IP/Entertainment Law Weekly Case Update for Motion Picture Studios and Television Networks - January 16, 2013

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Table of Contents

Larson v. Warner Bros. Entertainment, Inc., USCA Ninth Circuit, January 10, 2013
 Click here for a copy of the full decision.

  • Ninth Circuit reverses grant of summary judgment in favor of heirs of Superman co-creator in litigation concerning ownership of copyrights in comic book character Superman, finding that letter from heirs’ then-attorney constituted acceptance of oral settlement offer and created binding settlement agreement.

In this protracted litigation concerning the ownership of intellectual property rights to the famous comic book character Superman, the district court in March 2008 granted partial summary judgment to plaintiffs, holding that in 1999 co-creator Jerome Siegel’s widow and daughter had successfully terminated their share of grants that Siegel and co-creator Joseph Schuster conveyed to DC Comics’ predecessor-in-interest to the copyright in the Superman material published in Action Comics No. 1. (Read our summary of the district court’s opinion here.) In that opinion, the court also rejected defendants’ assertion that the heirs’ termination notices were no longer effective because the parties had reached a settlement of their dispute in 2001 and 2002. The district court granted summary judgment in favor of plaintiffs on defendants’ counterclaims related to that alleged settlement of their dispute, holding that no meeting of the minds existed as to the terms of that settlement, and that, as a matter of law, no binding settlement agreement existed.

The district court later issued decisions addressing the ownership of copyrights to other early Superman material. For example, in August 2009, the district court decided that Siegel’s heirs had properly terminated Siegel’s grants of copyright ownership to certain Superman material published in the 1930s and ’40s, including Action Comics No. 4, portions of Superman No. 1, and two weeks’ worth of daily newspaper strips, while other Superman material was created by Siegel and Schuster as works made for hire, and was therefore not subject to termination (read our summary of the district court’s August 2009 opinion here).

On appeal, the Ninth Circuit reversed the district court’s March 2008 grant of summary judgment, finding that an October 19, 2001, letter from the Siegel heirs’ then-attorney constituted acceptance of an oral settlement offer made on October 16, 2001, and created a binding settlement under California law (which all the parties agreed applied to the issue). “The October 19, 2001, letter itself plainly states that the heirs have ‘accepted DC Comics’ offer of October 16, 2001, in respect of the ‘Superman’ and ‘Spectre’ properties.” The letter also included “five pages of terms outlining substantial compensation for the heirs in exchange for DC’s continued right to produce Superman works[,]” and ends with plaintiffs’ attorney thanking DC’s attorney for his “’help and patience in reaching this monumental accord.’” Noting that the objective, not subjective, understandings of the parties determine whether they reached an agreement, and that extrinsic evidence of the parties’ actions may be used to determine whether the oral offer referred to in the letter had, in fact, been made, the Ninth Circuit concluded: “Statements from the attorneys for both parties establish that the parties had undertaken years of negotiations, that they had resolved the last outstanding point in the deal during a conversation on October 16, 2001, and that the letter accurately reflected the material terms they had orally agreed to on that day.”

The Ninth Circuit rejected plaintiffs’ argument that either state or federal law precluded a finding that an agreement could have been created by the October 19, 2001, letter, reasoning that California law permits parties to bind themselves to a contract even when they anticipate that some material aspects of the deal will be reduced to writing later, and even absent an express reference to a future agreement, “as long as the terms of any contract that may have been formed are sufficiently definite that a court could enforce them (as is undoubtedly the case here).” The appellate court likewise rejected plaintiffs’ argument that the Copyright Act precluded the finding of a binding agreement: “Nor is 17 U.S.C. § 204(a) a bar to the validity of any such contract; that statute expressly permits an agreement transferring ownership of a copyright to be signed by a ‘duly authorized agent’ of the copyright owner, and [plaintiffs do] not contest that the heirs’ attorney was such an agent.”

The court remanded the case to the district court with directions to reconsider the counterclaims related to the 2001 settlement agreement. Noting that a judgment in favor of the defendants on those counterclaims would “appear to render moot all of the other questions in this lawsuit,” the court declined to address any other issues raised in the appeal.

Fox Television Stations, Inc. v. BarryDriller Content Systems, PLC, USDC C.D. California, December 27, 2012
 Click here for a copy of the full decision.

  • California district court grants TV networks’ motion for preliminary injunction against internet streaming service, finding that, contrary to decisions by courts in the Second Circuit, streaming transmissions of copyrighted content likely infringed networks’ exclusive right to public performances.

Plaintiffs, broadcast television networks including Fox Television Stations, NBC, ABC, and CBS, moved for a preliminary injunction to enjoin defendants from offering plaintiffs’ copyrighted content through defendants’ internet and mobile device streaming services. The district court granted plaintiffs’ motion, finding that plaintiffs established a likelihood of success on the merits of their claim that defendants’ service violated plaintiffs’ right of public performance.

Defendants did not deny that they retransmitted plaintiffs’ copyrighted programming but argued that, under the Second Circuit’s decision in Cartoon Network LP, LLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) (“Cablevision”), they did so legally because their transmissions were private, not public. In Cablevision, the Second Circuit held that the internet transmission of a copy of a work made at the direction of and solely for use by a single user is not a public transmission, reasoning that the transmission must be public for the transmitter to infringe the public performance right. The court declined to follow the Second Circuit, reasoning that Cablevision’s focus on the transmission was misplaced because, under the Copyright Act and Ninth Circuit precedent, the concern is with the public performance of the work, irrespective of whether the transmission is publicly performed. Defendants’ service operated by receiving a broadcast with an antenna assigned to a single subscriber, and then retransmitting that separately-received transmission over the internet to that particular subscriber. The court rejected defendants’ “unique-copy transmission argument” and held that defendants’ transmissions were public performances that infringed plaintiffs’ exclusive right.

The court also found that plaintiffs would suffer irreparable harm absent an injunction because defendants’ service threatened to damage plaintiffs’ ability to negotiate favorable licensing agreements with retransmission broadcasters, damaged plaintiffs’ goodwill with their licensees, competed with plaintiffs’ ability to develop their own internet distribution, and harmed plaintiffs’ position in negotiations with advertisers. These harms are irreparable, according to the court, because they are neither easily calculable, nor easily compensable, and because defendants (which were start-up companies) would likely be unable to satisfy a large statutory damages award.

The court also found that the balance of factors favored plaintiffs because, to the extent they were likely to succeed on the merits of their copyright infringement claim, defendants had no equitable interest in continuing an infringing activity. The public interest also would be served by an injunction upholding copyright protections and preventing infringement.

While plaintiffs sought a nationwide injunction, the court held that principles of comity prevented the entry of an injunction that would apply to circuits with conflicting law, and therefore limited the geographic scope of the injunction to cover the Ninth Circuit only.
 



For more information, please contact Jonathan Zavin at jzavin@loeb.com or at 212.407.4161.

Westlaw decisions are reprinted with permission of Thomson/West. If you wish to check the currency of these cases, you may do so using KeyCite on Westlaw by visiting http://www.westlaw.com/.

Circular 230 Disclosure: To assure compliance with Treasury Department rules governing tax practice, we inform you that any advice (including in any attachment) (1) was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty that may be imposed on the taxpayer, and (2) may not be used in connection with promoting, marketing or recommending to another person any transaction or matter addressed herein.

Topics:  Copyright, Fox Television Stations, Internet, Motion Picture Industry, Preliminary Injunctions, Settlement, Warner Brothers Entertainment

Published In: Art, Entertainment & Sports Updates, Intellectual Property Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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