay to you your participation due, if any, on account of said profits, for the annual period ending each March 31 during your life, on an annual basis within a reasonable time after the end of each such period.

But I do know that whenever we heard of the clause above, we were pretty baffled by it being there.

I remain sort of confused.

I mean, I think my co-writer and I came to a solid understanding of the overall contract. I talk about it here in greater detail, but this is the short version. Basically, the 1996 bankruptcy voided Lee's contract with Marvel. After being low-balled in an initial offer, Lee's legal team worked out a very nice contract for Lee that guaranteed him a hefty salary in return for a modest amount of work as a kind of unofficial chief spokesman for the company and its characters. Our source missed out on how that contract built it way up to a million dollars a year, according to information in the recent brief, but we were very close. In return, Lee signed a lot of papers that removed all doubt that he could press any claim to the characters he had a hand in creating -- at the time, it was thought Lee might be able to tie a grant of his rights to the characters as understood within a employment contract. So Stan gets a significant salary ramping up to $1 million a year, guaranteed to protect his wife and daughter financially, and becomes a free agent who can now dabble in other areas of show business.

None of this explains how that 10 percent clause got in there, and if there's anything I'd like to know as Lee's case against Marvel works itself to a conclusion is why and how it did.

It could be that the 10 percent was an important motivating factor for Stan to sign his new contract and abdicate any creative ownership of the characters, that he had spent too much time in Hollywood taking grief from people like Alan Thicke and was too hopeful of Marvel's movie success not to have something like that in there. But everything I've read from the time makes me think that the salary is what was the important trade-off for Stan rescinding any claim he might have to the characters. In fact, I think the salary is a pretty solid trade-off considering the potential legal shakiness of any claim Stan could make, since borne out by the results of the Marv Wolfman case.

Others have suggested that Marvel was trying to motivate Lee into getting out there and making some Hollywood deals, but I don't think in 1998 Lee was significantly acting as point man for any effort of this type, and hadn't been for a while. Still others have asserted that Marvel simply didn't see their movie monies as significant, and therefore they were happy to throw that clause in. I actually think they were further along in making deals than that, or were at least confident in their ability to do so. That's why they wanted a clear slate with Lee. It may be that they didn't foresee the incredible amounts of cash that were stirred up by Spider-Man, but I think in a contractual phase that would make them more protective of whatever amounts they thought they could make, not less.

The theories I'm working with right now are

1) the lawyers at Marvel screwed up, which doesn't seem possible to that extent, but certainly explains everything.

2) while Marvel saw movie money in their future, they didn't think they'd be participating in a way that would activate that clause, and the runaway success of the Marvel films changed that and forced them to seek a better deal which then activated that clause.

Or

3) there's something I don't know about, maybe a more straightforward claim to ownership or profits in a past contract related to termination of employment that had to be dealt with more explicitly.

I'll continue to pursue the story, but my curiosity about the clause is such I don't mind revealing some of my thinking to my "competitors". My hope is that someone else working on the story may come to the answer first, and if so they'll choose to take time away from whatever tremendous implications for the future will certainly be in the air at the moment the case resolves itself, and spend a few moments doing industry historians the favor of a look back at that weird damn clause.