Fosson v. Palace (Waterland), Ltd.

• Citation: 78 F.3d 1448
• Decision Date: 21 March 1996
• Docket Number: No. 94-55550,94-55550
• Parties: 1995 Copr.L.Dec. P 27,503, 38 U.S.P.Q.2d 1196, 96 Cal. Daily Op. Serv. 1918, 96 Daily Journal D.A.R. 3282 Mark FOSSON, Plaintiff-Appellant, v. PALACE (WATERLAND), LIMITED, et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1448

78 F.3d 1448

1995 Copr.L.Dec. P 27,503, 38 U.S.P.Q.2d 1196,

96 Cal. Daily Op. Serv. 1918,

96 Daily Journal D.A.R. 3282

Mark FOSSON, Plaintiff-Appellant, v. PALACE (WATERLAND), LIMITED, et al., Defendants-Appellees.

No. 94-55550.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Oct. 19, 1995.

Decided March 21, 1996.

Allen Hyman, Law Offices of Allen Hyman, Studio City, California, for plaintiff-appellant.

Bruce Isaacs, Wyman, Isaacs & Green, Los Angeles, California, for defendants-appellees Fine Line Features, Landmark Theaters Corporation d/b/a Samuel Goldwyn Pavilion Cinema and Cineplex Odeon Corporation.

Gary E. Gans, Richards, Watson & Gershon, Los Angeles, California, for defendant-appellee Film Finances Services, Ltd.

Appeal from the United States District Court for the Central District of California, Dickran M. Tevrizian, District Judge, Presiding.

Before: POOLE, BOOCHEVER and O'SCANNLAIN, Circuit Judges.

POOLE, Circuit Judge:

I. OVERVIEW

Mark Fosson, the composer and copyright owner of a musical composition entitled "Picture of Your Daddy," appeals the district court's order granting summary judgment in favor of all defendants in his copyright infringement action. Fosson sued the defendants under 17 U.S.C. § 101 et seq., seeking $10,000 in damages because of the defendants' substantial delay in paying a $1,250 license fee that the parties had negotiated for use of Fosson's composition in a motion picture. The instant appeal turns on the circumstances under which a subsequent breach of the terms of an express license, which may constitute grounds for rescission, can give rise to a suit for infringement by the licensor. For the reasons discussed below, we affirm the district court's grant of summary judgment in favor of all defendants.

II. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff/Appellant Mark Fosson is the composer and copyright holder of a song entitled "Picture of Your Daddy" ("the Composition"). Defendants/Appellees Palace (Waterland) Ltd., and The Good Film Co., Ltd. (collectively "the Producers") are producers of a motion picture entitled "Waterland," ("the Film") which was released in the United States theatrically in late 1992. Defendant/Appellee Film Finances Services, Ltd. partly financed the production of the Film. ¹

Fosson's Composition was first recorded on an Atlantic Records release in early 1992. In March 1992, a representative of Atlantic Records contacted Fosson's manager, Kathleen Capper, and told her that the Producers would be willing to pay Fosson $1,250.00 to license his Composition for use in the Film's soundtrack. At that time, Capper indicated that Fosson would grant the license in return for prompt payment of the offered fee, and a "music cue sheet" to be provided to Broadcast Music, Inc. identifying Fosson as the composer and allowing him to collect public performance royalties once the Film was released.

In May 1992, the Producers contacted Capper directly. Peter Afterman, acting on behalf of the Producers, sent Capper an unsigned form contract ("the Synchronization License" or "Synch License") dated May 7, 1992. The Synch License-which contains both preprinted and typewritten provisions-grants the Producers the nonexclusive, irrevocable right to use the Composition in the Film. The Synch License also provides that if the Composition was used, the Producers would pay Fosson the agreed license fee of $1,250.00, and provide the music cue sheet upon his written request. Further, the Synch License contains a clause that provides that in the event of any breach by the Producers, Fosson would be limited to his remedies at law, and would have no right to terminate or rescind the contract. ²

Fosson read the entire Synch License and discussed it with Capper. Thereafter, both Fosson and Capper signed the agreement and Fosson returned it to Afterman in the pre-addressed, postage paid envelope provided by the Producers. Neither Capper nor Fosson ever received a countersigned copy of the Synch License; however, a fully executed copy of the agreement was received by the Film's distributor in June 1992, along with certain other rights clearance documents and materials required in order to "deliver" a motion picture.

Throughout the summer of 1992, Capper made several phone calls to Afterman regarding payment of the $1,250.00 license fee and the music cue sheet. Afterman finally put Capper in touch with the Producers in the United Kingdom, who informed her that the production had gone into receivership and that all outstanding payables were being disbursed by Film Finances, Inc. Capper sent her first written request to Film Finances for payment of the license fee on October 10, 1992.

Receiving no immediate response, Capper sent a second letter on October 20 in which she stated that Film Finances was in breach of the Synch License, and that if payment was not made by October 29, the fee would increase to $10,000.00. ³ Film Finances responded by fax that the person responsible for authorizing payment had been out of town for several weeks, but that he would contact Capper on October 26.

By October 29, Capper still had not received payment. On that date, she sent another letter to Film Finances informing them that they could contact Fosson directly to discuss the licensing fee. In this final letter, Capper did not mention either the $1,250.00 or $10,000.00 license amount.

The Film was released theatrically in the United States on November 6, 1992. Fosson was listed in the Film's credits as the composer and copyright owner of the Composition. To this point, however, no license fee had been paid. Sometime after the release of the Film, Capper turned the matter over to her attorney, Leonard Korobkin. Korobkin wrote a letter to the Producers on November 30, 1992 in which he reaffirmed Fosson's grant of the Synch License in May, and advised them of their subsequent default. However, Korobkin characterized Capper's October 20, 1992 letter as withdrawing Fosson's "offer" to license the Composition for $1,250.00 and substituting a new offer for $10,000.00. Korobkin's letter also demanded that the higher amount be paid within ten (10) days.

On December 10, 1992, Graham Easton of Film Finances faxed a letter to Capper stating that they would be willing to pay the $1,250.00 contract fee immediately. The following day, however, Capper informed Easton that the matter had been turned over to Korobkin. That same day, Easton, by return fax, reiterated Film Finances's willingness to resolve the matter promptly, and he proposed payment of the contract price by direct bank transfer. Capper did not respond, and on January 21, 1993, Film Finances tendered a check to her for the full license fee of $1,250.00. Korobkin returned the check on February 4, 1993 and renewed the demand for $10,000.00.

The $10,000.00 demand was never satisfied and, in May 1993, Fosson filed an action for copyright infringement in federal district court against the Producers, exhibitors and distributor of the Film, and Film Finances. Based on the foregoing undisputed facts, all the defendants filed motions for summary judgment, and Fosson filed a cross-motion for summary judgment. By order dated March 15, 1994, the district court granted summary judgment in favor of all defendants and denied Fosson's motion. This timely appeal followed, and we have jurisdiction pursuant to 28 U.S.C. § 1291.

III. STANDARD OF REVIEW

We review a grant of summary judgment de novo. Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir.1994). This court must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Id. at 1130. We are free, however, to affirm on any ground fairly presented by the record. Jackson v. Southern Cal. Gas Co., 881 F.2d 638, 643 (9th Cir.1989).

IV. DISCUSSION

In its order of March 15, 1994, the district court found that the written Synch License was a valid contract. The court went on to find that even assuming the Synch License was not valid, Fosson had granted the Producers an implied license to use the Composition in the Film. Either way, the court held, Fosson was precluded as a matter of law from bringing suit for copyright infringement. We address both findings in turn.

A. Validity of the Written Synch License.

Based on the undisputed evidence, the district court found that Fosson executed the Synch License and, therefore, authorized the Producers' use of the Composition in the Film. Although the court did not expressly find that the Synch License, on its face, was supported by valid consideration, ⁴ it concluded that a valid contract was formed, and that Fosson was bound by its terms.

Fosson attacks the enforceability of the Synch License on the grounds that: (1) the written agreement served merely as a continuing offer or option that, absent consideration, could be revoked by Fosson at any time prior to acceptance; and (2) the entire agreement was illusory and void for lack of consideration. However, as discussed below, neither of Fosson's contentions has merit.

1) Fosson's "Offer Revocation" Theory

Fosson's characterization of himself as offeror of the Synch License is unsupported by law or the facts of this case. Under California law, an "offer is a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it." In re First Capital Life Insurance Co., 34 Cal.App.4th 1283, 40 Cal.Rptr.2d 816, 819 (1995) (citing Restatement (Second) of Contracts § 24).

It is undisputed that the Producers approached Fosson and manifested their willingness to license the Composition for use in the Film. The Producers also proposed the initial license amount of $1,250.00. Further, once Capper indicated that...