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Seven Arts v. Content Media and Paramount Pictures Corp

By Barry Werbin

An important Ninth Circuit decision of first impression for that Court issued November 6th in Seven Arts v. Content Media and Paramount Pictures Corp. Seven Arts Filmed Ent Ltd v Content Media Corp .pdf. The Court held that "an untimely ownership claim will bar a claim for copyright infringement where the gravamen of the dispute is ownership, at least where, as [in this case], the parties are in a close relationship."

Here, the plaintiff had been embroiled with the defendant Content Media on ownership issues respecting copyrights in motion pictures in Canadian courts (based on a forum selection clause), where the plaintiff ultimately prevailed in an action originally filed in 2003. While the Canadian action was pending, the plaintiff also filed suit in California in 2005, claiming sole copyright ownership of the movies in question (and disputing the validity of an underlying agreement between the parties), but that suit was stayed pending the outcome of the Canadian action. In 2008, the California district court dismissed the California action for lack of prosecution. Meanwhile, Paramount had expressly repudiated the plaintiff's claim of ownership of the copyrights in 2005.

In 2011, the plaintiff won a declaratory judgment in the Canadian action that it was the sole owner of the copyrights under the U.S. Copyright Act. Immediately after, the plaintiff filed this new action in California in 2011 against Paramount based on the Canadian judgment, making the same ownership claims as in its 2005 action, which had been dismissed, but also claiming copyright infringement. The district court construed the gravamen of the claims as ownership claims and dismissed them as time-barred under the three year statute of limitations for ownership claims based on "when plain and express repudiation of co-ownership is communicated to the claimant, and [such claims] are barred three years from the time of repudiation."

The Ninth Circuit agreed that the case was fundamentally about ownership. The Court framed the issue as "whether a claim for copyright infringement in which ownership is the disputed issue is time-barred if a freestanding ownership claim would be barred." As an issue of first impression in the Ninth Circuit, the Court looked to precedent in the Second and Sixth Circuits. [The Second Circuit case being Kwan v. Schlein, 634 F.3d 224, 229 (2d Cir. 2011)]. The Ninth Circuit also cited Nimmer, and held that "Our sister circuits' approach makes good sense -- allowing infringement claims to establish ownership where a freestanding ownership claim would be time-barred would permit plaintiffs to skirt the statute of limitations for ownership claims and lead to results that are 'potentially bizarre....'" Of particular importance was the fact that the plaintiff's predecessor had started a relationship with Paramount over the movie production rights as early as 1998; the Court thus found that Paramount was not a third party stranger to the underlying transactions but was in a "close relationship" among the parties.

The decision thus aligns with those in the Second and Sixth Circuits. The Court expressly declined the plaintiff's urging to create a rift among the Circuits. Of particular interest is the Court's policy statement: "'the creation of a circuit split would be particularly troublesome in the realm of copyright.'.... Creating '[i]nconsistent rules among the circuits would lead to different levels of protection in different areas of the country, even if the same alleged infringement is occurring nationwide.'...Such would contravene Congress's intent in revising the Copyright Act."

It will be interesting to see whether this policy statement affects the Ninth Circuit's much awaited decision in the Aerokiller case or if it will set up a rift with the Second Circuit's Aereo decision.

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This page contains a single entry from the blog posted on November 12, 2013 4:44 PM.

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