An Exploration of the Action Lab Contract

Updated: Oct 27, 2021

Let’s look at the Action Lab contract that is offered to creators of material it would like to control. This is an unamended version, supplied to me by several different creators who decided not to publish with Action Lab. In some cases, this was down to disdain of the contract in its unamended form; in others that decision was down to amendments requested by the creators and their legal advisors being rejected by Action Lab. In the case of Steve Horton, those requests, seen by this website, included a requirement of written notification of certain matters, quarterly payment of revenue, the non-inclusion of staff salaries in the fees incurred which Action Lab may recover from revenue prior to beginning to offer royalties, copyright registry, and contract termination rights for the author of the material being contracted. We have seen a 2014 version of the same unamended contract; the one discussed below, shared between 2018 and 2020, contains minor line additions and increased detailing of revenue split should Action Lab develop spinoff media in-house. You can download these agreements here:


Actionlab_Revised
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ALE_CREATORS AGREEMENT PRINT OR DIGITAL
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Download PDF • 379KB

Some of the contracted creators we have spoken to signed this version of the contract; some signed amended versions, which did not ultimately provide them much more protection.


We have also seen a 2012 contract, which was later amended before signing to remove the language which gave Action Lab the right to perpetual rights so long as they were selling the book in a digital format.


In short, as per its unamended template, if Action Lab releases a book in any format within one year of a creator delivering the contracted book files, Action Lab is granted perpetual and exclusive rights to the control of that IP, in all formats. The only way for Action Lab to lose perpetual and exclusive rights to publication of that comic book is to subsequently leave it unpublished in any format for one whole year—meaning that so long as it’s available digitally, it cannot be retrieved by its creator. Should Action Lab cease publishing a book (including digitally) for a year and lose the comic book rights to that IP, they retain perpetual and exclusive rights to the IP in other venues, such as adaptation, merch, and so on. Once this contract is signed, barring that stated lapse of availability, Action Lab’s involvement with and control of a book’s publication and its featured IP is contractually unchallengeable.


Contracts are drafted to benefit their drafters: this is “how they work,” as one legal consultant put it. But if they are drafted in ways that are punitive to their signees, then those signees, and the scene and communities around them, are entitled to awareness of that, before, during or after the fact of their signing—what Action Lab’s contract protects their rights to do, and what rights it specifically preserves or does not preserve for their creators, is relevant to the state of their alumni’s experiences. It’s a part of the economy of comics within the direct market at large. What creators are agreeing to and what publishers are reserving for themselves against the interests of those creators is central to the function of this industry.


Agreements within this contract may appear within agreements in other publishers’ contracts. Those contracts may be more beneficial to creators. Normalised practices within the comic book publishing industry may or may not be present within this contract. They may or may not be framed negatively within this article, which may or may not shock or annoy those used to spec work within this field.

 


It begins fairly reassuringly:

1. Creators are the sole creators and authors of a comic book property known as “[xxxx]” ("the Work").

2. The Work is an original creation of Creators, and no other person or persons has any ownership interest in the story, characters, designs, or settings of the Work.

3. Creators desire to license the Work to Publisher for publication, with any and all revenues generated from publications split between Publisher and Creators, as set forth herein.


These first two passages establish that only the creative team named on the contract have any current legal claim to the comic being contracted for publication. This makes space for the meaning of the third: that, subsequent to its signing, only Action Lab will have either practical or legal claim on the publication of this book or related materials until the terms set out within the contract are breached and that breach is proven in a legal setting—so long, as discussed below, as they publish within a year and do not lapse that publication for one year after that point.


Part three sounds very pleasant–with the notion of revenue up front, the creator will be thinking of finally seeing return from the book they have self-funded and produced (per the creators’ handbook) at least four issues of. But “as set forth herein” means that there is more to the legal definition of “revenues generated from publications” than just “money as soon as the book starts to sell.”


It continues:


WHEREFORE, the parties agree as follows:


1. LICENSE: Creators hereby grant an exclusive worldwide license to Publisher, to print, sell, publish, distribute, advertise, publicize, and exploit the Work. This license includes distribution of the work as a printed comic book, graphic novel, trade paperback, compilation, or in any other printed form, as well as the distribution of digital versions of the Work in any forms, including .pdf, .cmz, or any other digital formats which now exist or may exist in the future.


This gives Action Lab the right to publish the comic in any form they choose, whatever form of publication becomes available, and peremptorily refuses that right to any other site of publication. Your comic is now Action Lab or nothing.


1a. Creators hereby warrant that either no sub-contracts exist relative to the creation of the Work with other creators (writers/artists/colorists/letterers/editors) or that any and all such sub-contracts have been provided to Publisher for review prior to entry into this Agreement.


This allows Action Lab to reestablish that only the named creators on this contract have legal rights to the book prior to Action Lab’s ownership. If you’ve hired a letterer who doesn’t get creator credit but worked for hire on your book, for example, you have to tell Action Lab so that they know that the letterer was a hired hand rather than someone who could potentially sue them for their right to the IP.


Creators also expressly agree that to the extent that any other contracts exist relative to the creation of the work, and to the extent that any provision of any such other agreement is in conflict with any provision of this Agreement, that the terms of this Agreement shall govern, and that any such conflicting provision shall be null and void. Creators further agree to indemnify and hold Publisher harmless from and against any claim, suit or demand by any other creator or other party relative to any right or rights allegedly granted by Creators either prior to or after the execution of the instant Agreement.


This means that if you agreed to this contract when you were not the only creative IP holder, Action Lab cannot be blamed and will carry on as if your agreement was valid. This section also means that if you are not forthcoming to AL about other contracts and AL is sued, AL has the right to sue you to pay if AL is found liable.


2. TERM: The term of this license is perpetual,


This means that it will never end; Action Lab will only be legally obliged to return IP and printing rights if they breach their agreements to you as outlined in this contract, or if the contract is allowed to lapse by Action Lab.


so long as Publisher offers the Work for sale in either printed or digital form within 1 year of the signing of this Agreement and the provision of the completed work (including all final comic pages in the format specified by Publisher) by Creators, and continues to offer the Work for sale to the public in either printed or digital form, and continues to make any payments due to the Creators in accord with this agreement. If Publisher fails to offer the Work for sale to the public within 1 year of the provision of the completed work by Creators, or if at any point after offering the Work for sale to the public, ceases to do so for a period of 1 year, this Agreement and the license granted hereunder will lapse, and all rights will revert to the Creators.


Action Lab will only give you your book back if: a) if they do not offer it for sale in any format within a year of receiving your files, b) if they do not deliver payments “due” to the creators, with the actual meaning of “due” defined later in this contract, or c) if, having begun to offer it for sale in any form, they cease doing so for one full year.


Whether or not solicitation dates count as an “offer” of sale to the public is believed to be untested, legally.


3. SEQUELS: Creators also grant to Publisher the exclusive right to print, sell, publish, distribute, advertise, publicize and exploit any follow-ups or sequels to the Work under the same terms as set forth herein unless otherwise agreed by the parties.


If you sign a contract with Action Lab, anything that can be defined as a sequel or “follow-up” cannot be offered to other publishers before Action Lab has declined it. Action Lab are able to sue to stop you from publishing a sequel, prequel or associated idea with another publisher, or sue you for breach of the agreement here, which is to allow Action Lab entitlement to any profits derived if the follow-up or sequel is already published by the time Action Lab learns of it.


Additionally, the language here is broad: what counts as a “follow-up”? Would you be within your rights to publish a spin-off elsewhere? Or would this mean any related project produced subsequently to the project signed to Action Lab?


Once this contract is signed, you cannot be sure of any of its included terms without asking Action Lab, who can define them as they feel appropriate. If you are unsure about the meaning of a passage of your contract, good practice is to ask it to be defined in writing, and for that definition or reference to that definition to be included within the written document before you sign it.


4. SUBMISSION OF FINISHED WORK: Creators will submit the finished Work to Publisher, in final form ready for publication, in the format as set forth by Publisher, by ___________ (date). If Creators do not supply the finished Work on or before the above-referenced date, Publisher has the right, at Publishers sole discretion, to void this Agreement with no further obligation to Creators, upon written notice to Creators.


More a temptation than a threat, this section gives Action Lab the right to terminate their agreement to solicit and publish your book should you not deliver your files by a deadline which they set. The only case of this known to WWAC is Jules Rivera, who found the lack of support from the publisher so affecting that they were not able to complete their book. Action Lab waited two years to confirm this termination.


If Creators do not supply the finished Work following the format outlined in the latest version of Publishers Creator Handbook, Publisher has the right to make changes and charge creators fees as outlined in said Creator Handbook.


From Action Lab’s Creator handbook, volume 3, updated 2019:


Penalties for Unfinished Files

If you submit your final pages to Action Lab incorrectly, you will be charged a $50.00 fee. Furthermore, if the Action Lab editorial staff must make corrections themselves, you will be billed, for cost of production, $30.00 per hour needed to correct the problems.


This includes [bolding ours] coloring adjustments, lettering adjustments, template fixes, and similar errors.”


This provides Action Lab with the right to alter your work in a way that is not in your best interest and charge you for it, should they consider your files in need of editorial (which service they do not provide as a collaborative resource). It also allows them to make changes to their handbook which would allow them greater leeway in doing this, without informing the creatives assembling their books. The responsibility of checking is entirely on the creators. This enables a situation in which a member of the creative team opens their printed issue and sees an alteration they do not approve of, were not aware of, and finds themselves having to pay $30 (per hour) for that change. Though none of the individuals we interviewed has claimed that this has happened to them, contractually, it could.


Having investigated whether being charged for unapproved changes to your work is common at other publishers, the answer was a resounding “No!”—even if your files are incorrectly formatted upon submission. “Similar errors” is a subjective phrasing that allows the publisher maximum leeway.


4a. EDITORIAL CONTROL AND TRADE DRESS: Publisher shall have the right to request edits or redraws by the creators in order to meet Publisher’s editorial and/or publication standards.


This means they can require you to change your comic if they want to. CBY is not aware of any incident of this nature at this time.


Publisher shall not make changes to the print version of the artwork or dialogue after submission to Publisher without Creator approval (other than minor page sizing and color adjustments which may be necessary in the printing process).


This is nonsensical unless “print version” is allowed to mean “files designated for printing,” as making changes to a print copy would be absurd and useless. We proceed with that definition (“files designated for printing”) in mind, due to the necessity of dealing with this contract fully, but find the language to be unsuitably poor for such a binding document.


This segment also overlaps, in a confusingly contradictory way, with the above combined statements of contract and handbook. As previously stated, the publisher has the right to make changes to lettering and anything which may be called “similar to” colouring, lettering or template adherence. As stated here, they must get approval for any changes which are not minor. But what’s “minor”? Would everyone agree? Would a publisher consider a lettering change “minor” in the same way a professional letterer would? This compounds a regular problem with Action Lab: their communication with workers is poor, and their agreements are vague enough to always be arguable in their favour. One legal consultant tells us that, when viewed by courts, contracts are frequently read against the favour of the drafter—if this one were to reach court review, Action Lab may find they are facing a court that challenges the drafter of a contract more than its signatory. But if Action Lab is not pressed to court, this contract will go functionally unchallenged.


Publisher shall have the right to prepare the work for Digital release in any form or format necessary and may make whatever alterations to layout, artwork, lettering or format needed to be released in said format.


Action Lab would be within their rights, for example, to chop your comic up and reassemble it into a Webtoon scrolling format. They would not have to consult you, or any graphic design specialist, or anyone experienced with Webtoon composition.


Publisher shall have editorial approval of cover art, including the absolute right to place logos, credits or other trade dress items on the cover of any published book, to insert advertising or other promotional pages into the book, and to create and place a masthead, introduction, or credits page on the inside front cover, at its own discretion.


You do not have the right to object to any cover graphic placement or any adverts found within your issues or trade collection. If, hypothetically, your YA book has a softcore advert inside, tough luck. Action Lab may insert adverts into your trade collection. They have the right to insert a credits page on the front cover, but in the handbook and in personal contact with creators require creative teams to add credits to their narrative pages in order to free up this area for advertising.


5. PUBLICATION COSTS: Upon submission of the finished work (subject to review and approval by Publisher, to assure that the work meets Publisher's quality standards for publication), Publisher shall print, publish, and offer the Work for sale to the public as part of Publisher's catalogue of comic books/entertainment products, under the "Action Lab, Action Lab Discover or Action Lab: Danger Zone" banner.


These are actually three separate banners, “Action Lab,” “Action Lab Discover,” and “Action Lab: Danger Zone,” incorrectly referred to as one. Note that the contract at this point says “print, publish and offer,” implying to a hopeful contractor that print is guaranteed.


Publisher shall affix its logo/banner to print and digital versions of the Work, and shall undertake reasonable effort to market, advertise, and publicize the work.


Again here the contract stipulates print and digital versions.


A vital question here is what constitutes “reasonable effort.” One of our consulting sources informs us there is a legal precedent for defining “best efforts,” Wood v Lucy, a case from the fashion industry in 1917. But “reasonable” is surely lesser, and harder to define, than “best.” What are reasonable efforts in the world of comic book marketing?


When questioned, Action Lab responded to us in the following way and with no more detail:


NAPIER: 3) Does Action Lab feel it did sufficient promotion for [Supermom: Expecting Trouble]? Did Action Lab feel Gordon McLean put in the effort to market it?


ACTION LAB: Yes, Our marketing Director at the time worked directly with the creator to develop a marketing plan. Action Lab focuses on marketing to retailers prior to release. If the retailers don't carry the book no amount of public marketing will matter.


As mentioned in our previous coverage, reducing marketing focus prior to release on retailers is contrary to the maximization of preordering. Retailers rely on customer orders to define the size of their orders—if potential customers are not being marketed to outside of a retailer’s shop, they cannot become customers unless they are habitually inside of a retailer’s shop. And even then, only if the retailer itself takes the trouble to market the Action Lab books to its captive audience.

It is known that McLean contacted a great many shops and fan forums himself. The only evidence of public outreach we can find from Action Lab re: that book prior to its print cancellation are their tweets regarding pre-ordering issues 1-3 of five in the months September to December (for a December release—pre-orders usually close). We have contacted several retailers regarding the marketing contact they receive from Action Lab, in order to further investigate the reality of this promise. One has replied that they have received no marketing contact from Action Lab at any time, gleaning all awareness of their books from Previews (which all direct market publishers advertise in, for a price that is covered within the distributors’ fee paid upon distribution agreement with parent company Diamond) and comics websites which use press releases for content. From four others, the most they have experienced on top of those Previews pages is the Action Lab newsletter. Our previous coverage goes into more detail on why this minimalist approach to public and retailer outreach is damning.


Speaking of public outreach, Action Lab’s social media platforms were noticeably dormant for months just prior to the complaints by creators which launched this coverage. From the end of 2020, until August (@ActionLab) and September (@ActionLabDanger) of 2021, Action Lab did not promote any comics to their thousands of followers. In fact, their Action Lab Danger Zone imprint’s Twitter handle, as well as both the Action Lab Entertainment and Action Lab Danger Zone profiles on Facebook, broke their silence only to respond to the numerous allegations that inspired this examination of their contract. Or, rather, to signal boost an article published by Bleeding Cool, which this website does not endorse, in which Seaton was given space to put a positive spin on the situation.


The Work shall be offered for sale in both printed and digital form, as agreed by the parties. All costs of printing, marketing, advertisement, or other costs of production shall be incurred by Publisher free of charge to the Creators.


Again, the contract states the work shall be offered for sale in both printed and digital form.

At this point, we see the most misleadingly stated promise: “costs of production shall be incurred by Publisher free of charge to the Creators.” Action Lab’s position as the contract continues demands that this be understood to mean that at point of payment the production costs (print runs ordered, marketing costs, presumably other business expenses such as shipping) shall be paid by the publisher rather than the creator—because those costs (discussed further below) will be incurred effectively as debts on the project and must be covered in full by revenue from sales of the comic before the creators will ever see a penny.


The creators may not be “paying” for the printing of their comic up front, but the success of their work is funding the recovery of those costs and their own payment for the production of that work is being delayed by Action Lab’s project-debt repayment schedule.


5a. Creator Copies of books: Creator(s) will be provided by Publisher with ten (10) copies of any single issue or four (4) copies of any trade paperback compilation or graphic novel, collectively (regardless of how many creators are involved in producing the book).


If you had a writer, a line artist, a colourist and a letterer work on your book, they each get one comp. A “comp” means a “complimentary copy”—a free example of your work, which you may distribute or refer to as you wish. They are an expected part of the book and publishing trade, with comics creators who do not receive comps from publishers they work for retaining disbelief and resentment over this underperformance. If you had separate penciller and inkers, somebody misses out! The contract does not mention any further fees that may be requested for these comps. Creators have informed us that postage and “Diamond fees” are charged to them before they may receive their comps. Speaking about this to Alison Wilgus, a comics editor who has worked for Random House and FirstSecond, we were informed that “The idea of multiple authors sharing four comp copies total is absurd.”


Additional copies may be requested by Creators at any time, and will be provided by publisher at 60% off of the suggested retail cover price, plus Diamond fees and shipping.


If you want to sell your book at a convention, you may order it from Action Lab for 60% of its cover price—as well as an amount that combines the fees incurred by postage and Diamond’s warehouse holding the books in stock and fetching the books out in order to ship them. Is this egregious? As per Wilgus, ordering one’s own books to hand sell at 60% of retail price is to be expected—that’s sixty percent of retail cover price, not sixty percent “off of” (40% of), as Action Lab’s contract has it. So in this case, Action Lab are actually ahead of the curve, offering a better deal than the norm—assuming no further difficulties arise (see the experience of Crofts and Wright, per our prior coverage). Charging creators postage on this stock is also not unexpected, though the matter of Diamond fees is murkier. We continue investigation on this point.


Unfortunately, it’s difficult for creators to take advantage of this benefit if Action Lab doesn’t respond to them. One source who asked to remain anonymous details their struggle:


“Our biggest problem recently is wanting to order trades and single issues to sell at cons. With shows looking like they are coming back, we reached [out] in May to get some trades as well as single issues. [We were] either met with ‘we are working on it,’ ‘we are waiting for the printer’ or silence. We have continued to reach out and now have not heard back in a month.

We understand with the pandemic that things are tough, but we are looking to give them money for books. It makes no sense why they would ignore us. “


Comic Book Yeti checked in with this source on October 16th for an update, and the source noted they eventually got the copies they requested. The source also noted, however, that the publisher only responded to them “once #freecrashandtroy started getting some steam.”


(Editor's Note: "#freecrashandtroy" is a hashtag started by comic book writer, Jarred Luján. He used it to share his own less-than-ideal Action Lab experience, and asked the publisher to give him the rights to his comic back. Though Action Lab have shipped him copies of his comic, it remains to be seen if the publisher plans to return IP rights to the creators of the comic. Many creators and fans rallied behind Luján's hashtag to share their support and share their own similar experiences with the publisher.)


6. REVENUE HANDLING:

(A) RECORD KEEPING: Publisher shall maintain a ledger showing all costs incurred in connection with publication of the work, including printing cost, advertising, marketing, or any other of Publishers costs associated with producing or publishing the Work in any form.


Action Lab obliges itself to keep records of their business finances, as businesses generally must.


The Ledger shall also reflect the number of copies of the Work sold in any format, and any and all revenues generated from the sale of the work. Publisher shall provide Creators with a quarterly report of all sales, cost and revenue data.


Action Lab is also obliged to provide creators with quarterly sales and project-debt recovery data, as well as details of any revenue money that is owed to the creator. If Action Lab were not to provide this data, they would be in breach of contract. This segment of the contract does not mention the payment of that money which may be owed to the creator. It is unclear how Action Lab expects to get the money their creators eventually earn to them, and on whom lies the burden of transaction instigation.


However, several Action Lab alumni have disclosed issues they have had with Action Lab’s accounting processes. One confidential source states, “You're never told WHEN quarterlies are up, you're just given a link and you have to keep going to it to see if you're owed any money...”


Another anonymous source, who asked to be credited as “Former Action Lab Creator,” claims “Their accounting is vague and baffling. There’s no way to really know how your [book] is selling or how much money you’re owed by them. When you ask questions, emails and calls go unanswered.”


Former Action Lab creator, Nick Marino tells his own story. “...[I]n one quarter alone we had $1500 billed just to Holy F*cked as advertising and promotion costs. When I asked the company's accountant what it was for, he told me it was for our Previews ads. However, other people at the company told me on different occasions that Diamond gives them Previews pages for free. I've received mixed information over the years, but I believe they get at least three pages in the catalog for free. [In fact, template Previews pages, which Action Lab commonly use, are paid for within the upfront fee Diamond asks a publisher upon agreement of distribution—purchased, yes, but in practice effectively a throw-in on a paid collaboration deal.] Now our comic was never run on a full-page ad to the best of my knowledge, just mixed into pages with multiple different titles [adhering to the basic, “free” Previews template, not accruing additional layout costs]. And I've never seen Action Lab solicits in Previews that ran beyond six pages. So how much more could those pages possibly cost, and how is that supposedly split among all of the books coming out that month? To me, these numbers don't make sense. And that's just one small area where they did ‘Hollywood accounting’ on our comics.”


John Perez, another Action Lab alum, details his experience:


“For starters, there is no record [offered to creators] of costs for any of the promotional/ advertising that [Action Lab] supposedly did for the book. We were given a sum total [$1,226.38, as seen below] that was tossed onto our project's costs without any evidence any of that expense was actually spent on our book. For the record though Action Lab [charged for] a presence at conventions [prior to 2016, when] our book was not even collected as a trade until 2016. So there was nothing to sell or promote to justify the cost below.


“Like many publishers, they give out royalties on a quarterly basis. Whenever it would come time to get our quarterly reports, no one at Action Lab would hand them out. We would have to chase down their accountant before they finally gave us a one-page summary which would only tell us our debt. Our book ran from August 2015 to January 2016. We have no idea what we did in sales because no such figures exist. When I pressed Bryan recently he admitted he discarded those records:


‘We did keep records of the number of copies but are not required by law to keep financial ledgers for more than 3-5 years, and even Diamond has cleared such records from its system.’ - Bryan Seaton in an email exchange with me on Sep 4, 2021.


“I'm a realist. Our book was an independent book, which likely didn't do Marvel numbers. But [retaining] NO RECORDS is completely ludicrous. We have no idea whether we were a successful book or a failure. All we know is our cost figure (what Action Lab claims needs to be recouped in order for the royalty split to activate): $6,862.28. The spreadsheet that is currently available is missing several years of revenue reporting [screenshots to support this have been seen by this website, but the creator who provided them preferred not to publicly share those images, as identifying information was visible within them]. I know for a fact our book had an uptick in Digital Sales when Comixology launched their Unlimited service. But all sales go blank around January 2020.


“Lastly, as far as the cost goes, Action Lab prints a minimum of 2000 trades. These are trades which have not been pre-ordered, thus the costs are thrown onto creators. In theory, if we were able to make enough sales to make 2000 trades vanish we would still never see a revenue split because Action Lab would simply do another 2000-trade print run and toss those costs onto us. This publication mechanism was never communicated to our team ahead of signing. Had we known we would have never agreed to this arrangement because it keeps creators’ books bound to Action Lab in perpetuity.”


This creator’s statement says that Action Lab’s publication mechanism, that is the way that creators’ return is staved off by their printing choices which incur costs that will be credited to the project debt, was not communicated to their team ahead of signing. Taking this to be correct, or taking it to be mistaken, the fact remains that the unamended contract they were likely given specifies that costs incurred by the publisher shall be recovered prior to return to the creator—as seen below. The contract, though it does not explain the possibility or previous practice of the economically punitive publication mechanism described by Perez, defends Action Lab’s right to keep that mechanism functioning. Creators have not understood this—Action Lab must understand it, as it’s their practice, but the knowledge necessary for comprehension has not been shared with creators.


(B) PUBLISHER'S RECOVERY OF COSTS INCURRED: Publisher shall be entitled to first recover all printing, marketing, advertising, or other costs associated with the publication of the Work from any revenue generated from the Work, and the rights for the Work, in any form, format or license, before making any revenue payment to Creators.


Action Lab specifies that they shall not pay the people who made and, prior to signing this contract, own the comic they (Action Lab) are planning to brand and sell a single penny until Action Lab has no further financial investment sunk into the project. They will not pay the worker at all until Action Lab’s own investment has been covered, and the workers’ product has begun to profit Action Lab. The creative team must fund the creation of their book in full and will receive no compensation until Action Lab are fully compensated. By the rights of this contract, Action Lab begins taking profits (making money), at the same time as their creators begin getting paid for work completed at least eight months ago (filling in their deficit). Add up the creator’s sunk costs, and perhaps you’ll wonder how long after Action Lab is taking profit the creator begins to.


The phrasing of this clause grants Action Lab leeway to charge anything they feel is arguably an outgoing cost for which the book’s sale or brand could have benefitted to a book’s “debt.” Say your book does get to press, but there’s a problem with the print run, because someone made a mistake nobody caught and all the lettering is an inch to the right of where it should be. Action Lab can order a second print run and charge both that and the original to your book, because it’s printing costs associated with your work. Imagine Action Lab takes a round of coffees to a shop to make an in-person sales pitch a little cuter. They, hypothetically — recall this is an article that seeks to show what the contract protectively allows Action Lab to do, the risks involved for those signing it — can charge that Starbucks tab to your book because it’s marketing, and your book has to pay off that latte set before your first hour of creative work can begin to make you money. Imagine Action Lab buys an Action Lab page advert in a different publisher’s book, which your title appears on. Doesn’t matter what sort of book it’s in, or how likely YOUR target audience is to see it. That, hypothetically, can be charged to your account, because it’s advertising. You won’t get money ‘til your book’s paid for your portion of that advert, as well as for all of the base costs of printing, etc.


If any of these costs seem reasonable to you, very well: it’s possible for a contract to outline reasonable costs, with specificity, and allow creatives to overtly agree to them. This contract does not, and that, when so many creatives have discovered that working with this publisher is uncomfortable, unprofitable, and professionally distressing, is the issue.


Imagine they wanted to get their logo smartened up, which they might argue would benefit their brand, which they feel will benefit your book by association. They can charge that graphic designer’s fees between every book they have on their slate, because it’s “associated with the publication of the Work,” and you won’t see a dime until your book has paid for an hour or more of their consultation. Additionally, “associated costs” will be shipping and storage fees, customs if customs apply, and potentially any other type of business cost which Action Lab is charged, as their presence as a publisher is a cost “associated” with their publication of your book.


It’s necessary to “imagine” these scenarios because Action Lab do not provide their creators with itemised breakdowns of the “Advertising and Promotion” costs their books incur, as seen in this article above. Creators cannot know what the money was spent on—their only information is the total given, and that their book has to pay for it.


One creator, Nick Marino, shares his experience of dealing with costs his project incurred.


“I emailed Bryan Seaton, the CEO and main stockholder of Action Lab, to notify him that I consider our contracts terminated due to years of breaches on their part. He sent me back a terrible offer, saying I could buy out our remaining stock at Diamond to reclaim the rights. In theory, it sounds good, but when you do the math, it's an absolutely insane offer because of how much they overprinted our comics. Just one variant cover of Holy F*ck #3 has 1046 copies still at Diamond after six years. This is not normal practice for a small publisher effectively managing its inventory. If I remember correctly, we received orders for about 2500 issues of Holy F*ck #3. And that variant probably got about 300-500ish of those orders. Accounting for reorders and late orders, we probably added on another 200ish copies for that one cover. So they chose to overprint it by... at least 1000 copies?!?? To buy back that one issue alone would cost me $2087.82.”


ALE Creators Handbook
.pdf
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The Action Lab Creators’ Handbook does list one reason for the overprinting:



This practice raises more than a few questions worth a brief digression.


In printing, or wholesale retail in general, the greater the number of units ordered in bulk, the lower the individual unit price. Perhaps to the business minds behind Action Lab, chasing a low unit price is worth charging a creator’s project debt with a large total order price. It might be considered to be “a savings,” in the long run, as Action Lab (or even the creator, should they manage to get their own stock in and hand-sell effectively) would be able to profit from the greater difference between that unit price and the retail price of each copy as it was sold. This is a gamble that relies on one thing: people knowing they can, and wanting to, buy those issues. If they don’t, or if they can’t, and we have discussed in this article and previous ones why those possibilities may be in question, then that bulk order price is just another hurdle for a creator’s book to clear before that creator sees any return on their work at all, and those units that cost so little individually are just a pile of papers taking up space in a warehouse somebody has to rent.


Speaking of hurdles: would overprinting for the trade account for the warehouse surplus on Marino’s Holy F*ck? At first glance, it seems like it could. Perhaps trade orders were not high enough to merit those 1000 stockroom issues being rebound (at, presumably, some further expense) into trade collections. If this is the case, did Action Lab’s overestimation of the number of trades they may eventually have to bind—as proven by their remaining unbound—work directly against the creator whose book they ordered in too much bulk, despite the lowered issue-unit price? Would Marino “owe” less on a project that had had a lower order price and higher unit price? We don’t know how Action Lab’s accounts work. We don’t know how the dollars and cents from a retail sale are portioned out behind the scenes, until the book is in the black—when the 60/40 revenue split occurs. If unit price is deducted from sale price, every time, covering that much of the book’s debt, then the size of an order defines the number of sales needed before the printer fee is filled in on the book’s debt: if the unit price is covered per unit sold at retail, then ordering 100 or ordering 1000 is just going to mean that book will take 100 or 1000 sales to “pay it back.”


Marino is being charged around two dollars per unit on this surplus, which is unlikely to be unit cost.


Further questions abound. How is the number of issues overprinted chosen? Is it a set number, that simply isn’t mentioned in the contract or Creators’ Handbook? Or is it based on the success of those individual issues? It’s common knowledge that sales drop from issue to issue—is the order total for issue one considered to set the estimate for the whole series? Or, are the same number of overstock pages printed for each individual issue—is (or was) e.g. 1000 copies added to each retailer order total? How does a retailer estimate trade sales from debut issue orders? Does that estimate drop if orders for issue two drop—and if so, is this heavily fluctuating method of unit-cost reduction worth the creator being charged for the over-ordered first issue? When during the process of issue order to trades sale were the issue pages loosened and bound into trade collections, and why haven’t they been in Marino’s case, leaving a huge surplus of #3? Are we wrong to assume the standard, that Action Lab received issues from their printer bound, and did they in fact have their books stapled elsewhere as well as trade-bound elsewhere?


Minutia aside: is creators waiting this long to see any money back normal? Do comic book publishers habitually deny their creators any monetary reward until they themselves are in the black? Can and should we expect this from publishers of comics? I asked several established, white, perceived male writers. While it was concluded that this level of punitive support—and, of course, exposure—is occasionally seen at smaller publishers (do feel free to share your experiences in the comments), their overwhelming answer was “No.” Some variations included “LOL no” and “Never.” An advance is to be expected, if your royalties won’t start coming in until a publisher’s costs are covered, because publishers, as one source pointed out, exist because they can pay in advance.


This arrangement shall also apply to any additional print runs, sequels, follow- ups, or any other costs related in any way to publication of the Work.


This reiterates much of the explanation given above. Action Lab are within their rights, as they have defined them, and as experienced by a creator quoted above, to charge future print runs or costs of producing sequels or any costs they can apply to the further marketing of your comic to the project-debt that must be covered prior to your receipt of any revenue.


(C) REVENUE SPLIT AFTER COST RECOVERY: After recovery of all printing, marketing, advertising, or other costs associated with the publication of the Work from revenue generated by sales of the Work in any format, Publisher shall thereafter split any additional revenue generated from sales of the Work on a 60%/40% basis, with 60% of revenue going to the Creators, and 40% to Publisher.


This was the segment of contract which was amended by one board-approved but unsigned creator to read “After recovery of all printing, marketing, advertising, or other costs associated with the publication of the Work from revenue generated by sales of the Work in any format, excluding staff salaries or other costs associated with day-to-day business.” Having returned this and other suggested amendments to Action Lab, the creator continued to consult with his Action Lab contact, Nicole D’Andria. This was Steve Horton, who says “There was further back and forth after this until they made it clear they wouldn't change a single word of the contract. Then talks broke off.”


The suggestion of this amendment tells us that this creator’s literary agent felt that the contract did not exclude the possibility of Action Lab charging staff salaries or office costs (etc) to the “project debt” of its creators. With this amendment, Action Lab would have been prohibited from assigning the whole or partial costs of employee payment, office heating bills or paperclips to the sum a book must earn over before payment begins reaching the creators who made it. We do not have any report or evidence that Action Lab attempted to do this. But the contract, in its template form, a form which was signed by many hopeful creatives, allows for it—it protects their right to do so should they choose to.


From the date of first publication onward, Publisher and Creators shall split all revenues generated from sales of the Work on the same percentage basis, for as long as this Agreement and License shall remain in effect.


This is perplexing coming at this point in the paragraph, as it appears to contradict the former statement. Taken alone, this segment suggests that as soon as publication is achieved in any format, the publisher should be paying the creator sixty percent of all revenue. Taken in concert, it’s simply confusing.

7. LICENSING AUDIO-VISUAL RIGHTS: Concurrently with the license to exploit the Work in printed or digital form, Creators also grant to Publisher the exclusive right to negotiate, sell, agree, market, or otherwise exploit the Work in but not limited to animation, video games, television, motion pictures, apps, video or audio productions.


Any revenues associated with these activities shall be handled in the manner set forth below:


For work Licensed by Publisher to other Companies or Agencies:


60% to Creator and 40% to Publisher. Payment for work in this category created and or distributed by Publisher the following royalty payment scale will apply: (i) The royalty percentage after cost recovery shall be set at:

  • 6% (six percent) for sales up to $100,000.00 per year

  • 7% (seven percent) on sales between $100,000.00 and $250,000.00 per year

  • 10% (ten percent) on sales above $250,000.00 per year

This segment is presented as formatted in the contracts CBY was able to see, to show how hard-to-read this contract can be. In sum, the gist is that Action Lab controls the IP in any given format and through any given franchising opportunity.


The hardest part of this to read is this section:


For work Licensed by Publisher to other Companies or Agencies:

60% to Creator and 40% to Publisher. Payment for work in this category created and or distributed by Publisher the following royalty payment scale will apply: (i) The royalty percentage after cost recovery shall be set at:”


This is because there should be at least a line break, ideally a paragraph break, between the first and second sentences of the paragraph beginning “60%.” This segment is supposed to inform signees that if Action Lab licenses out your IP for development in other creative fields, 60% of the licensing fee will be yours, and that if Action Lab develops that IP in other fields itself they will pay you royalties of e.g. six percent a year, if sales are under $100,000.


In practical terms, this formatting (seen in multiple copies offered to CBY) makes it very hard to parse.


All costs relating to the transfer of audio-visual rights and/or the recruitment of producers shall be the sole responsibility of Publisher. Any fees charged will be paid by Publisher and will be reimbursed to Publisher from revenues generated by the licensing, merchandising or other media projects, before application of the revenue sharing of the parties.


This means that, while the creators won't find themselves obliged to hire a lawyer to look over licensing contracts for development of their IP in other fields, Action Lab’s lawyers’ fees might be charged to the project-debt account (as experienced by a creative team this website has spoken with, but who prefer to remain nameless), and that deficit will have to be returned to neutral before the creators see any financial return from this deal centred on their work. Once again, Action Lab reserves the right to take a chunk out of your allotted 60% should it find itself facing reduced profits in any way.


The term of the audio-visual rights license shall be handled in the manner set forth in section 2 of this Agreement.


This refers to the segment which defines this contract as active “in perpetuity”—Action Lab and their licensor can use your creations forever unless something stops them: you don’t get anything back, ever, unless your IP goes unpublished for one year. Section 2 does not contain the word “exclusive,” which may provide some hope to those pursuing legal action: though Action Lab may have perpetual rights to profit from the adapted IP, if they are not exclusive, then the creator may be able to assert the legal right to license their IP to audio-visual adaptation without Action Lab’s input or profit. Action Lab would simply have the right to also pursue this—to compete, if it so chose. However this in itself may reduce the original creator’s licensing options.


Publisher shall advise Creators of all other media opportunities, and Creators shall have the right of approval over any such projects.


You can prevent Action Lab from finalising a contract with a licensing developer, but you cannot prevent Action Lab from having the right to continue to try to make deals. The most power you will have over your work once this contract is signed is the ability to stop it appearing in other mediums—but, in a worst case scenario, you will have to actively whackamole it, saying “no” every time Action Lab feel they have the possibility of a deal.

This is the only point within this contract that creators’ rights are mentioned.


Any audio-visual rights agreement shall require both Creators and Publisher to sign any agreement made with a producer as prerequisite. Any agreements made under this contract will remain in force and valid and Section 7 of this contract will continue to apply to those agreements even if this current contract should expire or be terminated by either party.


Action Lab retains the exclusive, eternal right to broker deals to license your IP so long as your contract remains unbroken, and to consider as unbroken any further contract signed for IP licensing should this original contract be dissolved. Action Lab retains access to any licensing agreements, and the right to enforce any licensing agreements, already made at the point of termination of this comics-publishing contract. Even if this contract is terminated, any further agreements you have made with Action Lab regarding the licensing of your IP are unaffected.


Over the past two months, Action Lab has started selling some rights back to creators, according to public tweets and our privately confirmed sources, but it remains to be seen if those rights extend only to comics publishing or their IP as a whole. We are unaware if any creators had any further licensing agreements in place. Some creators have also been seeing, in October 2021, the surprise return of their stock after having broken off contract negotiation with an unbending Action Lab. Will those creators have also received the return of their IP licensing rights? Would Action Lab consider this primary contract broken upon their gifting of stock to the creators? Without certainty, in writing, these creators cannot consider themselves out from under the shadow of their Action Lab contract. And, if this is not made clear, parties interested in those satellite rights may likely choose not to pursue that IP.


However, the invocation of the possibility to terminate in this segment is marginally hopeful in a legal sense—as it implies that the creator may indeed have the right to terminate (choose to end) their contract. This will not matter unless Action Lab is sued, and even then it’s only a maybe.


8. MERCHANDISING: Concurrently with the license to exploit the Work in printed or digital form, Creators also grant to Publisher the right to negotiate, sell, agree, market, or otherwise exploit the Work for merchandising, including toys, action figures, plush dolls or other stuffed animals or characters, T-shirts, other apparel, and any other merchandise bearing the likenesses, images, ideas or words of the Work.


Action Lab can sell whatever they want with your IP on it or represented by it.


Any revenues associated with these activities shall be handled in the manner set forth below:


This is how the money from those sales will be split—

For work Licensed by Publisher to other Companies or Agencies:


60% to Creator and 40% to Publisher. [x]Payment for work in this category created and or distributed by Publisher the following royalty payment scale will apply, The royalty percentage after cost recovery shall be set at:

  • 6% (six percent) for sales up to $100,000.00 per year

  • 7% (seven percent) on sales between $100,000.00 and $250,000.00 per year

  • 10% (ten percent) on sales above $250,000.00 per year

Once again, the format and wording of this segment is substandard. There should be a line break following the notification of rates for work licensed out (at site “[x]”). Then, “Payment for work in this category created and or distributed by Publisher the following royalty payment scale will apply, The royalty percentage after cost recovery shall be set at [series of rates]is not a functional sentence. Supposing that the comma after “apply” and before the capitalised “The” is intended to be a period (either way, this mistake appears in multiple examples of contracts supplied by Action Lab to prospective creators), “Payment for work in this category created and or distributed by Publisher the following royalty payment scale will apply” is not a functional sentence either. One might assume it should read “The following scale of royalty payment shall be used for work in this category created or distributed by the Publisher”—but it does not.


What this segment tells the creator is that if Action Lab license out merch production, the same revenue split applies to that merch as to the comic. However in the next segment of contract text, the same “after costs covered” term is applied before the creator will begin to be paid. If Action Lab produce any merch in-house, or apparently if they sell any of the licensed-out merch themselves, they will pay you at rates beginning six percent per year in any year where less than $100,000 revenue is seen.


All costs relating to the transfer of merchandising rights and/or the recruitment of trading partners shall be the sole responsibility of Publisher.


This sounds like Action Lab taking responsibility and risk off the shoulders of the creators–but these costs, while the “sole responsibility” of the publisher at time of their payment, become an obstacle between the creators and their payment as Action Lab must be reimbursed fully before revenue begins being split with the people who created the IP producing that income:


Any fees charged will be paid by Publisher and will be reimbursed to Publisher from revenues generated by the licensing, merchandising or other media projects, before application of the revenue sharing of the parties. The term of the merchandising license shall be handled in the manner set forth in section 2 of this Agreement.


—Section 2 specifies that Action Lab holds these rights In perpetuity, so long as product doesn’t stop being sold for one year.


Publisher shall advise Creators of all other media opportunities, and Creators shall have the right of approval over any such projects. Any merchandising agreement shall require both Creators and Publisher to sign any agreement made with a manufacturer as prerequisite. Any agreements made under this contract will remain enforce and valid and Section 8 of this contract will continue to apply to those agreements even if this current contract should expire or be terminated by either party.


As with section seven, this last chunk of text means the most power a creator has over their IP while they are contracted with Action Lab is the ability to say “you cannot complete that merchandising deal.” There are no stated terms for termination of Action Lab’s right to negotiate sales of non-comics development licenses, ever—the contract does not tell the signatory how or that they would ever be able to remove themselves from this agreement.


8a. Licensing Agent: Publisher may also retain the services of a licensing agent to assist in arranging merchandising, licensing, or other media opportunities for the Work. Any fees charged by said licensing agent will be paid from revenues generated by the licensing, merchandising or other media projects, before application of the revenue sharing referenced in paragraph 8, above.


This covers more fees which will delay your receipt of revenue.


8b. De minimus or direct merchandising by Creator: Creator may personally create and sell handmade items related to or based on the Work without payment of any revenue share to Publisher, provided that revenues generated by said sales do not exceed $500 in a year. Creator must maintain records of all sales of such items, and Publisher may audit said records at its request. For any sales in excess of $500 per year, the revenue sharing set forth in paragraph 8, above, shall be applied. Any artist-creator(s) shall retain the right to create and sell individual drawings, commissions, or sketches based upon the work without payment of any revenue share to Publisher.


This gives Action Lab the right to audit you in order to satisfy them that you haven’t made over five hundred dollars through sale of homemade items relating to your IP this year. Only illustrative work in an pure-illustrative format by the member of the creative team who contributed art to the comic is exempt—sketches by a writer, for example, are not exempt from these terms. Hypothetically a writer who made more than $500 drawing their own characters could be forced by Action Lab to prove this was so and then to pay, based on the assumption that the out-of-house royalty split from section 8 would take precedence when the creator rather than Action Lab were producing the work, 6-10 percent of that surfeit to Action Lab. Imagine you made $505 on tote bags and bookmarks you block printed with your character on. Action Lab can now require you to pay them thirty cents.


9. CHOICE OF LAW: This Agreement shall be interpreted in accord with the laws of Pennsylvania. Any dispute regarding this agreement must be brought and adjudicated in the court of common pleas, in Fayette County, in the commonwealth of Pennsylvania.


This means that if you want to sue Action Lab for the return of your IP, you have to do it in Pennsylvania (United States). This is not uncommon in contract law, and is considered by one of our legal sources “not necessarily predatory, just strategic,” and another as “extremely common,” expected in contracts by US lawyers—though he allowed that it was likely an irritant to those people who seek to bring suits. In a contract which has been interpreted as predatory elsewhere—as every legal source we have contacted considers this to be—every element which reduces the facility of its signatory to escape can be appreciated as another brick in the wall.


10. Creators certify that they have read this Agreement, and understand its contents.


This reiterates the burden of comprehension being on you, rather than a burden of ethical agreement patterns or solid contract language being on Action Lab. Similarly to the last clause, this is not considered a predatory inclusion in itself—it is highlighted to emphasise its presence at the end of a contract that has been observed to be confusing and subtle, and as well simply because it’s a part of the contract we are observing. We have included every word of these contracts; avoiding the neutral would be misleading.


11. ENTIRE AGREEMENT: This Agreement embodies the entire agreement between the Parties hereto, and no other promises or assurances have been made or relied upon by either Party in entering into this Agreement.


Per a legal source, this phrase refers to the “parol evidence rule.” It means that the agreements stated within this contract are the supreme agreements; if they’re contradicted by other agreements made elsewhere—for example, an email, a DM, etc—then those other agreements do not matter and are outweighed by whatever said in this document. However, if any phrasing in this contract is unclear, other documents or communiques are allowed relevance: if you have an email (for example) saying that a certain cost will not be associated with the publishing costs of your book, you can use that to claim that those costs must not be charged to your book’s “debt.”


This means that though the Handbook is a separate document, the parts of it or uses of it referred to in this contract are contractually obligated and solid within your agreement with Action Lab.


Note that the other promises and assurances which have not been made or relied upon are when, in the calendar sense, or how contracted creators will ever be paid; that they should have ever felt guaranteed to see any money from Action Lab at all; what rights the creator has beyond vetoing merchandising or adaptation licenses; or how the creator can ever dissolve this contract by choice or agreement. As impressed upon us by our various legal consultants during pursuit of this piece, contracts don’t have to be fair, but they do have to be in good faith.


Lawyer Chad Ciccone is a founding board member and the Chief Legal Officer of Action Lab, according to the volume 3 Action Lab Creator Handbook provided to creators in early 2020. As per that same resource, “​​He is the primary architect of your contracts and other legal matters.”


Neither Seaton nor Action Lab have responded to any further questions, with dates of asking reaching back into August 2021.


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