Kling v. Hallmark Cards

• Decision Date: 09 June 2000
• Docket Number: No. 99-55222,99-55222
• Citation: 225 F.3d 1030
• Parties: (9th Cir. 2000) MARY J. KLING, an individual, Plaintiff-counter-defendant-Appellant, v. HALLMARK CARDS INC., a Missouri corporation; MATTEL, INC., a Delaware corporation, Defendants-Appellees, DIC ANIMATION CITY INC., f/k/a/ Live Film and Mediaworks, Inc., Defendant-cross-defendant-Appellee, UNITED FEATURE SYNDICATE INC., Defendant-counter-claimant-cross-claimant-Appellee
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1030

225 F.3d 1030 (9th Cir. 2000)

MARY J. KLING, an individual, Plaintiff-counter-defendant-Appellant, v. HALLMARK CARDS INC., a Missouri corporation; MATTEL, INC., a Delaware corporation, Defendants-Appellees, DIC ANIMATION CITY INC., f/k/a/ Live Film and Mediaworks, Inc., Defendant-cross-defendant-Appellee, UNITED FEATURE SYNDICATE INC., Defendant-counter-claimant-cross-claimant-Appellee.

No. 99-55222

U.S. Court of Appeals for the Ninth Circuit

Argued and Submitted June 9, 2000--Pasadena, California

Filed September 6, 2000

COUNSEL: Michael H. Bierman, Tuttle & Taylor, Los Angeles, California, for the plaintiff-appellant.

Adrian Mary Pruetz, Quinn Emanuel Urquhart Oliver & Hedges, LLP, Los Angeles, California, for the defendantsappellees.

Appeal from the United States District Court for the Central District of California Edward Rafeedie, District Judge, Presiding D.C. No. CV-97-06293-ER-JGx

Before: Stephen Reinhardt, Richard A. Paez, Circuit Judges, and William L. Dwyer, District Judge. ¹

OPINION

REINHARDT, Circuit Judge:

Rainbow Brite is a young girl who, with the help of the Color Kids, her magical horse Starlite, and the small furry sprites who mine for sprinkles in the Color Caves, strives to keep color alive in Rainbow Land. Robotman, Stellar, Oops, and Lint are robots from Robot Land who, for some reason, enjoy helping human teenagers play music. Here in Legal Land, a rather joyless dispute has arisen regarding the ownership of the copyrights in the scripts for six animated children's television specials featuring the Rainbow Brite and Robotman characters. The specials were written by Woody Kling and produced and broadcast in the mid-1980s. Proceeding on the assumption that Mary Kling, Woody Kling's widow and successor in interest owns these copyrights, we are asked to decide whether the doctrine of laches bars her from filing in 1997 a claim for infringement based on infringing conduct that began in 1985 but may not have come to either of the Klings' attention prior to 1994. The district court granted the defendants summary judgment, holding that Woody Kling's failure to sue for a declaration of ownership within a reasonable time following July 17, 1985, when he learned that one of the defendants claimed to own the copyrights, barred his widow's 1997 infringement claim.

We hold that the period of delay for laches for a copyright infringement claim runs only from the time that the plaintiff knew or should have known about an actual or impending infringement, not an adverse claim of ownership. Because there is, at the very least, a genuine issue of material fact as to whether the Klings knew or had reason to know about an actual or impending infringement of their alleged copyrights prior to August 1994, we reverse the grant of summary judgment and remand for further proceedings.

I. Background

A. Woody Kling's Scripts

Beginning in 1981, Hallmark Cards, Inc. ("Hallmark") began to develop the Rainbow Brite character and a number of related characters and story lines. In August 1983 Hallmark began discussions with DIC Enterprises, Inc. ("DIC") regarding the development of an animated children's television program based on the Rainbow Brite characters. In December 1983 the two companies agreed that DIC would produce a Rainbow Brite program and that DIC would assign to Hallmark the copyrights in all material created by or for DIC. United Feature Syndicate, Inc. ("United Feature") also engaged DIC to produce an animated children's television program based on the character of Robotman.

Heywood F. "Woody" Kling was a producer and headwriter on numerous television shows. In 1974 he incorporated Heywood Kling Productions, Inc. ("HKP") and as its sole employee wrote scripts for various television programs and plays. Through HKP, Kling contracted with television production companies, networks, and individual producers on a project-by-project basis.

In 1983 and 1984, Kling entered into three contracts with DIC to write scripts for three Rainbow Brite and three Robotman television specials. Each contract provided as follows:

1. DIC engaged Kling to write "a story premise, outline, teleplay and appropriate polish(es)" for the respective programs.

2. Kling would be paid $20,000 for each special in three installments.

3. Kling would receive separate card credit (as writer for the first contract, and writer and developer for the second two contracts).

4. "Any feature adaptations, network series, or network special must be renegotiated in good faith. The aforesaid terms represent syndication broadcast only."

5. If more than three episodes containing characters developed by Kling were televised, he would receive $1000 per episode royalty.

Kling wrote the scripts. From 1984 to 1986, Hallmark registered a series of copyrights in various works relating to the Rainbow Brite characters, including the three television specials that Kling had written. The certificates of registration for these copyrights identified DIC as the author and stated that DIC had assigned Hallmark the copyright through their December 1983 contract. Also in the mid-1980s, DIC transferred its rights in the Robotman specials to United Feature, which then registered copyrights in the specials as their purported sole owner.

B. The Credit Dispute

Beginning in 1984, a dispute arose between Kling and DIC regarding card credit. Kling believed that he was due "Developed by" credit in episodes of Rainbow Brite and Robotman that, although not written by him, featured characters that he had developed in his earlier scripts. He expressed this belief in a letter to DIC on November 15, 1984, and thereafter retained attorney Leo Fenster to handle the matter. On May 28, 1985, Fenster sent DIC a letter on Kling's behalf demanding proper credit and other relief. Fenster's letter was forwarded to George Downing, counsel for United Feature, who expressed concern to another attorney about Fenster's statement that HKP retained "certain rights in `characters' developed by Mr. Kling." On July 17, 1985, Jeffrey Wernick, counsel for DIC, sent a three-page letter to Fenster, stating in part:

. . . . Your client sought the "Developed by " credit in future adaptations of Robotman and Rainbow Brite. He is not entitled contractually to any credit on any adaptations of either property that he does not provide specific services on. Moreover, DIC is not the copyright owner of either property and could not in any event grant Mr. Kling credit on adaptations for which he provides no work. . . . I would suggest that you research into the copyrightability of characters contained within a literary work. Characters are not separate copyrightable elements and no protectible interest has been created therein in favor of Mr. Kling. I would further remind you that as is standard in the entertainment industry, the work performed by Mr. Kling was done as a work-for-hire for copyright purposes, and that DIC Enterprises is the rightful owner of all results and proceeds of his work.

. . . . We absolutely reject your request for compensation in any future publications of the two properties. DIC Enterprises itself has no such profit participation and collectively this company has developed these properties far more than your client has. As there is no contractual basis for your claim I must assume that you are basing same on a misinterpretation of paragraph 4 of the respective agreements. This misinterpretation is clearly evidenced by paragraph 8 of your letter dated May 28, 1985 in which you stated that we were to renegotiate terms for Mr. Kling on "any future adaptations, specials, or network series based on characters developed by Woody Kling" . . . . The underlined portion represents language which you have unilaterally inserted into the language of paragraph 4 of the two agreements without any basis whatsoever. That paragraph was intended to provide further compensation to Mr. Kling, if and in the event the actual shows he worked on were exploited in a fashion other than syndicated broadcast. [emphasis in original]

On July 25, 1985, Fenster informed Wernick that based on his response "there is no point in continuing any further negotiations" and listed Kling's demands regarding appropriate crediting. Fenster also notified Hallmark and United Feature in writing of the dispute.

On August 19, 1985, Downing sent Wernick a copy of Fenster's letter to United Feature. Downing stated that "it is imperative that this problem with Heywood Kling be worked out immediately so that we are not in danger of having a court interfere with United Media's [United Feature ] rights to exploit the ROBOTMAN television shows." On October 21, 1985, Wernick sent Fenster a draft agreement settling their dispute. This draft agreement stated in part that HKP "hereby irrevocably transfers and assigns to Releasee [DIC] all of Releasor's [HKP's] right, title and interest in and to any element of the Rainbow Brite and Robotman properties arising out of the Agreements." On October 23, Downing wrote Wernick to say that while the draft was satisfactory, he would have preferred "to see the phrase `(including any copyrights)' inserted after the word `interest' " in this part. Following discussions with Wernick, Fenster returned to him a revised agreement that completely deleted the provision addressing transfer of ownership. The parties ultimately entered into an agreement that settled the credit dispute but omitted all discussion of the issue of copyright ownership.

C. Mary Kling's 1994 Visit to Blockbuster

Woody Kling died in 1988. On August 30, 1994, Mary Kling, Woody's widow and successor to all the assets of HKP, visited a Blockbuster Video store in Los Angeles with her son. She discovered that the store was renting video cassettes of television shows featuring Rainbow Brite characters, including the shows that utilized the scripts that her husband had written. Hallmark had released the...