Kalantari v. Nitv, Inc., 02-56592.

• Decision Date: 12 December 2003
• Docket Number: No. 02-56592.,02-56592.
• Citation: 352 F.3d 1202
• Parties: Masood KALANTARI, an individual and a California resident, Plaintiff-Appellant, v. NITV, INC., a California corporation d/b/a/National Iranian TV; Zia Atabay, a/k/a Zia Atabai, an individual; Parvin Atabay, a/k/a Parvin Atabai, an individual; Lobecast North America, Inc., a Delaware corporation; and Does 1-10, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

352 F.3d 1202

Masood KALANTARI, an individual and a California resident, Plaintiff-Appellant, v. NITV, INC., a California corporation d/b/a/National Iranian TV; Zia Atabay, a/k/a Zia Atabai, an individual; Parvin Atabay, a/k/a Parvin Atabai, an individual; Lobecast North America, Inc., a Delaware corporation; and Does 1-10, Defendants-Appellees.

No. 02-56592.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 3, 2003 — Pasadena, California.

Filed December 12, 2003.

Ali Kamarei, Palo Alto, California, for the plaintiff-appellant.

Martin N. Refkin, Gallagher & Gallagher, PC, Los Angeles, California, for the defendants-appellees.

Appeal from the United States District Court for the Central District of California; Percy Anderson, District Judge, Presiding. D.C. No. CV-01-05447-PA.

Before: Betty B. Fletcher, Pamela Ann Rymer, and Susan P. Graber, Circuit Judges.

OPINION

GRABER, Circuit Judge.

In this copyright infringement case, we are called on to decide whether the Iranian trade embargo, see 31 C.F.R. Part 560, prohibits the commercial importation of movies from Iran, the copyright of such movies, or the assignment to a "United States person" of the exclusive rights to copyright, distribute, and exhibit the movies in North America. We answer "no" to each of those questions and, accordingly, we reverse.

FACTUAL AND PROCEDURAL HISTORY

Plaintiff Masood Kalantari is a producer of television programs and a promoter of Iranian cultural events in the United States. He is a "United States person," 31 C.F.R. § 560.314, who is subject to the Iranian trade embargo, see, e.g., id. §§ 560.201-560.209.

Under a series of agreements, Plaintiff acquired the rights to three Farsi language films — "Snow Man," "Two Women," and "Corrupted Hands" — from their Iranian owners. For each film, Plaintiff's contract consists of an "Assignment," in English, and a "Contract," in Farsi. In relevant part, the agreements provide that, for a specified term: (1) Plaintiff is assigned, exclusively, all rights to the films, including the exclusive rights to copyright, distribute, and exhibit the films within the United States and Canada; (2) Plaintiff agrees to copyright the films in the United States and to use his "utmost efforts" to show and advertise the films; (3) the films' owners agree to send Plaintiff copies of the films and advertising materials; and (4) Plaintiff agrees to pay (a) for "Snow Man" and "Two Women," an initial deposit of $10,000, followed by quarterly payments of 50 percent of the net profit from showing the films, and (b) for "Corrupted Hands," three installment payments amounting to roughly $13,000.

As agreed, Plaintiff has made the contractual payments and displayed the three films in the United States. Plaintiff has also obtained copyright registrations for all three films.¹ Each copyright certificate lists the Iranian owner as the author of the work and indicates that Plaintiff became the owner of the copyright by way of an assignment of rights.

After Defendants NITV, Inc., d/b/a National Iranian TV, Zia Atabay, and Parvin Atabay allegedly broadcast the three movies on television in the United States without authorization, Plaintiff brought this action against them for copyright infringement. Defendants moved for summary judgment on the sole ground that the Iranian trade embargo prohibited Plaintiff from purchasing the rights that he purports to possess and that, without a valid assignment, he cannot have a valid copyright that could be infringed. The district court granted Defendants' motion. Plaintiff brought this timely appeal.

STANDARD OF REVIEW

We review de novo a grant of summary judgment. Rene v. MGM Grand Hotel, Inc., 305 F.3d 1061, 1064 (9th Cir.2002) (en banc), cert. denied, 538 U.S. 922, 123 S.Ct. 1573, 155 L.Ed.2d 313 (2003). We also review de novo the district court's interpretation of federal statutes and regulations. Boise Cascade Corp. v. United States, 329 F.3d 751, 754 (9th Cir.2003).

DISCUSSION

A. IEEPA and the Informational Materials Exemption

The International Emergency Economic Powers Act ("IEEPA"), enacted in 1977, gives the President the authority to "investigate, regulate, or prohibit ... any transactions in foreign exchange" upon declaring an emergency based on a foreign threat.² 50 U.S.C. §§ 1701, 1702(a)(1)(A). However, the President lacks the authority under IEEPA to regulate information and informational materials:

The authority granted to the President by this section does not include the authority to regulate or prohibit, directly or indirectly —

....

(3) the importation from any country,... whether commercial or otherwise, regardless of format or medium of transmission, of any information or informational materials, including but not limited to, publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD-ROMs, artworks, and news wire feeds.

Id. § 1702(b)(3).

Congress added the foregoing exemption for informational materials to IEEPA in 1988, in what is known as the "Berman Amendment." See Capital Cities/ABC, Inc. v. Brady, 740 F.Supp. 1007, 1009 (S.D.N.Y.1990).³ The Berman Amendment was designed to prevent the executive branch from restricting the international flow of materials protected by the First Amendment. Cernuda v. Heavey, 720 F.Supp. 1544, 1548 (S.D.Fla.1989) (quoting H.R.Rep. No. 100-40, pt. 3, at 113 (1987)).⁴ The Berman Amendment has been described as a reaction to several seizures by the United States of shipments of magazines and books from embargoed countries⁵ and to the Treasury Department's restrictions on the permissible forms of payment for informational materials purchased from Cuba.⁶

The IEEPA exemption was expanded in a 1994 amendment entitled "Free Trade in Ideas."⁷ The 1994 amendment expanded the exemption's nonexclusive list of informational materials to include new media, such as compact discs and CD ROMs, and it clarified that the exemption applied to importation and exportation in any "format or medium of transmission." The House Conference Report stated:

The language [of the original 1988 exemption] was explicitly intended, by including the words "directly or indirectly," to have a broad scope. However, the Treasury Department has narrowly and restrictively interpreted the language in ways not originally intended. The present amendment is only intended to address some of those restrictive interpretations, for example limits on the type of information that is protected or on the medium or method of transmitting the information.

The committee of conference intends these amendments to facilitate transactions and activities incident to the flow of information and informational materials....

H.R. Conf. Rep. No. 103-482, at 239 (1994), reprinted in 1994 U.S.C.C.A.N. 398, 483.

B. The Iranian Trade Embargo

Pursuant to his authority under IEEPA, President Clinton issued Executive Order Nos. 12959 and 13059, in 1995 and 1997 (respectively), to prohibit most trade with Iran. 60 Fed. Reg. 24757 (May 9, 1995); 62 Fed. Reg. 44531 (Aug. 21, 1997). The Iranian trade embargo was intended "to deal with the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States" presented by "the actions and policies of the Government of Iran." Exec. Order No. 12959, 60 Fed. Reg. at 24757; Exec. Order No. 12957, 60 Fed. Reg. 14615, 14615 (Mar. 17, 1995); see also Exec. Order No. 13059, 62 Fed. Reg. at 44531. As the Fourth Circuit has stated:

The obvious purpose of [Executive Order No. 12959] is to isolate Iran from trade with the United States.

... [Executive Order No. 12959] reflected the President's appraisal of the nation's interest in sanctioning Iran's sponsorship of international terrorism, its frustration of the Middle East peace process, and its pursuit of weapons of mass destruction.

United States v. Ehsan, 163 F.3d 855, 859 (4th Cir.1998) (citing Message to Congress on Iran, 31 Weekly Comp. Pres. Doc. 1584 (Sept. 25, 1995)).

The President's Executive Orders have largely been codified in the Iranian Transactions Regulations, 31 C.F.R. Part 560, which prohibit, with few exceptions, "the importation into the United States of any goods or services of Iranian origin" and any "transaction or dealing in" such goods or services, id. §§ 560.201 and 560.206.

Notwithstanding their broad scope, however, the regulations permit trade in certain items through general and specific licenses, and they reflect the IEEPA exemption for informational materials:

The importation from any country ... of information and informational materials as defined in § 560.315, whether commercial or otherwise, regardless of format or medium of transmission, [is] exempt from the prohibitions and regulations of this part.

Id. § 560.210(c)(1).

1. Importation

The first question that we must answer is whether Plaintiff's importation of the three movies ran afoul of the Iranian embargo. It is clear from the text of the statute and regulation that the bare importation of a movie is permitted. 50 U.S.C. § 1702(b)(3); 31 C.F.R. § 560.210(c)(1). But, because Plaintiff paid Iranians for the movies that he imported, to answer our first question, we also must consider whether a commercial transaction that results in importation is likewise permitted.

The regulation provides, as relevant: "The importation from any country ... of information and informational materials..., whether commercial or otherwise ..., [is] exempt from the prohibitions and regulations of this part." Grammatically, the noun that the clause "whether commercial or otherwise" modifies is "importation." This reading squares, too, with the statutory text from which the regulations drew the modifier. In 50 U.S.C. § 1702(b)(3) — the IEEPA exemption — the phrase "commercial or otherwise" directly follows the importation/exportation clauses, and quite clearly modifies them. Cf. Ehsan, 163 F.3d at 858 ...