(1968) Tags: United Artists
Hearst Corporation v. Shopping Center Network, Inc.
Subafilms, Ltd. v. MGM-Pathe Communications
In this action plaintiff claims, inter alia, invasion of its rights of literary property in certain original artwork used in the production of the animated motion picture “Yellow Submarine,” of which it was the producer.
The cause of action substantially alleges that plaintiff is a producer of the animated motion picture “Yellow Submarine,” currently in theatrical distribution in this country and abroad, said motion picture being promoted and distributed by United pursuant to agreement with plaintiff; that in producing this film, plaintiff commissioned the creation of and used a large number of original animation cells and other artwork; that at all times pertinent, plaintiff was and is the owner of said original cells and artwork; that in connection with the promotion and distribution of the film, United, for plaintiff’s benefit, entered into an agreement with defendant Shopping Center dated July 16, 1968, for the use of the animation cells and artwork in a December 1968 promotion of the motion picture; that approximately 65,000 pieces of said cells and artwork were conditionally delivered by plaintiff to defendant Shopping Center pursuant to a letter dated September 19, 1968.
Defendant Shopping Center, instead of providing the promotional services agreed to and for which purpose the original animation cells and artwork were conditionally delivered to it, breached in this and other ways the terms and conditions of its agreement and unlawfully sold the cells and artwork to or through defendants Outlet and Crown and other retail establishments, which retailers offered and sold said cells and artwork to the public; and that plaintiff at no time consented to said sales or received any royalties or other compensation for defendants’ use of the cells and artwork.
Judgment: Plaintiff’s motion to remand is granted.
Subafilms, Ltd. v. MGM-Pathe Communications
In 1966, the musical group The Beatles, through Subafilms, Ltd., entered into a joint venture with the Hearst Corporation to produce the animated motion picture entitled “Yellow Submarine”. Over the next year, Hearst, acting on behalf of the joint venture, negotiated an agreement with United Artists Corporation to distribute and finance the film. Separate distribution and financing agreements were entered into in May, 1967. Pursuant to these agreements, UA distributed the Picture in theaters beginning in 1968 and later on television.
In the early 1980s, with the advent of the home video market, UA entered into several licensing agreements to distribute a number of its films on videocassette. Although one company expressed interest in the Picture, UA refused to license “Yellow Submarine” because of uncertainty over whether home video rights had been granted by the 1967 agreements. Subsequently, in 1987, UA’s successor company, MGM/UA Communications Co., over the Producer’s objections, authorized its subsidiary MGM/UA Home Video, Inc. to distribute the Picture for the domestic home video market, and, pursuant to an earlier licensing agreement, notified Warner Bros., Inc. that the Picture had been cleared for international videocassette distribution. Warner, through its wholly owned subsidiary, Warner Home Video, Inc., in turn entered into agreements with third parties for distribution of the Picture on videocassette around the world.
In 1988, Subafilms and Hearst brought suit against MGM/UA, Warner, and their respective subsidiaries, contending that the videocassette distribution of the Picture, both foreign and domestic, constituted copyright infringement and a breach of the 1967 agreements. The case was tried before a retired California Superior Court Judge acting as a special master. The special master found for Appellees on both claims, and against the Distributors on their counterclaim for fraud and reformation. Except for the award of prejudgment interest, which it reversed, the district court adopted all of the special master’s factual findings and legal conclusions. Appellees were awarded $2,228,000.00 in compensatory damages, split evenly between the foreign and domestic home video distributions. In addition, Appellees received attorneys’ fees and a permanent injunction that prohibited the Distributors from engaging in, or authorizing, any home video use of the Picture.
We hold that the mere authorization of acts of infringement that are not cognizable under the United States copyright laws because they occur entirely outside of the United States does not state a claim for infringement under the Copyright Act. Peter Starr is overruled insofar as it held to the contrary. Accordingly, we vacate Part III of the panel’s disposition, in which it concluded that the international distribution of the film constituted a violation of the United States copyright laws. We also vacate that portion of the disposition that affirmed the damage award based on foreign distribution of the film and the panel’s affirmance of the award of attorneys’ fees. Finally, we vacate the district court’s grant of injunctive relief insofar as it was based on the premise that the Distributors had violated the United States copyright laws through authorization of the foreign distribution of the Picture on videocassettes.