Paramount Pictures v. Video Broadcasting Systems, 89-1412-C.

• Decision Date: 11 October 1989
• Docket Number: No. 89-1412-C.,89-1412-C.
• Citation: 724 F. Supp. 808
• Parties: PARAMOUNT PICTURES CORPORATION, Plaintiff, v. VIDEO BROADCASTING SYSTEMS, INC., Video Broadcasting System of St. Louis; Tim Mead; the Show Machine, Inc. d/b/a Popcorn Video; Domino's Pizza, Inc.; Lakoduk Broadcasting Corporation d/b/a KICT-95 Radio; and Various John Does, Jane Does, and ABC Companies, Defendants.
• Court: U.S. District Court — District of Kansas

724 F. Supp. 808

PARAMOUNT PICTURES CORPORATION, Plaintiff, v. VIDEO BROADCASTING SYSTEMS, INC., Video Broadcasting System of St. Louis; Tim Mead; the Show Machine, Inc. d/b/a Popcorn Video; Domino's Pizza, Inc.; Lakoduk Broadcasting Corporation d/b/a KICT-95 Radio; and Various John Does, Jane Does, and ABC Companies, Defendants.

No. 89-1412-C.

United States District Court, D. Kansas.

October 11, 1989.

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Monte Vines, Adams, Jones, Robinson and Malone, Wichita, Kan., Jeffrey L. Laytin, William M. Ried, Steven E. Seidenberg, Lewin & Laytin, New York City, for plaintiffs.

Steven D. Gough, Kahrs, Nelson, Fanning, Hite & Kellogg, Wichita, Kan., for The Show Mach., Inc. d/b/a Popcorn Video.

Thomas D. Kitch, William P. Tretbar, Fleeson, Gooing, Coulson & Kitch, Wichita, Kan., for Domino's Pizza, Inc.

John H. Gibson, Boyer, Donaldson & Stewart, Wichita, Kan., for Lakoduk Broadcasting d/b/a KICT-95 Radio.

William L. Fry, Fry, White, Birch & Reeves, Wichita, Kan., for Video Broadcast Systems, Video Broadcast Systems, of St. Louis, Tim Mead, and The Show Mach., Inc. d/b/a Popcorn Video.

MEMORANDUM AND ORDER

CROW, District Judge.

The case comes before the court on the plaintiff's motion for a preliminary injunction and motion to strike certain portions of affidavits submitted by defendants in opposition to the plaintiff's first motion. Defendant Domino's Pizza, Inc. also moves to dismiss plaintiff's complaint pursuant to Fed.R.Civ.P. 12(b)(6) or, in the alternative, for summary judgment. On September 28, 1989, the court conducted a hearing on the preliminary injunction motion in which counsel for each party presented their arguments. The court took the motion under advisement for additional research and preparation of the following decision. As to the motion to strike portions of defendants' affidavits, the court agrees that certain statements contained therein are inadmissible hearsay, incompetent testimony, or matters outside of the affiant's personal knowledge. Rather than separately ruling on each of the portions that have been objected to, the court will simply recite those facts which are properly supported by affidavits.

Paramount Pictures Corporation (Paramount) is a corporation organized under the laws of Delaware and maintains its principal place of business at Los Angeles, California. For over 75 years, Paramount has been in the business of producing and distributing motion pictures. In May of 1979, Paramount began its home video business through its wholly-owned subsidiary, Paramount Home Video (PHV). PHV owns and obtains rights to reproduce and distribute videocassettes of motion pictures and programs recently produced by Paramount or independent producers, as well as videocassettes of those motion pictures held in Paramount's library of films. After determining an optimal release date for the videocassette, PHV develops a marketing plan for sales and then spends substantial sums marketing the video releases. Many of Paramount's sales are to distributors who then sell the videocassettes to retailers who, in turn, rent or sell the videocassettes to the public.

Paramount became the first motion picture studio to include commercials at the beginning of its produced videocassettes. The commercial was placed on the videocassette of "Top Gun" and advertised products of Pepsi Co., Inc. PHV has also placed Pepsi commercials on five other videocassettes of Paramount pictures. Under its contract with Pepsi, PHV retains the authority to "reasonably approve" the content of Pepsi's video advertisement, and PHV is precluded from placing paid advertisements other than Pepsi's on the videocassette.

Paramount is the sole owner of the following incontestable trademarks: PARAMOUNT: A GULF + WESTERN COMPANY; STAR TREK; and PARAMOUNT: A GULF + WESTERN COMPANY: 75TH ANNIVERSARY. One or more of these trademarks appear on the recorded videotape portion of the videocassette, on the black plastic videotape cartridge, and on the cardboard sleeve for the videocassette.

Paramount holds certain copyrights in motion pictures and videocassettes as author and owner, author and licensee, or as licensee. The titles of those respective motion pictures and videocassettes are set forth in the plaintiff's complaint. Paramount places on the recorded videotape portion and the plastic cartridge an "FBI Copyright Warning" that states the videocassette can only be used for non-commercial private exhibition in homes and any public performance or copying of it is prohibited by copyright laws.

Defendant, Video Broadcasting Systems, Inc. (VBS), is a corporation organized under the laws of Kansas and has its principal place of business in Wichita, Kansas. Defendant Tim Mead is the sole executive officer of VBS. Defendant Video Broadcasting System of St. Louis is apparently a division of VBS. VBS is in the business of selling, producing and placing advertisements on the blank or lead-in tape of videocassettes rented or sold by the video retail stores to the public. VBS charges its advertising clients a fee for each videocassette upon which the advertisement is recorded. The video retail stores are in turn paid a fee for those advertisements placed upon their videocassettes.

As of June 9, 1989, VBS had forty-four active advertising clients, and their advertisements appear on videocassettes rented by twenty video retailers in Wichita, Kansas. One of these video retailers is defendant, The Show Machine Inc., d/b/a Popcorn Video (Popcorn). The recorded advertisements remain on the videocassette for at least three months. VBS does not erase the advertisements before the videocassette is later sold to the public. It is VBS' policy to record the advertisements only on the blank tape preceding the FBI warning.

VBS has recorded advertisements on videocassettes containing Paramount motion pictures and bearing Paramount's trademarks. Paramount did not authorize or consent to the placement of these advertisements. Among the products and services promoted by these commercials are those sold by the defendants originally named in this suit, including defendant, Lakoduk Broadcasting Corporation d/b/a KICT-95 Radio (KICT-95). Some of these advertisements overlapped the FBI warning and Pepsi commercials pre-recorded on the videocassettes sold by Paramount. Certain advertisements for Longneckers, Inc. also displayed Coca-Cola products and interrupted the pre-recorded commercial for Diet Pepsi.

Plaintiff filed its complaint on August 3, 1989, asserting nine counts for relief under three basic areas of law: trademark and/or unfair competition, copyright, and state common law. The next day plaintiff filed its motion for preliminary injunction with supporting memorandum. By the agreement of the parties, the motion was fully briefed and set for hearing on September 28, 1989. Each party chose to present nothing but arguments at the hearing. The only evidence submitted for the court's consideration was the affidavits and exhibits attached to their memoranda.

Plaintiff seeks to enjoin generally defendants from using Paramount's trademarks in a manner which is likely to cause others to believe that the defendants' advertisements are a part of or connected with plaintiff's product, from altering Paramount videocassettes by the addition of unauthorized advertisements, from creating and distributing derivative works from works in which plaintiff owns or is the exclusive licensee of the copyright, from interfering with plaintiff's prospective contractual relations for authorized advertisements, and from "shipping, delivering, holding for sale, distributing, returning, transferring, or otherwise moving or disposing of in any manner" videocassettes bearing plaintiff's trademark or protected by plaintiff's copyright which have been altered by defendants prior to rental or sale.

A preliminary injunction is an extraordinary remedy which is granted as the exception rather than the rule. GTE v. Williams, 731 F.2d 676, 678 (10th Cir.1984). The grant or denial of a preliminary injunction rests within the sound discretion of the trial court. Amoco Oil Co. v. Rainbow Snow, 748 F.2d 556, 557 (10th Cir.1984). The primary purpose of a preliminary injunction is to preserve the status quo pending a final resolution of the merits, in order that the trial court could then render a meaningful decision. Tri-State Generation v. Shoshone River Power, Inc., 805 F.2d 351, 355 (10th Cir.1986).

The movant has the burden to establish by clear proof its right to a preliminary injunction. Penn v. San Juan Hospital, Inc., 528 F.2d 1181, 1185 (10th Cir.1975). Mere allegations are not sufficient. Kansas City, Kan. Frat. v. City of Kansas City, 620 F.Supp. 752, 768 (D.Kan.1984). The movant's burden is particularly heavy when the injunction sought would essentially grant plaintiff a substantial portion of the relief the plaintiff would later recover upon a trial of the merits. GTE Corp., 731 F.2d at 679; Kingsford Products Co. v. Kingsford, Inc., 674 F.Supp. 1428, 1432 (D.Kan.1987). Courts have broken down the movant's burden into four separate prerequisites: (1) it will suffer irreparable injury unless the injunction issues; (2) the threatened injury to the movant outweighs whatever damage the injunction may cause the opposing party; (3) the injunction would not be adverse to the public interest; and (4) there is a substantial likelihood that the movant will eventually prevail on the merits. City of Chanute v. Kansas Gas & Elec. Co., 754 F.2d 310, 313 (10th Cir.1985).

LIKELIHOOD OF SUCCESS ON THE MERITS

Plaintiff must show its success on the pleaded claims is reasonably probable. Lundgrin v. Claytor, 619 F.2d 61, 63 (10th Cir.1980). The success of plaintiff's theories under the areas of trademark, copyright, and state common law turn upon common issues of law and fact which the court will identify and discuss for purposes of this motion.

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