Instance, Expense, and the Heirs' Lost Recapture: Marvel Characters v. Kirby

The Second Circuit held that Jack Kirby's foundational 1958-1963 comics were works made for hire under the 1909 Act's 'instance and expense' test, defeating his children's § 304(c) termination notices.

In Marvel Characters, Inc. v. Kirby, 726 F.3d 119, No. 11-3333 (2d Cir. Aug. 8, 2013), the United States Court of Appeals for the Second Circuit affirmed (in the main) summary judgment for Marvel, holding that 262 works the artist Jack Kirby contributed between 1958 and 1963 — the period that produced the Fantastic Four, the X-Men, the Hulk, Thor, and other cornerstones of the Marvel universe — were “works made for hire” under the Copyright Act of 1909. Because works made for hire have no human “author” who holds a terminable grant, Kirby’s children could not exercise the § 304(c) right to recapture the copyrights, and their termination notices were ineffective. The case stands as the definitive modern application of the 1909 Act’s “instance and expense” test to a freelance creator, and a sobering counterweight to author-friendly termination decisions.

At a glance

Case: Marvel Characters, Inc. v. Kirby, 726 F.3d 119, No. 11-3333 (2d Cir. Aug. 8, 2013).
Court: U.S. Court of Appeals for the Second Circuit, affirming the Southern District of New York in relevant part.
Issue: Whether Kirby’s 1958-1963 comic-book contributions were works made for hire under the 1909 Act, which would bar his heirs from terminating under § 304(c)(2).
Holding: The works were made at Marvel’s “instance and expense” and were therefore works for hire authored by Marvel; the Kirby heirs held no termination rights. (The court also vacated for lack of personal jurisdiction over two of the children, who were nonetheless not indispensable.)
Why it matters: It defines the work-for-hire bar to termination for pre-1978 works and shows how the 1909 Act’s standard can swallow even an iconic freelancer’s recapture claim.

Termination under § 304(c) and the work-for-hire bar

Section 304(c) addresses a different vintage of grant than the more familiar § 203. It applies to copyrights subsisting before 1978 — works whose terms Congress extended in 1976 and again in 1998 — and lets the author or statutory heirs terminate pre-1978 grants of renewal-term rights, recapturing the bonus years Congress added. The mechanism is meant to redistribute the windfall of term extension to authors and their families rather than to the assignees who acquired the copyrights long ago.

But § 304(c), like § 203, reaches only grants made by the author. Works made for hire are categorically excluded. If Marvel was the statutory author of Kirby’s contributions, then Kirby never owned a copyright to grant, his heirs inherited no termination right, and their notices were nullities. The entire appeal therefore collapsed into a single historical question: under the law in force when the comics were made, were they works for hire?

The 1909 Act and the “instance and expense” test

Crucially, the works predated the 1976 Act, so the modern Community for Creative Non-Violence v. Reid agency analysis did not apply. The governing standard was the judge-made doctrine the Second Circuit developed under the 1909 Act: the “instance and expense” test. A work is made for hire under that test when it is created at the hiring party’s instance and expense.

“Instance” looks at inducement and the right to direct and supervise: did the hiring party order or motivate the creation of the work and retain the power to control how it was done? “Expense” looks at financial risk: did the hiring party pay a fixed sum irrespective of the work’s success, rather than leaving the creator to bear the risk through royalties? Where both are present, the 1909 Act creates a near-irrebuttable presumption that the work is for hire, rebuttable only by evidence of an agreement to the contrary reserving rights to the creator.

The Kirby heirs’ best argument was that their father was a quintessential freelancer — not salaried, working from his own home in his own style, free to and in fact did sell pages to other publishers. The Second Circuit acknowledged all of that but held it did not move the needle under the controlling test. Freelance status is not dispositive; “instance and expense” looks past the label to the operative relationship.

How the panel found instance and expense satisfied

On “instance,” the court emphasized the close, continuous, and collaborative relationship between Kirby and Marvel during the years in question — most vividly the editorial engine driven by Stan Lee, in which characters and storylines were assigned, plotted, reviewed, and revised under Marvel’s supervision. Kirby drew within Marvel’s evolving universe and to its specifications; Marvel could and did request changes and reject pages. That supervisory inducement satisfied the “instance” prong even though Kirby contributed enormous creativity of his own. Creative genius and work-for-hire status are not mutually exclusive.

On “expense,” the decisive fact was the payment structure: Marvel paid Kirby a flat per-page rate for accepted artwork, not a royalty or profit share. Kirby bore the risk that pages might be rejected, but he did not bear the market risk of whether a comic sold — Marvel did. A fixed-sum payment, the court reiterated, is the paradigm of the “expense” prong. With both prongs met and no contemporaneous agreement reserving rights to Kirby, the presumption of work-for-hire status governed, and Marvel was the statutory author.

The court added a procedural wrinkle: it vacated the judgment against two of Kirby’s children (Lisa and Neal) for lack of personal jurisdiction in New York, but held they were not indispensable parties, so the action could properly proceed to the merits against the other two (Barbara and Susan), who were left without termination rights. The Kirby family later petitioned the Supreme Court for certiorari, drawing broad amicus interest; the parties settled in 2014 before the Court acted, leaving the Second Circuit’s reasoning intact and influential.

Open questions

Is “instance and expense” too generous to hiring parties? Critics argue the test converts almost any supervised, flat-fee freelance work into a work for hire, hollowing out the termination right for pre-1978 creators. The settlement foreclosed Supreme Court review of that critique.
How does the test interact with reserved-rights evidence? The presumption is rebuttable by an agreement to the contrary, but what counts as sufficient contemporaneous evidence remains contested.
What survives for post-1978 freelancers? For later works, Reid’s agency test — not “instance and expense” — controls, and can yield very different outcomes on similar facts.

Implications

For heirs of mid-century creators: A § 304(c) recapture stands or falls on the work-for-hire question under 1909-Act standards, where flat-fee, supervised freelance work is especially vulnerable to a for-hire finding.
For studios and publishers holding legacy catalogs: The “instance and expense” test is a powerful shield for pre-1978 works, but it depends on proof of supervisory inducement and fixed-sum payment, so historical records matter.
For litigators: Identify the governing law by the work’s creation date. Pre-1978 works invoke “instance and expense”; post-1977 works invoke Reid. Conflating the two is fatal.
For valuation and diligence: Iconic characters created by freelancers in the 1909-Act era carry meaningfully less termination risk than comparable post-1978 works, a fact that bears directly on catalog pricing.

Frequently asked questions

Why couldn’t Jack Kirby’s children terminate and recapture the characters? Because the court found the works were made for hire under the 1909 Act, Marvel — not Kirby — was the statutory author. Section 304(c) lets heirs terminate only grants the author made, and there was no author grant to terminate.

What is the “instance and expense” test? It is the 1909-Act standard for work-for-hire status. A work qualifies if it was created at the hiring party’s instance (its inducement and supervision) and expense (its fixed payment and assumption of financial risk).

Does being a freelancer protect an artist’s termination rights? Not necessarily. The court held that freelance status, working from home, and selling to multiple publishers did not defeat work-for-hire status where Marvel induced and supervised the work and paid a flat per-page rate.