Who owns the copyright on Jack Ryan?

On 10 February 2021, United States District Judge Ellen L. Hollander from the Federal District Court of Maryland published an 89-page Memorandum Opinion, addressing the issue of ownership of the books and fictional characters created by Tom Clancy, including Jack Ryan. The case is Alexandra Clancy v. Jack Ryan Enterprises, Ltd.

Facts

The character of Jack Ryan first appeared in The Hunt for Red October (The Hunt), the first book ever published by Tom Clancy. It was published in 1984, by a small academic press, the United States Naval Institute (USNI). One of the book’s characters is Jack Ryan, an analyst working for the Central Intelligence Agency. Jack Ryan became a recurring character in Tom Clancy’s books, and appeared in several movies and television series adapted from Clancy’s best-sellers.

Clancy and USNI signed a publishing agreement in 1983, which stated that:

“Author [Tom Clancy] grants and assigns to the Publisher [USNI] the exclusive worldwide rights and any subsisting copyright, including the right to secure copyrights and any renewals or extensions thereof, in connection with a certain unpublished work provisionally entitled THE HUNT FOR RED OCTOBER…” and also stated “The Author agrees that he will not, without the written permission of the publisher, publish or permit to be published any material based on, or derived from, or directly competitive with the Work [i.e., Hunt], so long as this agreement shall remain in force.”

On October 29, 1984, USNI received a certificate of copyright registration for The Hunt which identifies Clancy as the author, and USNI as the copyright claimant. On May 7, 1985, USNI, as owner of the exclusive rights, licensed a theatrical film from Paramount Pictures.

Jack Ryan Enterprises, Ltd. (“JREL”) was formed on May 28, 1985 by Tom Clancy and then-wife Wanda King. JREL’s only assets were the computers that Clancy used to write his books. JREL was owned 40% by Tom Clancy, 40% by Wanda King, and 20% by their four children. Tom Clancy died in 2013, and JRE is now owned 40% by his estate, 40% by Wanda King, and 20% by Clancy and King’s children. Wanda King is JREL’s President.

The issue of ownership of the Jack Ryan character first arose between Clancy and USNI in 1987. Clancy asked USNI to transfer the copyright registration for The Hunt back to him, claiming it was needed for Clancy to move forward with his negotiations with Viacom. USNI claimed it owned the rights to The Hunt.

Robert Youdelman, Clancy’s attorney, told his client at the time that he believed that USNI had “acquired the copyright in [Hunt],” which gave it a continuing “interest in new books using the same characters.” He added that “[t]he author of a novel usually retains the copyrights…. The publisher customarily has no interest in new books using the same characters,” and noted that USNI had acquired “world-wide publishing rights” and added that because the “contract entitles [USNI] to 50% of all you make from any book in which ‘Jack Ryan’ or other characters from Red October appear, it is our view that this alone departs so far from industry practice as to make the entire contract unconscionable.”

In 1988, Clancy filed for arbitration with the American Arbitration Association, arguing that he owned the Jack Ryan character, because the history of the relationship between USNI and Clancy showed that Clancy never relinquished his ownership of the now famous character. The parties settled: Clancy agreed to pay USNI $125,000 and, in exchange, USNI agreed to reassign the copyright in The Hunt to Clancy. However, the agreement did not explicitly mention the Tom Clancy character.

JREL and Paramount entered into an agreement in 1989 clarifying the ownership rights to the motion picture, television, and literary rights in The Hunt, which stated that JREL, as owner, had rights reserved for use and disposition, including in all literary property using the character Jack Ryan or any other principal character in The Hunt. JREL subsequently entered into other contracts for novels and movies featuring Jack Ryan.

Clancy formed Jack Ryan Limited Partnership (“JRLP”), a Maryland limited partnership, on 26 February 1992. Clancy’s 50% interest is now owned by his estate. Regina King still owns 50%. In 1992, and again in 1994, Clancy entered into employment agreements with both JREL and JRLP.

Clancy formed Rubicon, Inc. in November 1995, which was owned entirely by Clancy. Clancy published The Bear and the Dragon (2000), Red Rabbit (2002), and The Teeth of the Tiger (2003), featuring Jack Ryan, under contracts executed by Rubicon. Clancy published these books without the agreement of the JR Entities and no proceeds were paid to the JR entities.

Clancy & King separated in November 1996. Their separation agreement included sections on the ownership and control of JREL and JRL:

“Husband [i.e., Clancy], Wife [i.e., King] and Michelle Clancy [one of the Older Children] are the only directors of JREL. Husband is the President, and Wife is the Vice President, Treasurer and Secretary of JREL + Clancy, as president of JREL, would have the usual powers of the chief executive of a personal service corporation, including the power to negotiate and sign on behalf of JREL royalty and other contracts…”

This agreement was incorporated in the 1999 divorce decree. Tom Clancy married Alexandra Clancy in 1999. The couple stayed married until Clancy’s death in October 2013 and had one child.

Paramount announced in 2008 that it was developing a new movie, Jack Ryan: Shadow Recruit, featuring Jack Ryan, which would not be based on any of Clancy’s previous novels. Based on emails between Clancy and his representatives, there was some concerns on whether Paramount had the right to develop the Jack Ryan character. Robert Youdelman reminded Clancy’s agent that the “‘Jack Ryan’ character is owned by Jack Ryan Enterprises Ltd, an entity in which Wanda [King] and the children have an interest[.]” Paramount eventually paid to use the Jack Ryan character in the new movie.

Clancy died in 2013. After his death, Putnam wanted to publish “Tom Clancy” novels, at least one novel focusing on the Jack Ryan character. In March 2015, his Estate, Rubicon, JREL, and JRLP, collectively as the “Author,” executed a four-book deal with Putnam.

Procedure

Alexandra Clancy filed on August 25, 2017 a complaint for declaratory judgment in the Circuit Court for Baltimore City to obtain a declaration that the rights to the Jack Ryan character are owned by Rubicon, a company created by Tom Clancy, which is now wholly-owned by the Tom Clancy Estate.

Defendants are J.W. Thompson Webb, as personal representative of the Estate of Thomas L. Clancy, Jr. (the “Estate”) and the three separate business entities formed by Clancy: JREL, JRLP and Rubicon.

The case was removed to the federal District Court for the District of Maryland because some of the claims arise under the Copyright Act.

Authorship and Work Made for Hire

Defendants claim that JR Books were written as works made for hire for the JR Entities, which, therefore, own all of the copyrightable elements of the books, including the characters delineated in them.

Neither side argues that any of the books were “specially ordered or commissioned,” and thus the issue is whether Clancy was an employee of the JR Entities and wrote the JR Books within the scope of his employment.

If Clancy was an employee of JREL and JRLP, then the works he wrote at the time are works for hire and the two companies own the copyright. This is the view of the Defendants, but not, of course, of the Plaintiff, who claims that Clancy was neither an employee nor agent of the JR Entities, that, therefore, the works are not works made for hire as Clancy’s relationship with the JR Entities “had none of the earmarks of a true employee relationship.”

Section 101 of the Copyright Act defines a work for hire as:

“(1) a work prepared by an employee within the scope of his or her employment; or

(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.”

The Copyright Act does not define the terms “employee” or “employment,” however, leaving the application of the terms to the courts.

The U.S. Supreme Court held in Community for Creative Non-Violence v. Reid, that “the term ‘employee’ should be understood in light of the general common law of agency,” and set out a non-exhaustive list of factors to consider. However, none of these factors are determinative, and the Supreme Court did not indicate how the factors must be weighed.

The Courts do not mechanically apply the Reid factors and only consider the factors which are relevant in each case:

hiring party’s right to control the manner and means by which the product is accomplished;
skill required;
source of the instrumentalities and tools;
location of the work;
duration of the relationship between the parties;
whether the hiring party has the right to assign additional projects to the hired party;
extent of the hired party’s discretion over when and how long to work;
method of payment;
hired party’s role in hiring and paying assistants;
whether the work is part of the regular business of the hiring party;
whether the hiring party is in business;
provision of employee benefits; and
tax treatment of the hired party

The Second Circuit Court of Appeals identified in Aymes v. Bonelli five factors to consider when determining whether a work was made for hire:

hiring party’s right of control over the hired party;
skill required of the hired person;
provision of employee benefits;
tax treatment of the hired party; and
whether the hiring party has the right to assign additional projects to the hired party.

Judge Hollander found the Aymes factors “particularly relevant” in the Clancy case, and concluded that they weighed against finding a work for hire status, as evidence demonstrated that neither of the JR Entities had attempted to “control the manner and means” by which Clancy’s books were written. King acknowledged that Clancy had complete autonomy with respect to every aspect of his books, and even though she may have reviewed the books once they were written, it was Clancy who chose what books to write and when to work on them.

Clancy was a co-owner of both entities, but there are factors that support finding that the famous author was an employee of the JR Entities:

JREL paid for the computer that Clancy used to write the books;
Clancy worked for both entities for an extended period of time;
Clancy’s work was part of the regular business of the entities; and
Clancy received health benefits.

Defendants argued that publishing agreements between the JR Entities and Putnam proved that Clancy believed the books were made for hire. Judge Hollander found that these agreements prove that Clancy had the intent to form an employment relationship, but that they did not necessarily “suffice on [their] own” to overcome the factors weighing against finding a work for hire relationship.

Judge Hollander could not thus conclude, as a matter of law, that Clancy was an employee of the JR Entities and that his books were made for hire and denied both Plaintiff and Defendants’ motions with respect to the work for hire claims.

Alleged Copyright Assignments from Clancy to the JR Entities

The Parties did not dispute that JREL owns the copyright to The Hunt but disagreed over whether the Jack Ryan character as developed in The Hunt, was assigned to USNI and then JREL, along with the copyright in The Hunt or, instead, whether Clancy retained the copyright in Jack Ryan at the time of his death.

Ownership of a copyright is freely transferrable “by any means of conveyance or by operation of law,” 17 U.S.C. § 201(d)(1). However, “[a] transfer of ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or a memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent,” 17 U.S.C. § 204(a).

Section 204’s requirement may be satisfied by an oral assignment that is subsequently ratified or confirmed by a written memorandum of the transfer.

Defendants claimed that JR Entities own the JR Books and their characters because the copyrights were validly assigned to them by Clancy, pursuant to 17 U.S.C. § 204(a), while Plaintiff claims that any alleged assignment of the JR Books to the JR Entities was ineffective.

Defendants argued that there were “several written instruments, signed by Tom Clancy, that memorialize the transfer of copyright in each book from Tom Clancy to JREL and JRLP, respectively,” including:

the publishing agreements with Putnam;
the Guaranty Letters accompanying those agreements;
the Separation Agreement that acknowledges ownership of the books by JREL and JRLP;
Guaranty Letters and the Separation Agreement operate as written “note[s] or memorand[a]” validating earlier transfers between the JR Entities and Clancy.

Plaintiff argued that these are not the kind of documents that “qualify as assignments” under Section 204 and that “none of the referenced documents are between Clancy and JREL or JRLP,” none of them “set forth the clear and unequivocal intent to transfer required by Section 204.”

Judge Hollander applied Maryland law to interpret the agreements and concluded Tom Clancy clearly intended to transfer copyright ownership to the JR Entities, and that the requirement of an assignment under Section 204(a) were satisfied.

Impact of the assignment on ownership of the characters featured in the JR Books, including Jack Ryan

Judge Hollander noted that the parties appeared to agree that the owner of the copyright to these works also owns the rights to the characters or the incremental character developments in them, with the exception, however, of the Jack Ryan character. She considered separately the issue of ownership of the Jack Ryan character and concluded that the characters developed in the JR Books, like the books themselves, were validly assigned to the JR Entities.

The parties disagreed on whether the assignment to USNI of the copyright to The Hunt, and the assignment of The Hunt to JREL included assignment of the copyright in Jack Ryan, a character who first appeared in this book.

Defendants claimed that Clancy assigned the copyright in Hunt to USNI “without reservation,” and thus USNI acquired the copyright to the Jack Ryan character, and that, when USNI assigned the copyright in The Hunt to JREL, “it also assigned the rights to Jack Ryan as delineated in Hunt to JREL.”

Plaintiff stated that Jack Ryan “is a fully delineated, distinctive and iconic character,” and is “important to the Clancy franchise.” She conceded that the rights to The Hunt were assigned to USNI and JREL, but not the character of Jack Ryan:

“The 1983 [USNI] Contract does not grant USNI any rights to the characters featured in HUNT or to sequels or derivative works. None can be inferred.”

Fictional characters are not an enumerated copyrightable subject matter under the Copyright Act, see 17 U.S.C. § 102(a), but courts recognized that they can be protected by copyright if developed with enough specificity so as to constitute protectable expression.

The Ninth Circuit Court of appeals explained, however, in DC Comics v. Towle, that “[n]ot every comic book, television, or motion picture character is entitled to copyright protection.” The Ninth Circuit enumerated its “Towle” test for characters:

A character is entitled to copyright protection if

the character has “physical as well as conceptual qualities;”
the character is “sufficiently delineated to be recognizable as the same character whenever it appears” and “display[s] consistent, identifiable character traits and attributes;” and
the character is “especially distinctive” and “contain[s] some unique elements of expression.”

Section 201(d)(2) of the Copyright Act provides:

Any of the exclusive rights comprised in a copyright, including any subdivision of any of the rights specified in section 106, may be transferred…and owned separately. The owner of any particular exclusive right is entitled, to the extent of that right, to all of the protection and remedies accorded to the copyright owner by his title.

As such, under the theory of divisible copyrights, fictional characters may be protected separately from the underlying work, and this copyright may be assigned separately from the copyright in the general work.

Judge Hollander noted that the issue was not only whether Jack Ryan was sufficiently delineated in The Hunt to be protected by copyright, separately from the book, but also whether the assignments of The Hunt copyright to USNI, then JREL, included the transfer of ownership of Jack Ryan.

As both parties agreed that Jack Ryan is sufficiently developed to be protected, Judge Hollander addressed only the issue of assignment of rights, found these assignments to be ambiguous and denied summary judgment:

“Whether the rights to Jack Ryan were assigned to USNI or JREL, as part of the assignment of rights to Hunt, depends on the interpretation of the… agreements. …Applying the tools of contract interpretation, I conclude that the assignment of rights to Jack Ryan is ambiguous because at least one of the relevant agreements—the Settlement Agreement—is susceptible to multiple interpretations.”

The case is now heading to trial. A jury will be asked to decide who owns the Jack Ryan character, unless the parties settle.

This article was first published by TTLF Newsletter on Transatlantic Antitrust and IPR Developments ( Stanford-Vienna Transatlantic Technology Law Forum)

Image of the spine of The Hunt for Red October courtesy of Flickr user Drümmkopf under a CC BY 2.0 license.