You may recall our previous post about superhero journalists Clark Kent and Peter Parker, which discussed how copyright affected them differently as an employee and an independent contractor, respectively. Well the times they are a changin’, and Clark Kent quit his job at the Daily Planet in Superman #13 to become a blogger. This will have more than a few legal consequences for Kent, some of which we’ll touch on today and some of which will have to wait for a future post.
I. Intellectual Property
As an individual Kent will either be working as a freelancer, selling stories to companies like the Huffington Post, or he may publish stories himself. Regardless of which business model Kent chooses, he’ll also have to choose a form of business association (corporation, LLC, etc). Basically, he could either choose some sort of corporation, or he could operate a sole proprietorship. The latter is easier, but it’s also riskier (more on that later).
With regard to IP, the different kinds of business association give him some options. For example, he could be an employee of a corporation, in which case the copyright in his works would be automatically owned by the corporation, just as they were owned by the Daily Planet when he worked there. Or, if he wasn’t an employee then he could assign those copyrights by contract. And if he chose not to incorporate, then he could retain ownership of the copyrights as an individual.
One practical effect of this choice will come into play when contracts with publishers are signed. If Kent’s company owns the copyrights (either automatically or by assignment), then the company will be the one selling the stories, which entails either assigning the copyright to the publisher or granting the publisher a license. If Kent operates as an individual, then it’ll be Kent selling the stories directly. Either way it’ll probably be Kent signing the contracts, since he’ll be his company’s sole employee/shareholder/member. The difference will be whether he signs it something like “Clark Kent, Manager, KentCo LLC” or just “Clark Kent.”
So what’s the point of all of this? Why would Kent bother setting up a company, especially if he’s going to be the only employee or if it won’t even have any employees? The answers are, as they so often are in the law, liability and taxes. Taxes will have to wait for a future post, but let’s take a brief look at liability.
As a writer working alone, Kent probably won’t have to worry too much about some of the common sources of liability for companies, such as products liability or workplace injuries. But he will have to worry about suits for defamation, invasion of privacy, and related torts. To a certain extent these risks can be insured against, and it’s usually part of commercial general liability insurance, but there are limits to what insurance will cover. If Kent intentionally defames someone or (more likely) intentionally invades their privacy, then an insurer isn’t going to cover that. This is where the liability protection of the corporate form comes in to play.
Basically, the way this works is that the plaintiff could sue Kent’s corporation or company but not Kent himself as an individual. This means that the corporation’s assets would be vulnerable in the suit, but not Kent’s personal assets. There are some exceptions to this general rule, however. Sometimes a plaintiff can “pierce the corporate veil” and sue the employees or directors and officers of the corporation as individuals. There are several reasons why this can happen, but some of the most common are when the corporation is just an “alter ego” of the individual (i.e. they aren’t really distinct entities) or when the corporation is under-capitalized (i.e it doesn’t have nearly the assets it should given the kinds of risks it undertakes). Both of these are potential issues for a one-person corporation or LLC. Kent will have to be careful to observe the corporate formalities, avoid commingling personal and corporate assets, and maintain adequate capital in the company.
If Kent decides not to incorporate but instead operate a sole proprietorship or even act as an individual, then he won’t have this benefit. He could be named in the suit as an individual and his assets would all be up for grabs, subject to the limitations of bankruptcy. Incorporation has some upfront costs and requires some effort to maintain, but it beats being on the wrong end of a million dollar damage award.
So far there haven’t been a lot of details in the comics, but it’ll be interesting to see where this part of the Superman story goes. Clark Kent’s work at the Daily Planet has been an iconic part of the character for decades. “Clark Kent, mild-mannered blogger” doesn’t have quite the same ring to it.