This article is written by Ashwene Vij pursuing Diploma in Intellectual Property, Media, and Entertainment Laws from LawSikho.com.

Introduction

“Hey look, it is the friendly neighbour Spider-man!” Bit by a radioactive spider, Peter Parker (alias Spider-man) has come a long way is probably hanging now since his world keeps turning upside down in view of considering whether the alias will ever meet its Marvel Cinematic Universe (MCU) friends mostly comprising of the Avengers or that is he going to create the parallel world by himself.  Spider-man being the most popular of the lot has been in our daily lives through comics, later incorporated into television shows, animations, movies, and now even video games. Such a strong personality is carrying a lot of money around its back as it encompasses Intellectual property (IP) via personality rights, its graphical representation not limited but inclusive of Venom, Miles Morales carrying on the mantle of Spider-man, its potential use to technology through Spidey web and many more.  

Before understanding the web Spider-man’s IP is caught in, the character of Spider-man can be divided into 3 parts.

1. Comics: Previously owned by Sony and now, Disney being the parent company of Marvel Comics hence, Disney or Marvel (Marvel) is in control of Spider-man comics.
2. Films: Columbia Pictures Industries, Inc. owned by Sony pictures entertainment (Sony) are being licensed by Marvel to make the Spider-man movies. 
3. Merchandising: The Merchandise is owned and controlled by Marvel comics. Hence, being owned by Disney or Marvel.

They are creative assets and since these companies’ profits are based on them, it is not hidden that IP plays a pivotal role in Marvel’s fortune. 

The crossover   

Marvel Studios (Marvel) being the marvelous point of all things good in the MCU has based its model as a movie adaptation for many years via the method of licensing its heroes or characters to other studios, be it The Hulk, X-Men, or even Fantastic Four. This helped Marvel to retain the commercial value of its superheroes by defining a proper systematic structure of terms and conditions and thereby somewhat retaining them in Marvel which has been profiting by managing crossover of these superhero characters to multimedia formats and each of their character sharing screen space together on the silver screen.  

Since, at the time Marvel Comics did not have its own movie studio and other things interrelated to launch Spider-man in its banner, Spider-Man, in the same manner, was let out to Columbia Pictures Industries, Inc. owned by Sony Picture Entertainment in 1999 with the condition that Sony had to produce new movies every five years to retain rights. This gave Sony the right to produce as many Spider-man movies and use its IPR but in return, Marvel would receive royalties and that too without spending on production or making the film. Hence, Sony made Spider-Man (2002), Spider-Man 2(2004), Spiderman (2007). It did not just stop there, Sony also rebooted Spider-man by the film The Amazing Spider-man, resulting in The Amazing Spider-Man 2 which had pocketed Sony in a huge way.

Marvel owns and controls Marvel Comics, hence Spider-man kept on being published in crossover comics with other superheroes like Fantastic four, Civil War, etc. 

It is all about money: Pivoting its way up

When Marvel entered the game of the production of its own films leading to creating iconic larger-than-life films, the studios were able to purchase and regain the rights of the characters like Iron Man, the Hulk, etc due to contractual obligations. Disney not only acquired Marvel Entertainment in2009 but also got access to a host of superheroes. Unexpectedly in the year 2015, Marvel and Sony shook hands extending their term deals with the condition that Sony would have vital rights over Spider-man films. Though most of Marvel’s character has their own storyline in their comic books, with this deal, the character of Spider-man was allowed to be used in MCU with films like Captain America: Civil War, Avengers: Infinity War, and Endgame and they further went on to co-produce Solo Spidey Movies like Spider-man Homecoming (2017) and Spider-Man: Far from Home (2019) which turned a billion-dollar success story. Though Marvel did not get enough out of this deal as Sony signed checks and put money in their pocket, Marvel only received a 5% share of box office receipts but not to forget Marvel also gave Sony two major box office releases.

The battle and future of Spider-Man’s IP

The deal between Disney-Marvel and Sony almost fell apart when Disney wanted to share the 50% cost of producing the film with returns of 50% profits at the box office since Venom did well at the box office and Spider-Man: Into the Spider-Verse achieved its first Oscar. These films expanded the visual representation of Spider-man’s IP and revealed many layers of IP possibilities, which does not mean Spidey’s IP can last longer without the interference of MCU. Marvel has reached places with play station games, merchandising, rights to use the character on television, animations, etc thereby rebuilding the brand of Spider-man.  Spider-man is a perfect example of how various kinds of IP can exist and function together at the same time. 

Sony currently is majority banking on Spider-man’s IP specifically after the Oscar win also giving it more reason not to split its profits equally with Marvel. In order to keep it from being wound up, Sony needs a stable long-term IP to compete in the marketplace and to achieve more successful financial stability. It’s not hidden that Sony is going through a rough patch and it has the option to be merged, but not with Disney as according to the “Section 7 of the Clayton Act defines, a merger between two companies like Disney and Sony unlawful if the effect of the merger may be to substantially lessen competition but can be merged with Amazon or Netflix, etc in turn reverting the rights back to Marvel”.  

Though Marvel has its own share of struggle with respect to the case between Fox Film Corp. v. Marvel Enterprises, Inc, Wherein Fox sued Marvel as they launched a show, Mutant X-, Marvel could not bring up any reference to X-Men since there was a breach of contract as Fox at that time owned rights with respect to X-Men. Marvel also could not use the word “Mutant” when it launched the show Agents of S.H.I.E.L.D to describe people with superpowers because the word’s use in that context was trademarked and owned by Fox which, at the time, still owned the rights to X-Men. In case of a new franchise by Sony or a new deal or the way character rights are now licensed, it would mean that crossover of Spider-man with respect to any character with MCU and other trademarks would be legally difficult.

Though IP negotiations fell apart in August 2019, Sony is still maintaining its association with the character as Sony struck a new deal with Marvel stating that Spider-man shall continue to appear on the MCU while Marvel agrees to co-producing another Spider-man movie together.  Sony is heavily banking on its creative IP to be maintained with the movies like Venom-2, Moribus, and potentially Spiderwoman into the Spider-verse.

Effective enforcement of IP in contracts

The basic need for every company is to avoid economic harm specifically if IPs are major assets. IP must be enforced in such a way that it can ensure and encourage the investment in innovation of developing its IP, in turn, to avoid breaking of commercial-scale loss of the goodwill, reputation, and most necessarily its IPR. Marvel is still earning sums and has benefitted from lending the license of Spider-Man IP to Sony and retaining other Spider-Man IP rights for e.g., merchandising, animations, comics, etc. Marvel has used this as a low-risk movie strategy while the other studios are taking financial risks. In turn, this has had Marvel bank upon its marketing strategies using the same IP of Spider-man but in different forms. Marvel has been prone to pre-existing movie licensing agreements hence is aware of making and utilising IP in its contracts. Marvel indirectly has invested in leveraging the commercial value of its characters by striking licensing deals with various studios and at various platforms and has cut back its expenses which have proved to be a long-term effective approach of IP in their contracts. 

Conclusion 

Disney-Marvel and Sony are in a mix of what seems to have uncertain futures on the horizon. A mistake Marvel then made while giving out Sony Spider-man’s IP was giving up the final creative control as Sony not only introduced Knull a character in the film Venom but also Spider-verse’s Thanos took a different version as compared to MCU. Marvel should have just given the rights for the character of the Spider-man series till 2007 and not renegotiate its terms. Marvel in 2014-2015 had many opportunities to take over the full control of Spider-man’s IP but instead, now Marvel is co-producing another solo Spider-man film with Sony. Marvel then could have given the only IP with respect to the character of Spider-man to Sony and should have held the rights of its associated characters as, Sony is now majorly banking on its franchise and its associated characters like Venom sequel, follow up of Spider-man into the Spider-verse, Morbius-The Living Empire and many more. “Marvel has been leading to a truly bizarre state of affairs, one of them being that Marvel Studios and Avengers are currently owned by Disney, but the theme park rights of many characters are owned by Universal Studios who are central to Universal’s competitor to Disneyworld in Florida.”

Sony now is coming out as a winner and seems renegotiations are swiftly falling in the favour of it especially, when MCU Spider-man’s flicks may be lacking on the huge platform of Disney+ depending on their current negotiations in 2019. There still lies a bit of grey area between Disney-Marvel and Sony’s relationship with respect to rights associated with Spider-man’s IP for the future. Even if collaboration is hampered between Disney-Marvel and Sony and if Sony runs into trouble in the future, Disney-Marvel at least will not lose the IP rights of Spider-man.

References

• https://www.wipo.int/wipo_magazine/en/2012/03/article_0005.html#:~:text=IP%20protects%20comics%20in%20two,characters%20they%20create%2C%20are%20used
• https://lawreview.syr.edu/spider-man-leaves-the-mcu-custody-battle-over-character-rights-between-marvel-and-sony/

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join: