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Seven Arts Filmed Entertainment Ltd. v. Content Media Corp. PLC

United States Court of Appeals, Ninth Circuit

November 6, 2013

SEVEN ARTS FILMED ENTERTAINMENT LIMITED, an English corporation, Plaintiff-Appellant,
v.
CONTENT MEDIA CORPORATION PLC, an English corporation, Defendant, and Paramount Pictures Corp., a Delaware corporation, Defendant-Appellee.

Argued and Submitted Aug. 29, 2013.

Page 1252

Neil Netanel, Los Angeles, CA, argued the cause and Peter Hoffman, West Hollywood, CA, filed the briefs for the plaintiff-appellant.

Joan Mack, Los Angeles, CA, argued the cause and filed the brief for the defendant-appellee. With her on the brief were Jeanne A. Fugate, Los Angeles, CA, and Matthew O'Brien, Los Angeles, CA.

Appeal from the United States District Court for the Central District of California, Audrey B. Collins, District Judge, Presiding. D.C. No. 2:11-cv-04603-ABC-FMO.

Before: DIARMUID F. O'SCANNLAIN, CARLOS T. BEA, and MORGAN CHRISTEN, Circuit Judges.

OPINION

O' SCANNLAIN, Circuit Judge:

We are invited to decide the ownership of copyrights in several motion pictures. The question is whether the three-year statute of limitations in the Copyright Act applies.

I

This appeal is the latest chapter in a decade-long quest by Seven Arts Filmed Entertainment Limited (" Seven Arts" ) [1] to establish ownership of copyrights in several motion pictures— as relevant here: Rules of Engagement, An American Rhapsody, and Who is Cletis Tout?.

On May 27, 2011, Seven Arts sued Paramount Pictures Corp. (" Paramount" ) and Content Media Corp. PLC (" Content" ) for copyright infringement, a declaration of ownership rights, and an accounting, seeking a declaration that neither Content, nor its predecessors-in-interest (collectively " CanWest" ),[2] " is the owner or grantee" of rights in the films. Rather, Seven Arts claims that it is " the registered owner or assignee of the registered owner" of United States copyrights to the films. Seven Arts also alleges that Paramount is the licensee of certain distribution rights in and to the pictures, and that it has paid receipts from their distribution to Content, not Seven Arts, despite Seven Arts's demands.

Seven Arts voluntarily dismissed Content, deciding to pursue it in the High Court of England and Wales. Nonetheless, Seven Arts claimed a viable cause of action for copyright infringement against Paramount because of a summary judgment order it obtained in 2011 from the Superior Court of Justice in Ontario, Canada.

That Canadian action was first brought in 2003 against CanWest. In it, Seven Arts claimed co-ownership rights to the pictures stemming from a document referred to as the " Heads of Agreement" or " Master Structure Agreement." The case found its way to Canada because CanWest defended Seven Arts's first lawsuit— a 2002 action in the Central District of California— on the ground that the Heads of Agreement had a Canadian forum-selection clause. CanWest defended in Canada

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by denying that the Heads of Agreement was an enforceable contract.

While the Canadian action was pending, Seven Arts returned to the United States in 2005 and filed a second action in the Central District of California. Just as the instant 2011 action, the 2005 lawsuit alleged causes of action for copyright infringement, declaratory relief, and an accounting against CanWest. Unlike the 2002 action, which had alleged Seven Arts was a co-owner, the 2005 lawsuit claimed that Seven Arts was the sole owner of the disputed film rights. The new theory of ownership was that when CanWest denied the Heads of Agreement in Canada, Seven Arts obtained and exercised a right to " rescind any contracts which may have existed among the parties." Such contracts included: the Heads of Agreement in which Seven Arts's predecessor-in-interest had assigned all its rights to Rules of Engagement to Paramount's predecessor-in-interest; a 1999 agreement in which Seven Arts had assigned away its rights to An American Rhapsody; and a 2000 agreement concerning Who Is Cletis Tout?.

In August 2005, the district court granted CanWest's motion to stay the proceedings pending prosecution of the Canadian action. Seven Arts belatedly appealed that stay to this court, and we affirmed. See Seven Arts Pictures PLC v. Fireworks Entm't, Inc., 244 Fed.Appx. 836 (9th Cir.2007). In 2008, the district court dismissed the 2005 action with prejudice for failure to prosecute after issuing two prior warnings. Seven Arts appealed to this court, and we affirmed. See Seven Arts Pictures PLC v. Fireworks Entm't, Inc., 329 Fed.Appx. 726 (9th Cir.2009).

Seven Arts finally prosecuted its Canadian action and ultimately secured the February 2011 summary judgment order already mentioned. The Canadian proceeding was not adversarial, because the initially named defendants had entered bankruptcy and had not opposed the motion; so the Canadian court reviewed only the evidence presented by Seven Arts. Nonetheless, the Canadian order granted Seven Arts a declaration that it is and at all relevant times had been the owner of " copyrights registered and enforceable pursuant to the United States Copyright Act of 1976" for An American Rhapsody and Who is Cletis Tout?, and also that it had " exclusive rights" for international distribution of Rules of Engagement. The Canadian order further determined that Seven Arts ...


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