25 F.3d 1512 (11th Cir. 1994), 93-9181, Turner Entertainment Co. v. Degeto Film GmbH

Docket Nº:93-9181.
Citation:25 F.3d 1512
Party Name:TURNER ENTERTAINMENT CO., Plaintiff-Appellee, v. DEGETO FILM GmbH; Norddeutscher Rundfunk; Hessischer Rundfunk; Radio Bremen; Saarlandischer Rundfunk; Sender Freies Berlin; Suddeutscher Rundfunk; Sudwestfunk and Westdeutscher Rundfunk, Defendants-Appellants.
Case Date:June 29, 1994
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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25 F.3d 1512 (11th Cir. 1994)

TURNER ENTERTAINMENT CO., Plaintiff-Appellee,

v.

DEGETO FILM GmbH; Norddeutscher Rundfunk; Hessischer

Rundfunk; Radio Bremen; Saarlandischer Rundfunk; Sender

Freies Berlin; Suddeutscher Rundfunk; Sudwestfunk and

Westdeutscher Rundfunk, Defendants-Appellants.

No. 93-9181.

United States Court of Appeals, Eleventh Circuit

June 29, 1994

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Joseph R. Bankoff, King & Spalding, Atlanta, GA, for appellants.

John J. Dalton, Troutman Sanders, Atlanta, GA, for appellee.

Appeal from the United States District Court for the Northern District of Georgia.

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Before ANDERSON and BIRCH, Circuit Judges, and ATKINS [*], Senior District Judge.

ANDERSON, Circuit Judge:

This is an appeal of (1) the district court's grant of a preliminary injunction to plaintiff-appellee Turner Entertainment Co. ("Turner"), preventing defendants-appellants from broadcasting certain licensed works over the ASTRA satellites, and (2) the district court's denial of appellants' motion to dismiss or stay the American litigation in light of parallel proceedings under way in Germany. In the intervening period between the grant of the preliminary injunction and argument on this appeal, a judgment on the merits was rendered in the action in Germany. The German court found that the appellants should be able to broadcast via ASTRA for an increased fee to be determined at a later date. In light of this foreign judgment, we must decide whether to defer to the German court's judgment and dismiss or stay this action, or to ignore the German decision and continue essentially parallel proceedings. We hold that the preliminary injunction should be vacated, and that a stay of the American litigation is warranted.

I. FACTS AND PROCEEDINGS BELOW

This case involves a dispute over the interpretation of a License Agreement (the "Agreement") between the parties. The Agreement licensed certain entertainment properties to the appellants for television broadcast to the German population. Rapid changes in geopolitics and television technology since the inception of the Agreement led to the instant dispute over the limits of the contract.

A. The Parties

Defendant Degeto Film GmbH ("Degeto") is the exclusive agent for the other defendants. The remaining defendants are German public broadcasters; each serves one of the German political states (the "Lander"). Together the broadcasters, along with three other companies not a party to the American litigation, form a cooperative known as the Arbeitsgemeinschaft der offentlich rechtlichen Rundfunkanstalten der Bundesrepublik Deutschland ("ARD"). The defendants-appellants are collectively referred to in this opinion as ARD. ARD is supported by mandatory royalty fees and is obligated by German law to provide programming to the entire German population.

Although Degeto signed the Agreement with MGM/UA in 1984, Turner acquired the rights, through a series of transactions in the 1980's, to a substantial majority of the MGM/UA licensed properties covered by the Agreement. Thus, Turner purchased the rights and obligations under the Agreement as it pertains to those properties, and now stands in the shoes originally filled by MGM/UA.

B. The Agreement

ARD paid at least $60 million for an exclusive license to telecast the licensed works, under German copyright, to the German-speaking public, only in the German language. The licensed works include many old MGM movies, television series and cartoons. The Agreement expressly allows ARD to telecast the licensed works for reception within the licensed territory "by all means and methods now or hereafter known including but not limited to ... DBS [direct broadcasting satellite] and/or communication satellite for purposes of so-called home television reception," so long as the works are broadcast in German. The licensed territory comprises virtually all of German-speaking Europe--the German Democratic Republic, the Federal Republic of Germany, German-speaking Switzerland, Austria, South Tyrol (a region in Italy), Liechtenstein and Luxembourg.

The Agreement states that the telecasts can originate in any place in the universe, but only for reception within the territory. Because the reception area, or "footprint," of

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satellite broadcasts does not easily conform to the political and cultural boundaries that comprise the licensed territory, the parties included an exception to the strict definition in the contract of the licensed territory. Thus, the contract states that "[t]he telecast can originate any place in the universe for reception only in the Territory as defined ... below (inclusive of legitimate overspill as set forth in Paragraph 2(f) below)." The meaning of the term "overspill" generally, its applicability to ARD and/or ASTRA 1 broadcasts, and the result that should obtain based on such determinations, has been a hotly contested issue in the litigation. Despite the importance of the term to the contract, no clear explanation of the meaning and scope of overspill exists in the contract. Paragraph 2(f) contains only a contextual definition of overspill and states in relevant part:

Licensees acknowledge that broadcasts by satellite or otherwise in any language originating outside of the Territory might be received by television sets inside the Territory and that such reception shall not be deemed a breach hereof by MGM/UA. Further, notwithstanding the foregoing, if the overspill into the Territory is a result of compliance by MGM/UA's licensees with international conventions or treaties, including but not limited to the 1977 Geneva Convention, binding upon that licensee's territory, the licensee shall not be deemed to be in breach of its agreement with MGM/UA. In the event of illegitimate overspill into the Territory, Degeto shall notify MGM/UA and MGM/UA shall notify the entity whose signal is encroaching into the Territory to cease and desist from such encroaching activity.... MGM/UA shall provide in its own future standard license agreements that MGM/UA's licensees are prohibited from directing their signal into the Territory and from allowing their signal unintentionally to encroach into the Territory (except as to legitimate overspill as set forth above)....

Nothing more exists in the Agreement to define overspill.

In 1986 Degeto and MGM/UA amended the Agreement. The 1986 amendment, among other things, gave ARD the right to telecast certain licensed properties in English. English telecasts could not be broadcast, however, by DBS satellite, which at that time was the standard method for satellite broadcasting. The 1986 amendment also provided that "[t]he place of jurisdiction and applicable law with respect to disputes arising out of this Agreement shall only be (a) Frankfurt, Germany and/or (b) Los Angeles, California or such other city in the USA in which MGM/UA's parent company maintains its primary place of business." Thus, the seeds of the instant parallel litigation were planted in the Agreement, which provided for concurrent jurisdiction in Frankfurt, and, as a result of Turner's acquisition of the contract rights, Atlanta. 2

C. Technological and Geopolitical Changes Since the Agreement's Inception

ARD began broadcasting licensed works from Germany, in German, via the ASTRA 1B satellite in April of 1991. ARD maintains that it chose the ASTRA 1B satellite as a means of telecasting programming because (1) a substantial part of the former East German households, absorbed into the Federal Republic of Germany since the Agreement was drafted, can only receive television programming via satellite, apparently because of its poor communications infrastructure; 3 and (2) there were no other satellites that Defendants could effectively use to reach the German-speaking television audience, which ARD is obligated to do by German law, because satellite dishes designed to receive the ASTRA signal are more common in Germany.

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The ASTRA 1B is an FSS satellite, which means that it operates in the "fixed satellite service." Although the footprint of a DBS satellite could be as large as that of the ASTRA 1B, there are significant differences between the two satellites such that television reception of ASTRA 1B covers a much larger area. Relatively new technological developments have increased the sensitivity of common home satellite dish antennae and receivers, enabling FSS satellite signals to be received by anyone with a satellite dish in the satellite's service area. In contrast, DBS satellites require expensive decoding equipment that prohibit the common viewer from receiving its signals. Thus, the FSS satellite has revolutionized European television by allowing broadcasters to easily send their signal directly to viewers who own relatively inexpensive satellite reception dishes. Apparently, the home satellite dish is a more popular mode of television reception in Europe, compared to cable television, than in the U.S. The ASTRA 1B has a footprint over five times the size of the licensed territory; the footprint encompasses most of Europe. ASTRA 1B, therefore, is a prime vehicle for reaching a large European television audience. The Agreement's drafters failed to anticipate that such an easy method of reaching a pan-European audience would become a standard mode of broadcasting during the life of the Agreement.

D. The Dispute--Proceedings in Germany and Atlanta

In March 1993, Turner learned that ARD intended to broadcast its major program, "Das Erste," a program which apparently incorporates the use of licensed works, over ASTRA 1B in August 1993. Turner stated its opinion that transmitting licensed works via ASTRA violates the Agreement. After a flurry of communication between the parties, in...

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