Metro-Goldwyn-Mayer D. Corp. v. Bijou Theatre Co.

• Decision Date: 11 June 1932
• Docket Number: 2615.,No. 2614,2614
• Citation: 59 F.2d 70
• Parties: METRO-GOLDWYN-MAYER DISTRIBUTING CORPORATION v. BIJOU THEATRE CO. et al. EDUCATIONAL FILM EXCHANGES, Inc., et al. v. SAME.
• Court: U.S. Court of Appeals — First Circuit

59 F.2d 70 (1932)

METRO-GOLDWYN-MAYER DISTRIBUTING CORPORATION v. BIJOU THEATRE CO. et al.

EDUCATIONAL FILM EXCHANGES, Inc., et al. v. SAME.

Nos. 2614, 2615.

Circuit Court of Appeals, First Circuit.

April 7, 1932.

Rehearing Denied June 11, 1932.

Arthur D. Hill, of Boston, Mass., and Edward A. Sargoy, of New York City (Faneuil Adams and Hill, Barlow & Homans, all of Boston, Mass., and Gabriel L. Hess, of New York City, on the brief), for appellants.

John C. Coughlin, of Boston, Mass. (Henry Parkman, Jr., and John Lennox Hannan, both of Boston, Mass., on the brief), for appellees.

Before BINGHAM and WILSON, Circuit Judges, and MORRIS, District Judge.

MORRIS, District Judge.

These two cases submitted in one record and argued together are bills in equity in which the plaintiffs seek injunctive relief and damages for infringements of their alleged copyright on certain motion picture films.

Both plaintiffs are corporations organized and existing under and by virtue of the laws of the state of New York and each has a principal place of business in the city and state of New York.

The defendants in both cases are the Bijou Theatre Company, a corporation organized and existing under and by virtue of the laws of the commonwealth of Massachusetts, having an office and place of business in the city of Holyoke in said commonwealth, and M. F. O'Donnell, who is an inhabitant of said city of Holyoke and the manager of said theatre.

The plaintiffs are producers and distributors of motion pictures.

The bills allege that the defendants were engaged in the business of exhibiting motion pictures by giving public performances thereof for profit and in the conduct of such business owned, operated, or controlled the Bijou Theatre in said Holyoke and still operate and control said theatre.

The plaintiffs are copyright proprietors, being the sole and original authors and proprietors, of certain original, unpublished motion pictures, lists of which are set forth in the complaints.

The bills further allege that a large number of prints of each of the copyrighted motion pictures are circulated widely throughout the United States for public exhibition under license agreements; that such license agreements now exist between the plaintiffs and the defendants, under which agreements copyrighted motion pictures are delivered for exhibition to the defendants, such exhibitions to be held on specified dates. It is also alleged on information and belief that defendants are likely, if not restrained and enjoined by order of court, to exhibit the copyrighted pictures of the plaintiffs which may come into their possession in infringement of the respective copyrights thereof and in violation of the exclusive rights of the plaintiffs therein, to the great and irreparable damage of the plaintiffs. It is further alleged that on or about the 17th day of August, 1927, the plaintiffs, distributors, subject to the terms and conditions of written contracts, granted to the Bijou Theatre Company and the company accepted a limited license, under the respective copyrights of the motion pictures mentioned in the bills of complaint, to exhibit the same publicly each for one day only at the above-mentioned theatre. The bills further set forth the dates upon which the pictures were permitted by the contracts to be shown and the dates upon which they were shown, being in each instance one day later than the date fixed in the license agreements. It is alleged that each exhibition and performance was an infringement of the copyright and that each infringement constituted a separate cause of action, all of which are joined in the bills because governed by the same legal rules and involving the same facts, so that for the convenient administration of justice and as a ground of equitable jurisdiction such joinder of separate actions is made to prevent a multiplicity of suits. The prayer of the bill seeks injunctive relief and assessment of damages under section 25 of the Copyright Law (17 USCA § 25), such damages in no event to be less than $250 for each infringement.

The defendants in No. 2614 filed a motion to dismiss the case upon the following grounds: (1) That the plaintiff has not stated in its bill such a cause as entitles it to any relief in equity against these defendants. (2) That the alleged exhibition by the defendant of motion pictures referred to in the bill of complaint was not an infringement of the respective copyrights thereof. (3) That the plaintiff brought action against the defendant Bijou Theatre Company of Holyoke, in the superior court of the commonwealth of Massachusetts in and for the county of Hampden, by a petition filed on or about June 24, 1929, said petition being numbered 32252, for the same matters and causes of action set forth in the plaintiff's bill of complaint; that said action is still pending on the docket of said superior court and remains undisposed of; and that this defendant should not be required to defend two actions pending for the same cause of action. A motion to dismiss was filed by the defendants in No. 2615 upon the first two grounds above stated and upon the additional ground of misjoinder of parties. Ground No. 3 in 2614 is omitted from the motion in No. 2615.

The District Court disposed of the first ground for dismissal in each case, ruling that the actions could be maintained even though no ground for injunctive relief is found to exist (17 USCA § 2), and ruling as to the third ground in No. 2614 that the fact of the pendency of the prior suit in a state court is not ground for abatement of a subsequent suit in the federal court even though the prior suit is between the same parties and for the same cause. Citing McClellan v. Carland, 217 U. S. 268, 30 S. Ct. 501, 54 L. Ed. 762; Consolidated Ordnance Co. v. Marsh, 227 Mass. 15, 116 N. E. 394. See, also, Boston & Maine R. R. v. Dutille (C. C. A.) 289 F. 320. The court denied defendants' motion to dismiss on the ground of misjoinder of parties in No. 2615, citing Equity Rule 37 (28 USCA § 723); no exceptions were taken to these rulings of the District Court.

As indicated above, the acts relied upon as constituting infringement are exhibitions of the films in question, thirteen in number in the first case and twelve in number in the second case, alleged to have been unauthorized under the contract or license agreements between the parties.

After hearing the motions to dismiss, final decrees dismissing the bills were entered by order of the District Court, May 26, 1931, based on the second ground alleged. From these decrees the plaintiffs appealed and the cases are before this court upon their assignments of error as follows:

"The court erred in entering the aforesaid decree of May 26, 1931, (1) because the decree was based on an erroneous finding and ruling that the unauthorized exhibitions of the motion picture films in question did not constitute violations of their respective copyrights. (2) Because the decree was based on an erroneous finding and ruling that the contract entered into between the plaintiff and the defendant concerning exhibition of the motion picture films in question was a bar to proceedings by the plaintiff against the defendant under the Copyright Act for violations of copyright. (3) Because the decree was contrary to the law."

From what is common knowledge it is evident that the questions relating to the use of moving picture films is one of considerable importance, involving as it does large property interests. The production and distribution is one of the great industries of the United States. The income to the producers and distributors, which is the reward for the capital investment, comes from rentals paid by exhibitors for the privilege of exhibiting the pictures which have a wide distribution and enormous patronage throughout the country.

Prints of the pictures or films as they are called are not produced for sale. For all purposes and at all times they remain the property of the copyright proprietors. They are distributed pursuant to exhibition contracts from exchange centers located throughout the country, such distribution being made either by the copyright proprietor or by agents exclusively licensed under the copyright for such purpose. By stipulation of the parties filed October 21, 1930, photostatic copies of the contracts between the parties were annexed to the record for the determination of any and all questions raised by the defendants' demurrer to be considered as the contracts alleged in the plaintiffs' bills of complaint. The motions to dismiss are equivalent to demurrers to the bills.

The form of contract expressly grants to the exhibitor a license under the copyright to exhibit the motion pictures mentioned in the schedules thereof for an expressly limited period of time at the particular theatre specified. In the method of distribution under the license contract pictures which are exhibited in one theatre on a given date may be scheduled and advertised for exhibition in a theatre in another town for the next night, so it becomes important that each picture should be used on the date specified and the film promptly forwarded to the next exhibitor. If this is not done, what is termed in the industry as a "miss-out" occurs and the distributors are deprived of the rental to which they would be entitled, and a resulting financial injury to the exhibitor occurs.

It appears from these few observations that it is of first importance that exhibitors live up to the letter of their contracts. The question to be solved is whether, if they exhibit the films on a date other than the date specified in the contract, it constitutes a violation of the proprietor's copyright or merely a breach of contract.

By the Act of March 4, 1909, c. 320, § 11 (35 Stat. 1078), as amended by the Act of August 24, 1912, c. 356 (37 Stat. 488 17 USCA § 11), motion picture photoplays and motion pictures other than photoplays are made...