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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ARCHIE COMIC PUBLICATIONS, INC.,
KENNETH W. PENDERS, II,
a/k/a KEN PENDERS
Case No.: 10-CV-8858 (RMB)
Judge: Hon. Richard M. Berman
PRE-TRIAL ORDER [PROPOSED]
Plaintiff/Counterclaim Defendant, Archie Comic Publications, Inc. (“Plaintiff” or “ACP”),
and Defendant/Counterclaim Plaintiff Ken Penders (“Defendant” or “Penders”), by and through
their attorneys, respectfully submit the following proposed pretrial order pursuant to the
Individual Practices of the Hon. Richard M. Berman and Fed. R. Civ. Proc. 26(a)(3).
a. Plaintiffs/Counterclaim Defendant:
Matthew C. Wagner ([email protected]
Scott Harrington ([email protected]
Jonathan Longobardi ([email protected]
DISERIO MARTIN O’CONNOR & CASTIGLIONI, LLP
50 Main Street, Suite 1000
White Plains, NY 10606
(914) 684-0090 Tel
(914) 684-0590 Fax
Phillip J. Daman ([email protected]
Andre St. Laurent ([email protected]
17383 Sunset Boulevard, Suite A340
Pacific Palisades, California 90272
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Tel. (310) 431-9628
Fax. (462) 645-0754
SUBJECT MATTER JURISDICTION
This Court has original jurisdiction over this action under 28 U.S.C. §1331 as it involves
claims arising under the Declaratory Judgment Act, 28 U.S.C. § 2201. This Court has
supplemental jurisdiction over the asserted common law claims pursuant to 28 U.S.C. §1367(a),
because such claims are so related to those claims under which the Court has jurisdiction that
they form part of the same case and controversy under Article III of the United States
Alternatively, this Court has jurisdiction over this dispute pursuant to 28 U.S.C. § 1332(a)(1),
as the Parties are presently citizens of different States, and the amount in controversy exceeds
the sum or value of $75,000 exclusive of interest and costs.
BRIEF SUMMARY OF THE PARTIES' CLAIMS AND DEFENSES TO BE TRIED
a. Plaintiff’s Claims
ACP alleges as follows:
ACP was founded in 1939 by Maurice Coyne, Louis Silberkleit, and John L. Goldwater
and has grown into one of the most successful, longest running brands in the history of the
comic industry. ACP is best known for its series of comics featuring the fictional characters
created by its founders: Archie Andrews, Betty Cooper, Veronica Lodge, Reggie Mantle and
Jughead Jones. ACP’s comic enterprise has developed robustly over the years and now includes
many additional characters and comics outside of the characters first created some eighty years
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In 1992, ACP entered into a licensing relationship with Sega of America, Inc. (“Sega”), to
produce, among other things, comic books which feature Sega’s immensely popular character
SONIC THE HEDGEHOG, and all related ancillary characters, such as KNUCKLES THE ECHIDNA
(“Sonic Comic Book Series”). ACP’s relationship with Sega continues to this day, and now
includes digital distribution rights.
From 1993 to 2005, Penders worked for ACP as an independent contractor and
developed for ACP, stories, scripts, artwork, and other original creative expressions fixed in
tangible form (individually a “Work” and collectively “Works”) as contributions to the Sega
Comic Book Series. Penders was paid in full for his work.
The relationship between Penders and ACP was memorialized in written agreements,
executed in 1996. In multiple December 2008 emails, Penders admitted he executed a “work-
for-hire agreement” with ACP. In fact he executed two agreements: Revised Newsstand Comic
Independent Contractor’s Agreement (“Contractor’s Agreement”); and ACP Licensed Comic
Books Independent Contractor’s Agreement (“Licensed Comic Books IC Agreement”) (the
Contractor’s Agreement and the Licensed Comic Books IC Agreement collectively referred to as
the “ACP-Penders Agreements”).1
As the ACP-Penders Agreements make clear, all Works supplied by Penders to ACP were
commissioned by ACP from Penders as works-made-for-hire (as that term is used in the
Copyright Act). In the alternative, and to the extent that any Work fails to qualify as a work-
made-for-hire under the U.S. Copyright Act, Penders agreed in the ACP-Penders Agreements to
assign, and did assign, all right, title and interest in and to each Work and all of the Works to
1 The ACP-Penders Agreements are attached to the Complaint (D.E. 1) as Exhibits A and B.
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ACP. The ACP-Penders Agreements also obligated Penders to execute any documents needed
to confirm that any specific Work and all of the Works are works-made-for-hire and/or to
effectuate the assignment of his rights, if any, to ACP, in order for ACP to obtain copyright,
trademark or patent protection for any of the Works.
All Works supplied by Penders to ACP were governed by the ACP-Penders Agreements.
Paragraph 5 of the Contractor’s Agreement provides for a fixed sum of compensation for each
assignment and clearly states that Penders would not be entitled to any additional
compensation, including for reprints. Penders was paid in full by ACP for each of the Works at
the time of delivery, many years ago.
Beginning in about January 2009, a full fifteen years after he penned his first
contributions to the Sonic Comic Book Series and contrary to the ACP-Penders Agreements,
which contain signatures and dates that match numerous other documents signed by Penders,
he began filing numerous applications with the U.S. Copyright Office to register each of the
Works he supplied to ACP in his own name personally and claimed ownership of each of the
Works, listing himself as the “Author” and “Copyright Claimant” for each of the Works. Penders
filed at least one-hundred-seventy-one (171) copyright registrations with the U.S. Copyright
Office between 2009 and 2010.
In July 2010, Penders, through his lawyer, then accused ACP of infringing his copyrights.
ACP sent Penders copies of the ACP-Penders Agreements, and demanded he cease and desist
from his actions in violations of the agreements. After written correspondence was exchanged
for several months, Penders continued his charge of infringement and threats of filing a lawsuit.
It became clear that unless ACP acquiesced to Penders demands, that he would file suit against
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ACP. ACP feared they would be unfairly sued for copyright infringement. Accordingly, ACP filed
this action on November 25, 2010, seeking cancellation of the registrations, declaratory
judgment and remedies for breach of contract and tortious interference.
The asserted registrations were registered more than five years after first publication of
the subject work. None of the asserted registrations may be considered to be prima facie
evidence of the validity of the copyright and the facts stated in the certificates. 17 USC 410(c).
None of the asserted registrations include a statement that the subject work was made for hire,
as required by 17 USC 409(4), and each was registered more than three (3) months after first
publication of the subject work (17 USC 412). Each of asserted registrations are for Works
supplied by Penders to ACP from as early as 1993, seventeen (17) years ago; in all the years
since that time until 2010, Penders never claimed any ownership in any of the works, or sought
copyright registration, or made any demands upon ACP for any further compensation for use
and exploitation of any of the Works. Penders was not entitled to any ownership interest in
any of the Works, or to any additional compensation for use and exploitation of any of the
Works, and he knew this plainly at the time the Works were delivered to ACP and when he
accepted payment from ACP in exchange for the Works.
Specifically, ACP’s complaint alleges five claims for relief against Penders:
Claim 1 is for Declaratory Judgment that the ACP-Penders Agreements are valid and
enforceable, and that ACP does not infringe the Works or registrations asserted by Penders in
his threats of suit and accusations against ACP. This claim arises under the Declaratory
Judgment Act, 28 U.S.C. § 2201.
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Claim 2 is for Declaratory Judgment, again arising under 28 U.S.C. § 2201, that the
asserted registration should be canceled, and other relief consistent with the terms of the ACP-
Penders Agreements. Penders’ acts and conduct were in derogation of the contractual terms of
the ACP-Penders Agreements, and he made false statements in the applications, claiming to
have written transfer agreements with co-authors, when in fact he did not. The registrations
are therefore invalid and should be canceled. “*W+hen a court is convinced that a registration
should be canceled, it should hold the registration invalid, and order the holder of the
certificate to request the Copyright Office to cancel the registration. Such an action does not
require an affirmative action by the Copyright Office. If the holder of the certificate fails to
request cancellation by the Copyright Office, that party may be held in contempt.” 5 Patry on
Copyright § 17:108.
Claims 3 and 4 are for breach of the Contractor’s Agreement and Licensed Comic Books
IC Agreement (the ACP-Penders Agreements) under New York law. The ACP-Penders
Agreements both grant to ACP all right, title and interest in any Works supplied by Penders to
ACP as a work-made-for-hire, or in the alternative, to the extent any Work fails to qualify as a
work-made-for-hire, Penders agreed to, and did, assign all right, title and interest in each Work
to ACP under the terms of that agreement. By virtue of the acts and conduct described above,
Penders has materially breached the ACP-Penders Agreements. Penders’ claims of ownership,
authorship, or of any copyright right in the Works, applications for and maintenance of the
copyright registrations constitute material breaches of his obligations. Penders has used or
reproduced the Works, prepared works which are substantially similar to the Works, and
parodied the Works. These are all in breach of the agreements.
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Furthermore, any compensation for reprints under the ACP-Penders Agreements are to
be paid at ACP’s sole discretion, and Penders’ demand for information from ACP relating to
reprints of the Works and any ancillary products based on the Works is a violation of the terms
of the agreements.
ACP has requested Penders to cease all acts and conduct in derogation of the ACP-
Penders Agreements, and take such actions which he is required to do, but Penders has refused
to do so. ACP has no adequate remedy at law to redress Penders’ continued breaches. On this
basis, ACP requests relief in the form of damages for breach of the ACP-Penders Agreements
(respectively in Claims 3 and 4) and specific performance from Penders in compliance with the
Claim 5 was for intentional interference with contractual relations, namely Sega. Since
the time discovery closed in this matter, Sega and ACP have renewed their agreement. ACP has
therefore agreed to withdraw this claim.
b. Defendant’s Defenses
The basic premise of Defendant’s defense is that he retains ownership of the copyright
and associated rights to all of the Works and that he, not ACP, is the true, rightful and legal
owner of the copyrights at issue in this matter. Both the Newsstand and Licensed Comic Book
Agreements fail in whole or pertinent part because:
(1) The documents do not meet the basic standards of offer, acceptance, consideration
and mutual assent of the parties required for contract formation
(2) The documents purport to control subject matter which is beyond the scope of the
“work for hire” exception as defined by the Copyright Act, 17 U.S.C. § 101
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(3) The documents fail to comply with the requirements necessary to validly create a
“work for hire contract” to the extent retroactive, “blanket assignments” lack specificity, are
ambiguous and are unenforceable;
(4) The documents fail to comply with requirements necessary to create a valid
Lastly, and again assuming arguendo that these two contracts Plaintiff ACP are deemed
valid and enforceable, Penders maintains that he is still the rightful copyright owner of a large
subset of the work he submitted to ACP to the extent such work:
(1) Pre dates the purported dates of execution on these agreements (all work from
1993- 1996 work) and/or ;
(2) He was never paid for this subset of the work he produced.
Penders further maintains that any arguable copyright ACP may have are cancellable under
section 203 of the Copyright Act.
The Revised Newsstand Independent Contractor’s Agreement and the ACP Licensed Comic
Books Independent Contractor’s Agreement are Not Authentic.
Archie is relying on the two above-noted documents, the validity and enforceability of
these documents are disputed for a number of reasons.
Penders Never Signed the Documents
First, these documents are not authentic as they were never executed by Penders.
Despite ACP’s current argument and the language of the proffered documents, it was not
common practice at ACP during this time to require Penders nor any other of the SONIC
Freelancers to sign such documents. In fact, several of Penders’ witnesses are similarly
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situated freelance employees who worked on SONIC, and will state, like Penders, that they all
worked as freelancers without contracts for many years, and overlapping with the time that
Penders worked on Sonic.
Despite its assertions that the above referenced independent contractor’s documents
are genuine, ACP has been unable to produce any original copies of the either contract.
Initially, Penders contacted Justin Gabrie, his editor at the time the documents were allegedly
executed, who stated in writing that he had sent no such documents to either Penders or any
other freelancer submitting work to the Sonic titles at the time. Gabrie also went on to state
that he had approached the publishers of ACP regarding the placement of work-for hire
language on the vouchers and back of the checks which freelancers routinely signed, but was
rebuffed by the publishers as being an unnecessary action required on their part. Furthermore,
Penders repeatedly followed up on this by reaching out to ACP’s Co-President, Mr. Gorelick, in
December 2008 to ascertain whether any such documents existed and in an effort to clarify the
scope of any purported rights ACP may have claimed to his submissions and library of work.
Mr. Gorelick initially ignored Penders’ requests for information, but ultimately acknowledged
that no such documents existed. Penders then proceeded to file his copyright registrations to
protect his interests. Although the Copyright Office notified ACP of the pending registration
and solicited any response or object as it is statutorily required to do, ACP did not respond or
otherwise indicate any objection to Penders’ copyright registrations, and the Copyright Office
registered the copyrights.
Accordingly, Penders maintains that ACP-Penders documents are forgeries or, if actually
signed, signed under false pretenses and the documents are therefore not authentic and
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provide no authority. Penders further maintains that, even assuming arguendo that the
purported ACP-Penders documents are genuine, they are not valid, binding or otherwise
enforceable work-for hire or assignment agreements and therefore they cannot be used by
ACP to claim copyright ownership in the work Mr. Penders produced.
Although ACP has produced numerous Revised Newsstand Agreements that were
entered into between ACP and creators who worked on Archie character books, no evidence
has been produced showing that any of Penders or his contemporary Sonic Creators signed
either the Revised Newsstand Agreements or the ACP Licensed Comic Book Agreement. Nor
has ACP produced any evidence documenting any requests on their part with any creator of
comic books or related artwork regarding the transfer to ACP of any such creator’s rights to a
specific work at any time during the entire period Penders was submitting his works to ACP.
In addition, after consultation with numerous creators and editors who worked on the
Sonic comic book series or related books (the “Sonic Titles”), the evidence shows that Archie
did not utilize any standard operating procedure when it came to the creators working on the
Sonic Titles during the 1990s. Specifically, Penders has not yet found a creator who worked on
the Sonic Titles prior to 1997 who had been required to sign an Independent Contractor’s
Agreement or a Licensed Comic Books Independent Contractor’s Agreement. Penders also
located a number of other creators who worked either on Archie-core titles or other licensed
properties who had never signed any agreements with ACP. One such creator, Elliot S! Maggin,
has been described to this court as having no connection whatsoever with ACP by ACP
President Michael Pellerito (See Pellerito Declaration, filed with the court on March 3, 2011),
and yet his name is prominently featured on the first issue cover in bold lettering on an Archie
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title. Thus, the assertion by Archie that it obtained signed agreements from Penders, but never
sought nor obtained similar agreements from the remaining creators, is again highly suspect,
and enhances the questionable nature of those documents.
Documents Did Not Exist Prior to July 2010
Finally, and as alluded to above, Penders had in the past repeatedly requested copies
from Archie of any and all contracts or agreements that he might have signed during his many
years as a freelancer for Archie. These requests were made more than 2 years ago, and on
more than one occasion, and each time Archie informed Penders that no agreements or
contracts between Archie and Mr. Penders existed.
Only after Archie received Penders’ July 2, 2010 letter were these documents allegedly
discovered in Archie’s files. The sudden appearance of these “lost” documents is thus highly
suspicious. Further, Archie’s repeated refusal to allow inspection of the original documents not
only seriously brings into question their authenticity, but has also prevented Penders from
taking actions to document the forgery (though the burden to show the validity of the
document rests with ACP as proponent of the document).
The Independent Contractor Agreement and the Licensed Comic Books Independent
Contractor’s Agreement are Not Valid Contracts.
Even if authentic, it is clear that the documents produced are not valid, legally binding
and enforceable work-for-hire contracts or assignments, for the reasons set forth below
Comic Books Not Within Work for Hire Category
Although work for hire agreements are used in any number of industries, including the
comic book industry, comic books in general do not fall within any of the statutory categories of
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works eligible for consideration. For example, Knuckles the Dark Legion #1 is a single 22 page
story with a single creative team; it is neither a compilation nor a collective work, nor does it fit
within any of the other 7 categories of qualifying works. These documents, therefore, do not
constituted valid work for hire agreements even if they are deemed to be authentic.
Documents Lack Sufficient Particularity
Even assuming arguendo that certain of the works are found to qualify for one of the 7
enumerated categories, they fail with respect to the writing requirement. Specifically, the
statute states that a “work made for hire” is “a work specially ordered or commissioned” and
requires that “the parties expressly agree in a written instrument signed by them that the work
shall be considered a work made for hire.” The documents produced by Archie, however, fail to
identify the specific works (or even comic book series) which are expected to be the subject of
work made for hire status.
Between 1993 and 2005, Penders worked on more than one Archie comic book title,
and created works involving a variety of different characters, including Archie Andrews,
Jughead, Betty and Sabrina, as well as non-Archie Andrews-related characters such as The
Jaguar. In addition to the SONIC and KNUCKLES series, Penders also worked as a freelancer on
other Archie comic books based on licensed properties, such as NIGHT INTO DREAMS and
PRINCESS SALLY. However, the documents provided make no reference to any specific title(s)
or property(s), and do not identify any specific work (or works) that were specially ordered or
commissioned by Archie.
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Documents are Subsequent to Penders’ Creation
As noted above, one of the requirements for a work to qualify as a “work made for hire”
is that there be a written agreement between the parties stating that any eligible work is
considered a work made for hire. Under controlling 2nd Circuit law, such agreement must be
reached prior to creation of the work in question; one cannot require a work to become “work
made for hire” retroactively. It is undisputed that Penders, however, began submitting story
proposals to the Sonic Titles in 1993. Thus, the alleged Archie contracts (even if validly
executed) would fail to meet the statutory requirements, and cannot be relied upon as
evidence that Mr. Penders’ works published in the Sonic Titles were works made for hire.
Failure to Form a Valid Contract
Again, even assuming that the documents provided were validly executed by both
parties, there is clearly a failure of the parties to form a valid contract under relevant contract
The documents lack any valid consideration, a necessary element for the formation of
any contract. First, the contracts do not contain any actual promise of monetary in exchange
for execution of the documents themselves. In fact, the contract specifically identifies
numerous forms of compensation which the contractor is not entitled to receive, but no actual
compensation is identified.
The only compensation discussed is based on potential future employment, which
employment is not guaranteed or promised. This is, at best, an illusory promise, and thus
cannot be considered adequate consideration. Further, under the terms of these documents, a
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contractor could be asked to perform work but not be paid for it should the work not be
acceptable to Archie; yet, the contracts would grant Archie rights in any such work.
Thus, if a person signing either of the documents were to receive no future work from
Archie, or Archie were to refuse to accept work created by that contractor, then Archie would
have received benefits under the contract without requirement to compensate the creator. In
fact, Penders often produced work on speculation, and in numerous instances was not paid for
the work he created, including works that were then used by Archie in published works. Absent
valid consideration, there can be no enforceable contract. Incentivising such work is the very
reason why, absent a clear document, Work for Hire is circumscribed and artists are
encouraged to develop works to put into the free market on their own volition with their own
Additionally, the Licensed Comic Books Independent Contractor’s Agreement contains a
number of blanks and un-selected cross-outs. The Licensed Comic Books Independent
Contractor’s Agreement fails to identify any particular series or any particular licensor. As
noted above, Penders worked on more than one title, and on more than one licensed property.
Thus, there is no way to ascertain from the face of this document what licensed property is
intended to be covered by such contractor’s agreement. Without such an understanding, there
can be no meeting of the minds, and thus no means for forming a valid, enforceable contract
between the parties.
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Does Not Reflect Standard Practices in the Comic Book Industry
Finally, the contracts relied upon by Archie do not comport with the standard practices
found in the comic book industry. Within the industry, creators are required to sign separate
work for hire agreements with each assignment submitted to a publisher for publication.
Historically, this has generally been done by use of a pay voucher filled out by the creator,
where such voucher contains the work made for hire agreement and assignment language, or
by placement of similar language on checks, the endorsement of which confirmed the status
and/or transfer of rights.
In conclusion, Penders continues to dispute (i) that the document copies produced by
Archie were validly entered into by the parties, and (ii) even if the originals are found and it is
determined that they had, in fact, been validly entered into, that the agreements themselves
constitute enforceable contracts. Thus, Penders properly obtained his copyright registrations
and the same are valid, and that Archie’s activities constitute an infringement of his copyright
rights in the registered works.
c. Defendant’s Counterclaims
Penders alleges as follows:
Penders and Michael Kanterovich, who has assigned all of his rights relevant to the
instant matter to Penders in signed writings, prepared, approached and submitted three
"Sonic" story ideas to ACP for approval during the second half of October 1993. ACP in turn,
submitted all three stories to Sega for approval, and Sega and ACP eventually approved two of
the three stories.
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This method of working on a comic book was different than Penders was used to doing
with other publishers. Specifically, rather than receiving a specific assignment, Archie invited
the writers to pitch story ideas, which ACP would submit to Sega for acceptance or rejection.
Unlike Penders' experience of submitting scripts at any other comic book publisher, ACP
insisted scripts be submitted in full panel page layout form, clearly depicting everything in a
rough visual format rather than in normal text format. Penders was paid no additional money
for producing these story layouts, despite the additional time and effort it required, and
received no credit or acknowledgement for them in the published works.
Once Sega and ACP approved the two story ideas, , ACP would act as a conduit and relay
the selected story submissions to Penders, wh, along with the other contributor, worked
together on full story scripts for those ideas. The first two stories authored by Penders and
Kanterovich appeared in issue No. II, cover dated June I994, released in March 1994.
Following acceptance of the first group of story ideas, Penders and the other contributor began
to work on additional story synopses for submission to ACP, which additional stories similarly
were approved by ACP and Sega.
Though Penders and his fellow contributor were soon identified by ACP as the new
regular writers for the Sonic Comics, there was at no time any official undertaking by ACP to
formalize Penders' working arrangements, and no guarantee of future work for the Sonic
Comics. More significantly, there was no Work for Hire agreement or arrangement. Penders
and the other party created the works on their own and at their own risk, and retained all rights
to the works. It is undisputed that there was no agreement entered into at this time.
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Early in the Penders/ACP relationship, Penders was presented with the opportunity to
write a story introducing the "Knuckles the Echidna" video game character into the Sonic
Comics continuity, intended to be a try-out for such character. The Knuckles story appeared in
issue #13, cover dated August 1994, released in May 1994. Although Sega was initially skeptical
of the idea, the story proved popular. In the ensuing years, Penders would be given the chance
to script and illustrate many more stories featuring the Knuckles character, eventually leading
to a Knuckles mini-series and then a regular, ongoing Knuckles comic book series that continued
for nearly three years.
Starting in late 1994, Penders began to write solo stories with increasing frequency. In
addition, in mid-1995, Penders began to provide full pencil artwork for the Sonic Comics, at first
for covers and then interior artwork.
At all times through this period, it is undisputed that Penders was working for ACP as a
freelancer with no contract. Moreover, the only ACP-generated documents that were being
provided to and signed by Penders and that pertained to the work Penders created were pay
vouchers and checks that Penders endorsed.
None of the ACP pay vouchers tendered by ACP contained any legal language, or made
any reference to ownership or transfer of copyright rights in the materials that Penders was
producing for the Sonic Comics. None of the checks that Penders received from ACP in payment
for his work contained any legal language concerning copyright rights or a transfer of his rights
to ACP. Penders understood that there was no transfer of his rights in the stories Penders
pitched, whether or not they were accepted by ACP for publication. As a result, his enthusiasm
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for working on the Sonic Comics continued to grow as Penders introduced new concepts, story
ideas and characters, all of which Penders believed he owned as their creator.
Penders' Counterclaim 1 is for declaratory judgment, seeking a judicial determination of
the validity of his copyrights, both registered and unregistered, with respect to his creations
and his ownership thereof, and thus that ACP’s use of any such material constitutes
impermissible infringement on Penders’ copyrighted property. Penders further seeks a
declaration that Penders’ own use of his properties does not constitute breach of contact or
any other violation of ACP’s rights. Lastly, Penders seeks declaration that ACP does not own
“All works submitted by Mr. Penders”, contrary to ACP’s assertion in its November 23rd , 2010
letter to Penders’ then counsel.
Penders' Counterclaim 2 is for the direct infringement of his exclusive rights of
reproduction, distribution, and the preparation of derivative works in these works, specifically,
ACP's compilation and reprinting of Penders' copyrighted works within various issues of Sonic
Archives, the use of Penders' storylines and/or characters in other Sonic comic books, and the
creation of derivative works in the form of electronic media versions of the Penders
Copyrighted Works for distribution via electronic channels.
Penders' Counterclaim 3 is for the vicarious infringement of Penders' works by ACP as
the result of the direct infringement of his works by others, believed to include, without
limitation, Apple, Inc., Sony Computer Entertainment Europe, Diamond Comics Distributors,
Graphicly.com, Worldcolor Press (formerly Quebecor), Toys R Us, Barnes and Nobles, Jazwares,
Comixolgy, Kablenews, and iVerse Media LLC, directly infringing activities which ACP receives a
direct financial benefit from and has the right and ability to supervise.
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Penders' Counterclaim 4 is for the contributory infringement of Penders' works by ACP
as the result of the direct infringement of his works by others, believed to include, without
limitation, Apple, Inc., Sony Computer Entertainment Europe, and iVerse Media LLC, where ACP
had knowledge of Penders' rights and induced, caused, and/or materially contributed to the
directly infringing activities.
d. Plaintiff’s Defenses to Counterclaims
Penders’ First Counterclaim is duplicative of ACP’s first party claims, and should be
dismissed for all the reasons stated in ACP’s Rule 12 Motion to Dismiss, which remains pending
before the Court and is fully incorporated herein by reference. See D.E. 39 and 40. Notably,
Penders made no effort to oppose ACP’s motion to dismiss the First Counterclaim in his
response. See D.E. 42. Accordingly, for all the reasons advanced in support of its first party
claims, recited above, Penders is not entitled to the relief sought in this counterclaim. In
addition, Penders, for the first time, seeks declaratory judgment that “his own use of his
properties does not constitute breach of contact or any other violation of ACP’s rights” and that
“ACP does not own “All works submitted by Mr. Penders”, contrary to ACP’s assertion in its
November 23rd , 2010 letter to Penders’ then counsel.” These claims for relief are not pled in
the counterclaim or in the prayer for relief.
Penders’ second counterclaim is for direct copyright infringement “of his exclusive rights
of reproduction, distribution, and the preparation of derivative works in these works.” The
Defendant bears the burden of proving two elements: (1) ownership of the copyright and (2)
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unauthorized copying by the defendant. Penders is unable to prove either element, and
therefore cannot support a claim for copyright infringement. The party alleging infringement
“must necessarily establish the content of the copyrighted work that it contends was
infringed.” Airframe v. L-3 Communications Corp., 658 F.3d 100 (1st Cir. 2011). As a threshold
matter, Defendant has failed to provide any evidence of the specific works that he claims have
been infringed, and the “content of the copyrighted work.” Although Penders may have filed
copyright registrations, those registrations are not evidence of ownership of a copyright.
Copyright registration is a precondition to filing suit for copyright infringement; registration has
been called an additional element of infringement. See Reed Elsevier, Inc. v. Muchnik, 130 S.Ct.
1237, 1241-9 (2010); Cosmetic Ideas, Inc. v. IAC/InteractiveCorp, 606 F.3d 612, 615 (9th Cir.
2010). Penders has failed to obtain registration for works he claims have been infringed, failed
to produce the works he alleges to have been infringed that are subject to purported
registrations, and has even failed to produce the registrations he has obtained. The
registrations he has obtained are invalid for a multitude of reasons.
First, ACP and Penders entered into two binding and enforceable contracts, where
Penders agreed to assign and did assign, all right, title and ownership interest in and to each
Work and all of the Works to ACP. Despite Penders claims to the contrary, the ACP-Penders
Agreements are valid contracts and comport with the requirements for a binding contract. A
valid contract requires “an offer, acceptance, consideration, mutual assent and intent to be
bound.” Arakelian v. Omnicare, Inc., 735 F. Supp.2d 22 (S.D.N.Y. Aug. 18, 2010). In 1996,
Penders and ACP entered into the Contractor’s Agreement and the Licensed Comic Books IC
Agreement. The Agreements were supported by valid consideration in the form of ACP’s
Case 1:10-cv-08858-RMB-MHD Document 103 Filed 12/16/11 Page 21 of 41
promise to give Penders compensation for his work on stories, scripts, artwork and other
creative expressions for the Sega Comic Book Series. Penders claims that the contracts do not
contain any actual promise of money (consideration) in exchange for the work provided is
nonsensical. The terms clearly state in Paragraph 5 of the Contractor’s Agreement that work
commissioned by ACP and acceptable to ACP shall be compensated by a fixed sum. In fact, the
parties conducted this course of conduct for many years. “A benefit to a promisor or a
detriment to the promisee is sufficient consideration for a contract.” Kinley Corp. v. Ancira, 859
F. Supp. 652, 657 (W.D.N.Y. July 25, 1994). ACP would be receiving the benefit of Works from
Penders, and Penders would receive the benefit of compensation for those works.
Both agreements were signed and dated by Penders. Penders once again makes the
tired and uncorroborated argument that the ACP-Penders agreements are forgeries, despite
there being no evidence to support such a claim, and despite his admission he has no proof
Archie forged the documents. Archie did not forge these documents. It is incumbent upon a
party claiming a nongenuineness of a signature to produce firsthand proof of the forgery.
Bradford Trust Co. of Boston v. Merrill Lynch, Pierce, Fennder & Smith, Inc., 622 F.Supp. 208
(S.D.N.Y. 1985). Penders has failed to produce any evidence that the agreements were forged
(because they are not forged) nor has he ever identified a handwriting expert to testify as to
nongenuineness of the documents. Penders’ admission that he has no proof of any forgery
should be dispositive on this issue. This argument is unfounded and contradicts Penders’ own
Penders’ claims that he was not paid for all of his work, yet he worked for ACP for over
twelve (12) years, and was paid in full for all of his work, in accordance with the Agreements (he
Case 1:10-cv-08858-RMB-MHD Document 103 Filed 12/16/11 Page 22 of 41
was even paid for work which was not acceptable to ACP and which was never published by
ACP). Similarly, Penders never claimed any ownership of the works or made any demands for
additional compensation for use of the works. Penders argues that “under the terms of these
documents, a contractor could be asked to perform work but not be paid for it.” This is simply
not the case. The terms of the Contracts very clearly provide for compensation to Penders for
work commissioned by ACP and acceptable to it; equally clear in this relationship (as in any
business relationship) is that ACP would not pay for work which was not acceptable to it. See
D.E.1,at Exhibit A and B (“Contractor’s full and complete compensation for each assignment
that is completed on time and in a manner that is acceptable to Archie, will be a fixed sum
based on a rate to be mutually agreed upon.”). Moreover, the ACP-Penders Agreements that
Penders alleges are invalid are the very same Agreements that were enforced by this Court in
litigation in this district with another writer and ACP, deciding the same issues in this case. See,
DeCarlo v. Archie Comic Publications, Inc., 127 F. Supp.2d 497 (S.D.N.Y.), aff’d, 11 F. App’x 26
(2d Cir. 2001), cert. denied, 534 U.S. 1056 (2001); Archie Comic Publications v. DeCarlo, 258 F.
Supp.2d 315 (S.D.N.Y. Apr. 23, 2003), memorandum opinion (citing DeCarlo v. Archie Comic
Publications, Inc., 127 F. Supp.2d 497 (S.D.N.Y.)) (noting that ACP had previously been
determined to own copyrights in the properties and an order to quiet title is proper), final
judgment and permanent injunction, 2003 WL 21354692 (S.D.N.Y. June 11, 2003), aff’d, 88 F.
App’x 468 (2d Cir. 2004).
Contrary to the DeCarlo case law, Defendant argues that the ACP-Penders Agreements
are not enforceable contracts because the documents are ambiguous. Under the applicable
law, “ambiguity requires more than one reasonable interpretation of the contract.” AIU North
Case 1:10-cv-08858-RMB-MHD Document 103 Filed 12/16/11 Page 23 of 41
America Inc. v. Caisse Franco Neerlandaise de Cautionnements, 72 F.Supp.2d 350 (S.D.N.Y. Oct.
28, 1999). Penders does not and cannot establish that there is more than one reasonable
interpretation of the agreements. The ACP-Penders Agreements clearly state, on their face, the
subject matter of the agreement. For example, the Revised Newsstand Comic Independent
Contractor’s Agreement (“Contractor’s Agreement”) states in all capital letters that it is an
INDEPENDENT CONTRACTOR’S AGREEMENT. The next paragraph of the Agreement further
states that it is a “work for hire agreement.” The Contractor’s Agreement contains no blanks,
was signed and executed by Penders and is filled out in its entirety. The ACP Licensed Comic
Books Independent Contractor’s Agreement (Licensed Comic Books IC Agreement”), signed and
executed by Penders on December 12, 1996, does contain two blank spaces, which is clearly
explained by ACP’s President Michael Pellerito, and also served as the basis of the parties
relationship for many years, which established a course of performance under its terms.
However, even if the Court accepts Defendant’s argument that the Licensed Comic Books IC
Agreement is ambiguous, extrinsic evidence is admissible to establish that the parties intended
to enter into this contract and established a course of performance over many years according
to the terms of the agreement. Indeed, Penders never claimed ownership of the works he
supplied to ACP and ACP paid Penders for all work acceptable to it and that was published.
Accordingly, the terms of the agreements are binding and enforceable.
In the event that the Licensed Comic Books IC Agreement is unenforceable due to these
two blanks, then the Contractors Agreement, which contains no blanks, controls all of Penders’
submissions and similarly provides that Penders is an independent contractor of ACP and “all
works and properties are and shall be works for hire owned by and for the benefit of Archie.”
Case 1:10-cv-08858-RMB-MHD Document 103 Filed 12/16/11 Page 24 of 41
The Contractors Agreement clearly states that Penders’ work on all “Licensed Properties” (there
is no dispute in this case that the work at issue is a “Licensed Property” of ACP) shall be
governed by that agreement unless and until the contractor signed the Licensed Comic Books IC
Agreement. That agreement also contains terms under which all works are assigned to ACP.
Defendant argues that the ACP-Penders Agreements “do not comport with the standard
practices in the comic book industry.” The standard practices at other publishers is irrelevant.
The ACP-Penders Agreements conformed to the standard practice for ACP’s dealings with its
Independent Contractors. Indeed, the DeCarlo cases show that the 1996 agreement is a form
used by ACP regularly. ACP is one of the most successful and longest running brands in the
history of the comic book industry and has executed hundreds of contracts with independent
contractors. In 1996, ACP’s practice was to send out two signed copies of the contract to sign
to the independent contractor, and have the independent contractor return one copy to ACP
and keep one for his or her own personal use and record. In conformance with this policy, ACP
sent Penders two contracts to sign, which he testified during his deposition that he received
those contracts. Penders signed both agreements and returned a copy of each to ACP, in
accordance with ACP’s long standing policies and procedures. Defendant cites no evidence to
support his argument that the Agreements do not comport with practices in the comic book
industry, and there is no expert disclosure for testimony to establish any purported “standard
practices” in the comic book industry.2
2 Defendant has identified Elliot S! Maggin to testify “as to the industry standards regarding
work for hire agreements and assignments.” It appears that Defendant plans to call Maggin to
provide expert testimony yet no Rule 26 expert disclosure was ever made in this case. This
testimony is or will be subject of a Motion in Limine and to Exclude.
Case 1:10-cv-08858-RMB-MHD Document 103 Filed 12/16/11 Page 25 of 41
Defendant also argues that the ACP-Penders Agreements did not exist prior to July 2010.
This is completely false. These documents were signed and executed by Penders more than
fifteen years ago. Contrary to Defendant’s claims, ACP never informed Penders that “no
agreements or contracts between Archie and Mr. Penders existed” and there is no evidence to
the contrary. In fact, Penders emails to ACP (Gorelick) in 2008 admit and request copies of the
“agreements I *Penders+ signed” with ACP. ACP undertook a diligent search for the Agreements
when Penders requested copies of the Agreements he signed. There is ample evidence that the
ACP-Penders Agreements produced to Penders are true and accurate copies of the documents
that Penders executed and submitted to ACP in 1996. The copies that ACP has provided to
Defendant that were found in the files that the original agreements would have been
maintained, and are evidence of the contents of the original documents and are admissible
under the Federal Rules of Evidence in lieu of the lost originals. FRE 1003-1004. ACP undertook
a diligent search of its regularly kept business records and files, and the copies of the ACP-
Penders Agreements were located and produced to Defendant. ACP and Penders entered into a
valid and binding contract where Penders agreed to assign and did assign all right and interest
in each Work to ACP. Penders is not the legal or rightful owner of the copyright to the works.
Second, Penders’ registrations are not prima facie proof of validity of the copyrights
under 17 U.S.C. § 410 because they were not filed within five years of the date of first
publication of the work. The presumption of validity of the Copyright’s Office’s registrations
only applies when the registration “was made before or within five years after the first
publication of the work.” All of Penders copyrights registrations were filed more than five years
after the first publication of the work, and therefore are not entitled to a presumption of
Case 1:10-cv-08858-RMB-MHD Document 103 Filed 12/16/11 Page 26 of 41
validity.3 Similarly, none of the asserted registrations include a statement that the subject work
was made for hire, as required by 17 U.S.C. § 409(4). Therefore, Penders cannot use the
registrations to prove the first element of copyright infringement.
Third, Penders is equitably estopped from asserting his claims for copyright
infringement. Under applicable federal law, a party can be estopped from pursuing a claim
where: (1) plaintiff had knowledge of defendant’s conduct; (2) plaintiff either (a) intended that
defendant rely on plaintiff’s acts or omissions or (b) acted or failed to act in such a manner that
defendant had a right to believe it was intended to rely on plaintiff’s conduct; (3) defendant
was ignorant of the true facts; and (4) defendant relied on plaintiff’s conduct to its detriment.
DeCarlo, 127 F. Supp.2d 497, aff’d, 11 F. App’x 26 (2d Cir. 2001), cert. denied, 534 U.S. 1056
(2001); Archie Comic Publications v. DeCarlo, 258 F. Supp.2d 315 (S.D.N.Y. Apr. 23, 2003),
memorandum opinion (citing DeCarlo v. Archie Comic Publications, Inc., 127 F. Supp.2d 497
(S.D.N.Y.)) (noting that ACP had previously been determined to own copyrights in the
properties and an order to quiet title is proper), final judgment and permanent injunction, 2003
WL 21354692 (S.D.N.Y. June 11, 2003), aff’d, 88 F. App’x 468 (2d Cir. 2004). Penders knew that
ACP considered itself the owner of the Works, yet he testified in his deposition that he told his
attorney he claimed ownership of works to his attorney when he filed for Bankruptcy in 1994.
He also testified that he believed ACP infringed his works in 1997, more than ten years prior to
the commencement of this lawsuit, yet he testified that he never attempted to register the
works with the Copyright Office (nor did he ever attempt to register his works until 2010) or
contact ACP and tell them that he believed ACP to be infringing his works. Despite believing
3 For further support and case law, see Plaintiff’s Reply to Defendant’s Opposition to Plaintiff’s
Motions in Limine, D.E. 60.
Case 1:10-cv-08858-RMB-MHD Document 103 Filed 12/16/11 Page 27 of 41
ACP to be infringing his work as early as 1997 Penders remained silent in order to gain more
work from ACP and in fact ACP continued to commission work from Penders and Penders
supplied ACP with works for more than fifteen (15) years. He did not begin seeking to register
copyrights until 2009. Penders did not list any intellectual property or copyrights in his
The second element of equitable estoppel is also clearly satisfied. ACP was unaware
that Penders fashioned himself as the owner of any rights in any works he supplied to ACP. ACP
relied on Penders’ silence and relied on the Agreements Penders signed when it began
reprinting materials in which Penders now claims rights. “Silence in the face of an explicit
contrary assumption by an innocent party may constitute a concealment of facts or a false
misrepresentation for estoppel purposes.” Gen. Elec. Capital Corp. v. Armadora, S.A., 37 F. 3d
41, 46-47 (2d Cir. 1994). ACP relied on Penders’ behavior to their detriment, and had no reason
to believe that Penders considered himself to be the owner of the works, especially considering
Penders’ long employment with ACP and the two agreements he executed.
Fourth, Penders cannot prove a copyright infringement claim because at least five of the
fifteen allegedly infringing reprint materials clearly exceed the three year statute of limitations.
17 U.S.C. § 507 (b). Penders is barred from recovery of any damages for any reprint materials
occurring in 1994, 2007 and April of 2008 because the claims accrued more than three years
prior to the commencement of this action. Penders recovery and damages are also limited
solely to the acts, if any, occurring within three years of this suit. Each alleged act of
infringement claimed by Penders is a “distinct harm that gives rise to an independent claim for
Case 1:10-cv-08858-RMB-MHD Document 103 Filed 12/16/11 Page 28 of 41
relief”, therefore each harm and claim for relief is limited to the three year statute of
limitations of 17 U.S.C. § 507(b).
Fifth, the seventeen (17) registrations Penders filed prior to May 8, 1995, the date of his
bankruptcy discharge, are invalid and cannot be used to establish ownership of a valid
copyright. Penders filed for Chapter (7) Bankruptcy on December 12, 1994. Notably, he stated
on his bankruptcy petition that he has no rights to any “patents, copyrights, and other
intellectual property.” Penders swore under oath and penalty of perjury that he had no rights
to intellectual property or copyrights. He is barred from now claiming that he had rights in any
copyright prior to his bankruptcy discharge.
Sixth, Penders registrations listing a co-author by written transfer agreement are invalid.
The Copyright Act requires that a transfer of a copyright be in writing and signed by the
conveyor of the rights. Penders listed a co-author on at least sixteen (16) registrations. Those
registrations were obtained without the requisite written transfer agreement. The assignments
Penders produced to ACP are defective, do not assign all the works, and were executed in the
Summer of 2011, after the registrations were obtained. A copyright registration is invalid when
it is shown that the Copyright Office received false information from the applicant that may
have resulted in the rejection of the application. Penders supplied the Copyright Office with
false information, and told the Copyright Office that he had obtained written transfer
assignments from co-authors, when in fact he had not and knowing that his application would
not be approved without a written transfer assignment. These registrations are invalid, and
would never have been granted but for the fraudulent information regarding the assignments.
Case 1:10-cv-08858-RMB-MHD Document 103 Filed 12/16/11 Page 29 of 41
Third and Fourth Counterclaims:
Penders Third and Fourth Counterclaims for vicarious and contributory copyright
infringement both lack any legal or factual support. In order to prove a claim for vicarious
infringement, Penders must prove three elements by a preponderance of evidence: (1) A party
other than ACP directly infringed on his copyright; (2) ACP profited from or had a financial
interest in the infringing activities of the third party; and (3) ACP had the right and ability to
supervise or control the infringing activities of the third party. For both vicarious and
contributory copyright infringement “there must be the direct infringement of a third party.”
Artista Records LLC v. Usenet.com, Inc., 633 F. Supp.2d 124 (S.D.N.Y. June 3, 2009).
Penders now states that he “believes” Apple, Inc., Sony Computer Entertainment
Europe, Diamond Comics Distributors, Graphicly.com, Worldcolor Press (formerly Quebecor),
Toys R Us, Barnes and Nobles, Jazwares, Comixolgy, Kablenews, and iVerse Media have directly
infringed on Penders works. This allegation is entirely unsupported by the evidence in this case
and Penders is unable to meet even the threshold requirement for both vicarious and
contributory infringement. Penders’ belief that “Apple, Inc., Sony Computer Entertainment
Europe, Diamond Comics Distributors, Graphicly.com, Worldcolor Press