Classic Media, Inc. v. Mewborn

• Decision Date: 11 July 2008
• Docket Number: No. 06-55704.,No. 06-55385.,06-55385.,06-55704.
• Citation: 532 F.3d 978
• Parties: CLASSIC MEDIA, INC., Plaintiff-counter-defendant-Appellee, v. Winifred Knight MEWBORN, Defendant-counter-claimant-Appellant. Classic Media, Inc., Plaintiff-counter-defendant-Appellant, v. Winifred Knight Mewborn, Defendant-counter-claimant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

532 F.3d 978

CLASSIC MEDIA, INC., Plaintiff-counter-defendant-Appellee, v. Winifred Knight MEWBORN, Defendant-counter-claimant-Appellant.

Classic Media, Inc., Plaintiff-counter-defendant-Appellant, v. Winifred Knight Mewborn, Defendant-counter-claimant-Appellee.

No. 06-55385.

No. 06-55704.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 15, 2007.

Filed July 11, 2008.

Marc Toberoff (argued), Nicholas C. Williamson, Law Offices of Marc Toberoff, PLC, Los Angeles, CA, for the defendant-counterclaimant/appellant-cross-appellee.

Bonnie E. Eskenazi, Aaron J. Moss (argued), Greenberg Glusker Fields Claman & Machtinger LLP, Los Angeles, CA, for the plaintiff-counterclaimant defendant/appellee-cross-appellant.

Appeals from the United States District Court for the Central District of California; R. Gary Klausner, District Judge, Presiding. D.C. No. CV-05-00452-RGK.

Before: FERDINAND F. FERNANDEZ and KIM McLANE WARDLAW, Circuit Judges, and RANER C. COLLINS,^* District Judge.

WARDLAW, Circuit Judge:

Winifred Knight Mewborn ("Mewborn"), daughter of Eric Knight, the author of the world-famous children's story and novel, Lassie Come Home (collectively, the "Lassie Works"), appeals the district court's grant of summary judgment in favor of Classic Media, Inc. ("Classic") and denial of Mewborn's partial summary judgment motion. Each party sought declaratory relief as to their respective copyright interests in the Lassie Works, works that were in their renewal copyright terms on January 1, 1978 when the Copyright Act of 1976 (the "Act" or the "1976 Act") took effect. This appeal requires us to determine whether the Act's termination of transfer right, 17 U.S.C. § 304(c), can be extinguished by a post-1978 re-grant of the very rights previously assigned before 1978. Because we conclude that such a result would circumvent the plain statutory language of the 1976 Act, as well as the congressional intent to give the benefit of the additional renewal term to the author and his heirs, we hold that the post-1978 assignment did not extinguish Mewborn's statutory termination rights.

I. Factual and Procedural Background

Eric Knight authored the beloved children's story, "Lassie Come Home," about a boy and his dog who, when sold to a rich duke by the boy's poverty-stricken family, makes an arduous journey to return home to her original owner. Inspired by the harsh realities of life during the Great Depression, the story of the fearless collie, Lassie, and the boy who loved her was first published in the December 17, 1938 issue of The Saturday Evening Post, and was registered in the U.S. Copyright Office that year. Knight later developed the story into a novel, which was published and registered in the U.S. Copyright Office in 1940. Knight granted the rights to make the popular Lassie television series to Classic's predecessors-in-interest, but died in 1943, before the renewal rights had vested. Under section 24 of the 1909 Copyright Act, the interest in the renewal term of the copyrights reverted to Knight's wife, Ruth, and their three daughters, Jennie Knight Moore, Betty Knight Myers and Winifred Knight Mewborn. Each heir timely filed a renewal of copyright with the U.S. Copyright Office in each of the works between 1965 and 1967. Because Classic's predecessors-in-interest had an agreement only with Knight's widow as to the television series, it became necessary to secure agreements from the three daughters for the renewal term of motion picture, television and radio rights. Thus, Lassie Television, Inc. ("LTI") approached Mewborn and her sisters, Moore and Myers, to obtain the necessary rights.

In a written agreement dated July 14, 1976, Mewborn assigned her 25 percent share of the motion picture, television and radio rights in the Lassie Works to LTI for $11,000 ("1976 Assignment"). The contract states, in relevant part:

I, Winifred Knight Mewborn, ... hereby sell, grant, and assign to [LTI] all of the following rights in and to the story entitled LASSIE COME-HOME written by Eric Knight and published in the Saturday Evening Post on December 17, 1938 and the novel or book based thereon also written by Eric Knight and published by John C. Winston Co. in 1940 ...:

All motion picture (including musical motion picture), television and radio rights in and to the said literary work[s] ... throughout the world for the full period of the renewal copyrights in the work[s] and any further renewals or extensions thereof.

It was not until March 1978 that LTI was able to obtain similar assignments from Mewborn's two sisters. On March 17, 1978 and March 22, 1978, Myers and Moore, respectively, assigned their motion picture, television and radio rights to LTI, as well as ancillary rights such as merchandising, dramatic, recording and certain publishing rights. They each received $3,000 in exchange. To conform the grant of rights among the sisters, on March 16, 1978, Mewborn signed a second agreement, furnished by LTI ("1978 Assignment"). The assignment reads:

I, Winifred Knight Mewborn, ... hereby grant, assign and set over unto [LTI] and its successors and assigns forever, all the following rights in and to the literary work entitled "LASSIE COME-HOME" ... (a) [a]ll motion picture (including musical motion picture) rights, television rights, radio rights, recording rights, and dramatic rights on the legitimate stage ... and all merchandising, commercial tie-up and related rights, and certain publication rights....

The 1978 Assignment contained the identical transfer of motion picture, television and radio rights as the 1976 Assignment, but added language assigning ancillary rights to LTI, including recording and dramatic rights, all merchandising, commercial tie-up and related rights and certain publication rights, as well as language stating:

[a]ll of the foregoing rights are granted to [LTI] throughout the world in perpetuity, to the extent such rights are owned by me, as hereinafter provided.... The rights granted herein to [LTI] are in addition to the rights granted by me to [LTI] under and pursuant to an assignment dated July 14, 1976, recorded with the United States Copyright Office on July 12, 1976 in Volume 1589 at Pages 258-259....

(emphasis added). In exchange, LTI also paid Mewborn $3,000. Apart from references to the 1976 Assignment, which only Mewborn had entered into, the three sisters' 1978 assignments were identical.

On April 12, 1996, Mewborn served a notice of termination ("Termination Notice") within the five-year period required by § 304(c) on Palladium Limited Partnership ("Palladium"), LTI's then successor-in-interest in the Lassie Works. Mewborn sought to recapture her motion picture, television and radio rights by terminating the 1976 Assignment effective May 1, 1998. This began the Lassie Works' difficult journey home, as counsel on behalf of the parties—but predominantly Classic—spewed acrimonious charges, threats and demands over the rights to the works in a series of correspondence of not much relevance, but nonetheless included in the record before us. On April 1, 1998, counsel for LTI's then successor-in-interest, Golden Books Family Entertainment, wrote to Mewborn, "rejecting and repudiating" Mewborn's Termination Notice, and threatening suit against Mewborn. Mewborn discovered in the autumn of 2004 that Classic was preparing to produce a motion picture entitled Lassie Come Home, based on her father's works. On March 23, 2005, Mewborn's counsel wrote to Classic, the subsequent successor-in-interest to the Lassie Works, and its production partners demanding that Classic account for and pay to Mewborn her share of profits from Classic's exploitation of the Lassie motion picture, television and radio rights pursuant to the 1996 Termination Notice, and that Classic cease the unauthorized exploitation of the works in the United Kingdom. Classic's counsel responded with a vituperative gem of a letter dated March 29, 2005, accusing Mewborn of "extortion," threatening to sue Mewborn and her counsel "personally," and claiming that "[t]he damages to which Classic will hold you accountable are enormous ... [and] irreparable." The letter asserted that the 1976 Assignment was a "complete irrelevancy" and advised that Mewborn should "govern[herself] accordingly." This bombastic correspondence did little to further communication or deter litigation.

As a result, on May 27, 2005, Classic filed a declaratory relief action in the Central District of California against Mewborn seeking a declaration that Mewborn has no interest in the Lassie film or in any of the rights she previously assigned to LTI in the 1978 Assignment, and that Mewborn's Termination Notice was ineffective. On June 29, 2005, Mewborn counterclaimed seeking a declaration that, in fact, Mewborn had recaptured some of her previously assigned rights, and requesting an accounting of Classic's profits as of May 1, 1998, the effective termination date under the Termination Notice.¹

The parties filed cross-motions for summary judgment. On February 9, 2006, the district court granted Classic's motion for summary judgment and denied Mewborn's motion as moot. Interpreting the § 304(c) termination right to be inalienable but subject to waiver or relinquishment, the district court found that the parties intended that the 1978 Assignment "give away" all of Mewborn's additional rights not transferred in 1976, which included her newly acquired § 304(c) right to terminate the 1976 Assignment. Accordingly, Mewborn had relinquished her termination right, and the 1996 Notice of Termination was ineffective because Mewborn no longer had any interest in the rights transferred in 1976 and 1978. The district court also found that the 1978 Assignment did not substitute for or revoke the 1976 Assignment and that the 1976 Assignment remained intact.

After final judgment was entered, Classic moved for attorneys' fees. On April 13, 2006, the...