#DisneyMustPay? The Writer and the Mouse

Picture this: you have been hired to write a book based on a popular science fiction film. The franchise is wildly successful. The royalties start coming in. You expect to continue receiving payments for the rest of your life. 

But years later, the payments stop. Disney now has the rights. It says that it does not owe you anything. It claims that it has acquired the rights without taking on any liabilities – including the obligation to pay you.

That is what beloved science fiction writer Alan Dean Foster says happened to him after Disney acquired the rights to Splinter of the Mind’s Eye, the first novel in the Star Wars expanded universe, novelizations of the Aliens franchise, and other books he has written. Foster, his fans, and the Science Fiction & Fantasy Writers of America say #DisneyMustPay.

Work-made-for-hire and the Writer

Foster’s rights will depend on his contracts. Typically, an author holds a book’s original copyright and grants the publisher an exclusive license—permission—to publish the work in exchange for royalties. If a license is transferred to another publisher, the obligation to pay royalties goes with it.

When writers are hired to write movie tie-in books, though, the books are generally “works made for hire.” The hiring company is the legal author and owns the copyright from the moment of creation. According to their copyright registrations, Splinter of the Mind’s Eye and Aliens are works made for hire. If that is correct, Foster never owned the copyrights. His rights would be based on his contracts with the companies that hired him.

The Assets and the Mouse

Whether Disney or its publishers must pay royalties could depend on how Disney acquired the copyrights to Foster’s books.  As Foster said in an open letter to “Mickey,” “[w]hen one company buys another, they acquire its liabilities as well as its assets.” Disney purchased Lucasfilm and Fox and made them subsidiaries. This would seem to support Foster’s position that Lucasfilm’s and Fox’s obligations to pay him should carry over to Disney.

A company can, however, buy, sell, or transfer only selected assets. In that case, corporate liabilities or contractual obligations may be left behind. This may have happened when the copyrights were transferred to Disney and Disney started using new publishers. If copyrights to the books were transferred and contractual obligations to pay royalties were not, this could be disastrous for the livelihoods of writers like Foster.

The Takeaway

Even without knowing the details of Foster’s contracts, Foster’s case highlights the difficulties of contracts for future revenue. The contract must anticipate changes in circumstances, including changes of company ownership and transfers of property. Foster’s contracts may have done so. We don’t know.

Should creators avoid royalties or a revenue share for work-made-for-hire? No. Filmmakers frequently accept “points,” a percentage of a film’s net profits. Rather, the creator and the employer should address in detail how the revenue share or royalties will be paid, and the contract should accurately reflect their intentions.

Who Wins

Foster may win through publicity and outreach. The #DisneyMustPay campaign appears to have gained Disney’s attention. Although Disney initially rejected Foster’s claims, Disney later agreed to “carefully review[] whether any royalty payments may have been missed as a result of acquisition integration and [] take appropriate remedial steps if that is the case,” according to the Wall Street Journal.

Even if Disney can legally avoid making payments to Foster, it should do better by the authors who have contributed to these iconic and profitable franchises. If Disney can reach an agreement with Alan Dean Foster and other writers with similar contracts, everybody wins.

Elaine Wyder-Harshman is the Managing Attorney of Convex Legal LLC, a law firm serving creative and entrepreneurial clients. Elaine’s practice includes film finance and production legal. You can contact her at elaine@convexlegal.com. Follow Convex on Facebook.

Disclaimer: The information in this column is intended for general information purposes only and should not be construed as legal advice.