Co-Opportunities v. National Broadcasting Co.

• Decision Date: 17 February 1981
• Docket Number: No. C-79-2321-MHP.,C-79-2321-MHP.
• Citation: 510 F. Supp. 43
• Parties: CO-OPPORTUNITIES, INC., Plaintiff, v. NATIONAL BROADCASTING COMPANY, INC., Defendant.
• Court: U.S. District Court — Northern District of California

510 F. Supp. 43

CO-OPPORTUNITIES, INC., Plaintiff, v. NATIONAL BROADCASTING COMPANY, INC., Defendant.

No. C-79-2321-MHP.

United States District Court, N. D. California.

February 17, 1981.

Boone & Knudsen, Halley, Cornell & Lynch, San Francisco, Cal., for plaintiff.

Morrison & Foerster, San Francisco, Cal., for defendant.

OPINION

PATEL, District Judge.

This action is before the court on defendant NBC's motion for summary judgment. Plaintiff is alleging copyright infringement, federal and state antitrust violations and unfair trade practices.

Plaintiff Co-opportunities, Inc., incorporated in June 1977, is engaged in the business of providing information to radio and television advertising staff regarding currently available cooperative advertising programs. One of plaintiff's services is a loose-leaf publication with monthly supplements entitled Co-opportunities. Prior to incorporation, plaintiff's predecessor Broadcast Marketing Co. BMC provided the cooperative advertising service. From 1974-1976 Ms. Jan Wohlers worked for BMC and was primarily responsible for producing the co-op service.

In early 1976, NBC entered into an agreement with BMC which provided among other things that NBC could offer the co-op services to its radio affiliates at a twenty percent discount. NBC wished to provide this service to its affiliates as a means of promoting itself in the intensely competitive national network industry.¹

In August 1976, Ms. Wohlers left the employ of BMC and entered into an arrangement with NBC whereby Ms. Wohlers would provide defendant with a co-op advertising service as an independent contractor. NBC then began providing such a service free of charge to its radio affiliates. It is this Dataline service to which plaintiff's claim of copyright infringement is directed.

In June 1977, Co-opportunities, Inc. was incorporated to carry on the work of BMC. During this period of time, William McGee, the sole proprietor of BMC transferred his various copyrights, including those to Co-opportunities, and "all assets" of BMC to plaintiff in exchange for stock in the new corporation. The copyright transfer was registered in December 1978 and a Notice of Assignment of Copyrights was recorded in July 1979 shortly before and in contemplation of bringing this action.

1. ANTITRUST CLAIMS

Federal Claim

Plaintiff's first claim is for violation of federal antitrust law. Defendant amply demonstrates and plaintiff does not attempt to refute that the practice of NBC in distributing copies of its Dataline service free to affiliates is not an illegal tying arrangement. Plaintiff argues however that NBC violates the Sherman Act, 15 U.S.C., when it uses its economic power in the radio network programming market for co-opportunity publications. Plaintiff does not expressly set forth in its opposition to motion for summary judgment whether it is arguing a § 1 violation, a § 2 violation or both, but appears to be arguing a combined restraint of trade/attempted monopolization theory.

Assuming without deciding that network programming and co-opportunity services represent two distinct markets, plaintiff still cannot prevail under its theory. To defeat summary judgment, plaintiff must show that defendant has a dominant position in the market for network programming and that it has exploited that position for the purpose of obtaining unfair advantage in the co-opportunity service market. Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 73 S.Ct. 872, 97 L.Ed. 1277 (1953); ALW, Inc. v. United Air Lines, Inc., 510 F.2d 52 (9th Cir. 1975). Although plaintiff cites several broadcast cases that recognize the existence of certain property rights to media dissemination, i. e., early reporting of news and exclusive right to broadcast sporting events, the court is not convinced that such protection from appropriation by others creates the same presumption of economic power as does a product protected by copyright. See Levitch v. Columbia Broadcasting System, Inc., 495 F.Supp. 649, 662-68 (S.D.N.Y.1980).

Even assuming sufficient economic power, plaintiff has not made a showing that NBC is engaging in predatory pricing as a means to unfair advantage in co-op services, or that it has the specific intent to monopolize that market. Janich Bros., Inc. v. American Distilling Co., 570 F.2d 848 (9th Cir. 1977). While defendant NBC has submitted evidence that it distributes Dataline free of charge and solely for the purpose of increasing its share of the affiliate market, plaintiff has made no showing that NBC intended to expand its dissemination of its co-op publication to nonaffiliate radio networks.² Further, NBC has made a sufficient factual showing that its affiliates remain free to purchase co-op services elsewhere if they choose and that a number of affiliates still purchase co-op services from plaintiff.

Plaintiff suggests that its business has declined because of the free Dataline service but submits no evidence to support this claim. However even if some injury was demonstrated, restraint of trade is not determined solely by a showing of injury to any one competitor; the Sherman Act is intended to encourage unfettered competition rather than protect any one business from the rigors of a competitive market. Sherman v. British Leyland Motors, Ltd., 601 F.2d 429, 450 (9th Cir. 1979); Robert's Waikiki U-Drive v. Budget Rent-A-Car, 491 F.Supp. 1199, 1212-14 (D.Hawaii 1980). Additionally, defendant has made a showing that plaintiff's business actually increased during the relevant time period. Plaintiff has neither refuted this showing nor addressed the fact that Ms. Wohlers increased competition by going into business for herself.

Based on the foregoing factors and authority, defendant's summary judgment motion with respect to the federal antitrust claim is hereby granted.

State Claim

Plaintiffs have also alleged a violation of state antitrust law under the Cartwright Act (Cal.Bus. & Prof.Code §§ 16700-16758). It is well-settled that federal cases interpreting the Sherman Act apply as well to Cartwright Act claims. General Communications Engineering, Inc. v. Motorola Communications & Electronics, Inc., 421 F.Supp. 274, 294 (N.D.Cal.1976). Accordingly, summary judgment is granted defendant on the Cartwright Act claim.

2. COPYRIGHT INFRINGEMENT

Defendant argues that plaintiff lacks standing to sue for copyright infringement and that it has failed to meet procedural requirements for filing an infringement action. The essential facts are not in dispute and the court finds as a matter of law that plaintiff Co-opportunities has the necessary standing to bring this action.

Accrued Causes of Action

The parties are in agreement that the usual assignment of a copyright does not include an assignment of existing causes of action for infringement. See De Silva Construction Corp. v. Herrald, 213 F.Supp. 184 (M.D.Fla.1962). The court is not persuaded that National Council of Young Israel, Inc. v. FEIT Co., Inc., 347 F.Supp. 1293 (S.D.N.Y.1972) represents an exception to this general rule applicable to the present case. Although Mr. McGee arguably assigned his copyrights and "all" the assets of BMC to plaintiff, there is no specific assignment of accrued causes of action. Although the court in National Council determined that a sale of assets included accrued causes of action for copyright infringement, it expressly based its finding on the existence of a comprehensive and unrestricted conveyance. Plaintiff Co-opportunities has introduced no evidence of any such comprehensive transaction and the court is not persuaded that such an assignment occurred. Plaintiff's argument of a continuing cause of action is unavailing as no specific facts are introduced by way of affidavit or declaration to support the allegation of continuing infringement.

Although plaintiff did not acquire the right to sue on prior acts of infringement at the time it was assigned the copyright, it has now acquired such right pursuant to the express assignment of accrued causes of action filed in the Copyright Office on December 16, 1980 while this motion was under submission.³ The question is whether such an assignment may be allowed to `relate back' to the time of filing the present suit. As noted above, because there are no facts to support a continuing violation, the three-year statutory period had run at the time of the effective assignment of accrued causes of action.

If the subsequent assignment is allowed to relate back to the filing of the suit, the result is to toll the statute of limitations and leave the plaintiff with a claim that is not time barred.

The court is mindful that the statute of limitations should not be used mechanically to prevent adjudication on the merits between the real parties in interest who had sufficient notice of the proceedings. It can be argued that giving plaintiff retroactive standing to bring suit defeats the purpose for requiring an express assignment of an accrued cause of action. However what little related authority there is on the issue suggests the opposite result.

In a patent infringement action, plaintiff was allowed to amend her complaint to sue as executrix of the deceased patent holder's estate after the statute of limitations had run and after she had initially brought suit in her individual capacity without having title to the patent in question. Owen v. Paramount Pix, 41 F.Supp. 557 (S.D.Cal. 1941). In an analogous situation, the court stated "it is well settled that, even after the expiration of the statutory period, an assignee may be admitted to an action commenced by his assignor after the assignment but before the statute has run." Fox-Greenwald Sheet Metal Co. v. Markowitz Bros., Inc., 452 F.2d 1346, 1359 (D.C.Cir. 1971). Further, amendments made after the statute of limitations has run that change the capacity in which the plaintiff brings suit, are to be liberally construed. 3 Moore's Federal...