Russell v. Price

• Decision Date: 18 December 1979
• Docket Number: 78-2703 and 78-2763,Nos. 77-3466,s. 77-3466
• Citation: 612 F.2d 1123
• Parties: , 1978-81 Copr.L.Dec. 25,125 Cyril RUSSELL, etc., et al., Plaintiffs/Appellees, v. Daniel A. PRICE et al., Defendants, and Albert C. Drebin, etc., Defendants/Appellants. Cyril RUSSELL, etc., et al., Plaintiffs/Appellants, v. Daniel A. PRICE et al., Defendants, and Albert C. Drebin et al., Defendants/Appellees. Cyril RUSSELL, etc., et al., Plaintiffs/Appellees, v. Daniel A. PRICE et al., Defendants, and Albert C. Drebin, etc., et al., Defendants/Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1123

612 F.2d 1123

205 U.S.P.Q. 206, 1978-81 Copr.L.Dec. 25,125

Cyril RUSSELL, etc., et al., Plaintiffs/Appellees, v. Daniel A. PRICE et al., Defendants, and Albert C. Drebin, etc., Defendants/Appellants.

Cyril RUSSELL, etc., et al., Plaintiffs/Appellants, v. Daniel A. PRICE et al., Defendants, and Albert C. Drebin et al., Defendants/Appellees.

Cyril RUSSELL, etc., et al., Plaintiffs/Appellees, v. Daniel A. PRICE et al., Defendants, and Albert C. Drebin, etc., et al., Defendants/Appellants.

Nos. 77-3466, 78-2703 and 78-2763.

United States Court of Appeals Ninth Circuit.

Dec. 18, 1979.

Rehearing Denied Feb. 19, 1980.

Gerald M. Singer, Los Angeles, Cal., for defendants-appellants.

Mitchell N. Reinis, Katz, Hoyt & Bell, Los Angeles, Cal., for plaintiffs-appellees.

Appeal from the United States District Court for the Central District of California.

Before GOODWIN and HUG, Circuit Judges, and THOMPSON ^*, District Judge.

GOODWIN, Circuit Judge:

Defendants distributed copies of the film "Pygmalion", the copyright for which had expired. They were sued by the owners of the renewal copyright in the George Bernard Shaw play upon which the film was based. Defendants appeal the resulting judgment for damages and attorney fees.

Plaintiffs cross appeal, claiming that the court erred in not awarding them statutory "in lieu" damages. ¹ We affirm.

In 1913 Shaw registered a copyright on his stage play "Pygmalion". The renewal copyright on the play, obtained in 1941 and originally scheduled to expire in 1969, was extended by Congressional action to the year 1988. Shaw died in 1950 and the plaintiffs, except for Janus Films, are current proprietors of the copyright. Janus Films is a licensee.

In 1938 a derivative version of the play, a motion picture also entitled "Pygmalion", was produced under a license from Shaw; neither the terms nor the licensee's identity appear in the record. ² The film was produced by Gabriel Pascal, copyrighted by Loew's, and distributed by Metro-Goldwyn-Mayer ("MGM"). For undisclosed reasons the film's copyright was allowed to expire in 1966. When and if the original film rights agreement expired is also not disclosed. ³

In 1971 the play's copyright proprietors licensed Janus Films to be the exclusive distributor of the film "Pygmalion". Shortly after discovering in 1972 that Budget Films was renting out copies of the 1938 film, ⁴ Janus brought action against Budget in a California state court, alleging state causes of action in particular, unfair competition. That case ended in Budget's favor upon a determination that the action was essentially one for copyright infringement over which the state court lacked jurisdiction. The English copyright proprietors then executed a power of attorney in favor of their licensee Janus, and Janus ⁵ promptly brought this action in federal district court in May 1975.

I. LACHES

The defendants contend that the doctrine of laches barred the infringement action. The question of laches is addressed primarily to the discretion of the district court. Gardner v. Panama Railroad Co., 342 U.S. 29, 30, 72 S.Ct. 12, 96 L.Ed. 31 (1951); International Telephone & Telegraph Corp. v. General Telephone & Electronics Corp., 518 F.2d 913, 926 (9th Cir. 1975). Rejection of the laches defense in this case was not an abuse of discretion.

Although proceeding on a different theory at the time, Janus instituted state court proceedings shortly after it learned that Budget was renting out the film "Pygmalion". Thus, defendants had early notice that their activities were objected to on legal grounds. But they claim that Janus misled them and the state court for two and a half years by steadfastly refusing to acknowledge the copyright nature of the action so as to keep it in state court, and that the other plaintiffs sat back on their copyright claim all that while, choosing instead to see how Janus would fare in the California courts. Only when the state court action was dismissed on the ground that the action was in fact one for infringement of copyright rather than for unfair competition did the plaintiffs file the present copyright action. Meanwhile, the defendants complain that they had incurred unnecessary expenses in the state litigation and had been falsely reinforced in their belief that no valid copyright protected the playwriter's rights in the film "Pygmalion" on which the film copyright had expired.

Even if the plaintiffs had followed the strategy alleged, and if it somehow offends equity, ⁶ as defendants insist, the detriment Budget claims to have suffered as a result of plaintiffs' delay in bringing this action does not constitute prejudice within the meaning of the laches doctrine. Defendants at no time changed their film distribution activities in reliance on Janus' conduct. Defendants cite no case in which a false sense of security alone has been enough to bar an otherwise proper claim. ⁷ Nor were the expenses and difficulties of the earlier litigation incurred in reliance on plaintiffs' inaction. If plaintiffs had proceeded in both state and federal courts simultaneously, defendants would have been in no better position. This is not a case where copyright holders speculated on the probable success of a costly but unauthorized exploitation of a work before asserting their rights in it. See Hampton v. Paramount Pictures Corp., 279 F.2d 100, 105 (9th Cir.), Cert. denied, 364 U.S. 882, 81 S.Ct. 170, 5 L.Ed.2d 103 (1960) ⁸; Universal Pictures Co. v. Harold Lloyd Corp., 162 F.2d 354, 372 (9th Cir. 1947). In fact, the copyright proprietors here knew the value of their property and were themselves exploiting it through the licensing arrangement with Janus. The laches defense was properly rejected.

II. INFRINGEMENT

Defendants' main contention on the primary issue in this litigation is simply stated: Because the film copyright on "Pygmalion" has expired, that film is in the public domain, and, consequently, prints of that film ⁹ may be used freely by anyone. Thus, they argue that their renting out of the film does not infringe the statutory copyright on Shaw's play.

Defendants rely almost entirely on the recent opinion of Judge Friendly in Rohauer v. Killiam Shows, Inc., 551 F.2d 484 (2d Cir.), Cert. denied, 431 U.S. 949, 97 S.Ct. 2666, 53 L.Ed.2d 266 (1977). However, in so relying, they ignore or fail to appreciate the significant differences between that case and this one. ¹⁰

In Rohauer the author of a novel which was statutorily copyrighted in 1925 assigned exclusive movie rights to one Moskowitz, specifically promising in the contract to reassign to him or his successor in interest all film rights for the novel's copyright renewal term. A successful silent film was made under that assignment and separately copyrighted in 1926 by an assignee of Moskowitz. Unfortunately, the novel's author died prior to the end of the novel's first copyright term. The author's daughter, as statutory beneficiary of the right to renew, inherited the renewal term free from the film license granted by her mother. ¹¹ The daughter then granted exclusive movie and television rights for the renewal term to Rohauer. Killiam Shows, Inc., successor in interest to the 1926 film's renewal copyright, allowed the film to be shown on educational television without Rohauer's or the daughter's authorization, whereupon the latter two brought a copyright infringement action against Killiam.

The Second Circuit held on those facts that the derivative film's independent copyright entitled the defendant to continue showing the film without infringing rights under the renewal copyright in the underlying novel. Defendants here understand by this that a derivative copyright covers more than the new matter which the producer of the derivative work added to the underlying work. Thus, they say that when the derivative copyright expires the whole product enters the public domain free of the monopoly protection of any subsisting copyright in the underlying work. The court's opinion in Rohauer, however, makes it clear that this is simply not the case.

First, the Rohauer court placed heavy emphasis on the nongratuitous intent of the nonsurviving author to convey film rights in the novel's renewal term, a promise which had been bargained for in the initial assignment. ¹² The defendants here have never bargained with Shaw or his successors for anything, nor do they enjoy any relationship with anyone who had so bargained.

A second important difference between the favored party in Rohauer and the defendants here is that the defendant Killiam there was the proprietor of the still valid copyright in the film. By virtue of that copyright, Killiam was held to have sufficient rights in the matter derived from the novel to continue showing it as part of the film. ¹³ A prominent rationale in that case for awarding those limited rights in favor of the owner of the derivative copyright is the protection and encouragement of the "large and independently copyrightable" "literary, musical and economic" contributions of the "person who with the consent of the author has created an opera or a motion picture film" from a copyrighted novel. 551 F.2d at 493. However, whatever place sympathy for the position of creators of derivative works might properly have under the 1909 Copyright Act, ¹⁴ the defendants here can take advantage of none, having contributed nothing to the production of the film "Pygmalion".

Nor is it apparent under Rohauer that such sympathy should have any place at all when the independent copyright on the derivative work has been allowed to expire. For then there is no longer a conflict between two copyrights, each apparently granting "their proprietors overlapping 'exclusive' rights to use whatever underlying material * * * had been incorporated into the derivative film." Comment, Derivative Copyright and the 1909 Act New Clarity or Confusion?, 44 Brooklyn L.Rev. 905, 912 (1978) (footnote omitted)....