339 F.2d 823 (2nd Cir. 1964), 93, T. B. Harms Co. v. Eliscu

Docket Nº:93, 28921.
Citation:339 F.2d 823, 144 U.S.P.Q. 46
Party Name:T. B. HARMS COMPANY, Plaintiff-Appellant, v. Edward ELISCU and Ross Jungnickel, Inc., Defendants-Appellees.
Case Date:December 23, 1964
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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339 F.2d 823 (2nd Cir. 1964)

144 U.S.P.Q. 46

T. B. HARMS COMPANY, Plaintiff-Appellant,

v.

Edward ELISCU and Ross Jungnickel, Inc., Defendants-Appellees.

No. 93, 28921.

United States Court of Appeals, Second Circuit.

December 23, 1964

Argued Oct. 21, 1964.

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Gustave B. Garfield, New York City, for plaintiff-appellant.

Lewis A. Dreyer, New York City (Norma Hack, New York City, of counsel), for defendant-appellee Ross Jungnickel, Inc.

David Blasband, New York City (Linden & Deutsch, New York City), for defendant-appellee Edward Eliscu.

Before FRIENDLY, KAUFMAN and ANDERSON, Circuit Judges.

FRIENDLY, Circuit Judge:

A layman would doubtless be surprised to learn that an action wherein the purported sole owner of a copyright alleged that persons claiming partial ownership had recorded their claim in the Copyright Office and had warned his licensees against disregarding their interests was not one 'arising under any Act of Congress relating to * * * copyrights' over which 28 U.S.C. § 1338 gives the federal courts exclusive jurisdiction. Yet precedents going back for more than a century teach that lesson and lead us to affirm Judge Weinfeld's dismissal of the complaint.

The litigation concerns four copyrighted songs; we shall state the nub of the matter as alleged in the complaint without going into details irrelevant to the jurisdictional issue. The music for the songs was composed by Vincent Youmans for use in a motion picture, 'Flying Down to Rio,' pursuant to a contract made in 1933 with RKO Studios, Inc. He agreed to assign to RKO the recordation and certain other rights relating to the picture during the existence of the copyrights and any renewals. RKO was to employ a writer of the lyrics and to procure the publishing rights in these for Youmans, who was 'to pay said lyric writer the usual and customary royalties on sheet music and mechanical records.' Subject to this, Youmans could assign the publication and small performing rights to the music and lyrics as he saw fit. In fact RKO employed two lyric writers, Gus Kahn and the defendant Edward Eliscu, who agreed to assign to RKO certain rights described in a contract dated as of May 25, 1933. Max Dreyfus, principal stockholder of the plaintiff Harms, which has succeeded to his rights, acquired Youmans' reserved rights to the music and was his designee for the assignment with respect to the lyrics. Allegedly-- and his denial of this is a prime subject of dispute-- Eliscu then entered into an agreement dated June 30, 1933, assigning his rights to the existing and renewal copyrights to Dreyfus in return for certain royalties.

When the copyrights were about to expire, proper renewal applications were made by the children of Youmans, by the widow and children of Kahn, and by Eliscu. The two former groups executed assignments of their rights in the renewal

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copyrights to Harms. But Eliscu, by an instrument dated February 19, 1962, recorded in the Copyright Office, assigned his rights in the renewal copyrights to defendant Ross Jungnickel, Inc., subject to a judicial determination of his ownership. Thereafter Eliscu's lawyer advised ASCAP and one Harry Fox-- respectively the agents for the small performing rights and the mechanical recording license fees-- that Eliscu had become vested with a half interest in the renewal copyrights and that any future payments which failed to reflect his interest would be made at their own risk; at the same time he demanded an accounting from Harms. Finally, Eliscu brought an action in the New York Supreme Court for a declaration that he owned a one-third interest in the renewal copyrights and for an accounting.

Harms then began the instant action in the District Court for the Southern District of New York for equitable and declaratory relief against Eliscu and Jungnickel. Jurisdiction was predicated on 28 U.S.C. § 1338; plaintiff alleged its own New York incorporation and did not allege the citizenship of the defendants, which concededly is in New York. Defendants moved to dismiss the complaint for failure to state a claim on which relief can be granted and for lack of federal jurisdiction; voluminous affidavits were submitted. The district court dismissed the complaint for want of federal jurisdiction, 226 F.Supp. 337 (1964).

In line with what apparently were the arguments of the parties, Judge Weinfeld treated the jurisdictional issue as turning solely on whether the complaint alleged any act or threat of copyright infringement. He was right in concluding it did not. Infringement, as used in copyright law, does not include everything that may impair the value of the copyright; it is doing one or more of those things which § 1 of the Act, 17 U.S.C. § 1, reserves exclusively to the copyright owner. See Nimmer, Copyright §§ 100, 141 (1963). The case did not even raise what has been the problem presented when a defendant licensed to use a copyright or a patent on certain terms is alleged to have forfeited the grant; in such cases federal jurisdiction is held to exist if the plaintiff has directed his pleading against the offending use, referring to the license only by way of anticipatory replication, but not if he has sued to set the license aside, seeking recovery for unauthorized use only...

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