Scandinavian Satellite System, As v. Prime Tv Ltd., 01-7104.

• Citation: 291 F.3d 839
• Decision Date: 04 June 2002
• Docket Number: No. 01-7104.,01-7104.
• Parties: SCANDINAVIAN SATELLITE SYSTEM, AS, Appellant, v. PRIME TV LIMITED, et al., Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

291 F.3d 839

SCANDINAVIAN SATELLITE SYSTEM, AS, Appellant, v. PRIME TV LIMITED, et al., Appellees.

No. 01-7104.

United States Court of Appeals, District of Columbia Circuit.

Argued May 6, 2002.

Decided June 4, 2002.

COPYRIGHT MATERIAL OMITTED

Appeal from the United States District Court for the District of Columbia (No. 00cv02482).

Gary C. Tepper argued the cause for appellant. With him on the brief was Caroline Turner English.

Robert B. Rosen argued the cause for appellees. With him on the brief was Richard K. Coplon.

Before: EDWARDS, HENDERSON, and GARLAND, Circuit Judges.

Opinion for the Court filed by Circuit Judge EDWARDS.

HARRY T. EDWARDS, Circuit Judge:

Appellant Scandinavian Satellite System ("SSS") claims rights under an exclusive copyright license to broadcast programming created by Pakistan Television Corporation ("PTV"), a government-owned enterprise based in Pakistan that produces news and entertainment programs. On May 25, 1998, PTV granted Sports Star International ("SSI"), a Pakistani company, an exclusive license to broadcast PTV programming. On July 1, 1998, SSI, in turn, granted SSS, a Norwegian company, the exclusive rights to broadcast PTV programming outside of Pakistan. SSS intended to use Prime TV Limited ("Prime TV"), a British company, to broadcast PTV programming in Europe. Finally, on February 17, 1999, SSS executed a Joint Venture Agreement with SSI, authorizing SSI to assume control over Prime TV, which previously had been a wholly owned subsidiary of SSS, and transferring the exclusive license to broadcast PTV programming from SSS to Prime TV.

SSS now sues Prime TV and two individual defendants for copyright infringement, claiming that Prime TV violated SSS's copyright by broadcasting, or preparing to broadcast, PTV programming in the United States. SSS also contends that the SSS/SSI Joint Venture Agreement is null and void because it was executed under duress. In answer to SSS's complaint, Prime TV moved to dismiss the case on three grounds: lack of personal jurisdiction; principles of international comity arising from related lawsuits in Pakistan; and the existence of forum selection clauses in the disputed SSS/SSI contracts that required the parties to resolve their disputes pursuant to arbitration in Pakistan.

SSS's action is based on a claim of copyright infringement under 17 U.S.C. §§ 106 and 602. The District Court, however, saw the case differently. The District Court ruled that, because the "Joint Venture Agreement is at the core of this action," Scandinavian Satellite Sys., AS v. Prime TV Ltd., 146 F.Supp.2d 6, 10 (D.D.C.2001), the action is principally one for contract rescission, not copyright infringement. The trial court also held that, even if the Joint Venture Agreement were voided — "which is necessary for SSS to maintain a copyright action — SSS would have no cause to seek relief under the copyright laws, since Prime [TV] would be its wholly owned subsidiary." Id. at 18. The District Court therefore held that it had no subject matter jurisdiction to decide the case, because the matter did not arise under an act of Congress relating to copyrights. See 28 U.S.C. § 1338(a) (federal courts have subject matter jurisdiction over matters "arising under any Act of Congress relating to patents, plant variety protection, copyrights and trade-marks").

Because we find that the District Court has subject matter jurisdiction over appellant's complaint, we reverse and remand for further proceedings. SSS's complaint is founded on a claim of copyright infringement arising under the Copyright Act for which it seeks declaratory and injunctive relief from appellees' infringing conduct. This is sufficient to establish subject matter jurisdiction under 28 U.S.C. § 1338(a). It does not matter that appellees may interpose a contract defense based on the Joint Venture Agreement; rather, the important point here is that SSS's claim rests solely on its asserted copyright license. Furthermore, we reject the District Court's holding that SSS has no cause to seek relief from Prime TV, because Prime TV is purportedly SSS's wholly owned subsidiary. The mere claim of a parent-subsidiary relationship is not enough to decide this issue, for the court must first determine whether SSS does in fact control Prime TV. Indeed, in this case, Prime TV claims to be controlled by SSI, not SSS.

Because the District Court erred in dismissing the case solely on the basis of subject matter jurisdiction and, thus, failed to rule on appellees' numerous other arguments for dismissal, we reverse and remand for further proceedings.

I. BACKGROUND

PTV executed an agreement with SSI in May 1998 granting SSI "[e]xclusive world wide rights" to use PTV programming. See Am. Compl. ¶¶ 7, 8, reprinted in Joint Appendix ("J.A.") 227; Agreement Between PTV and SSI 1 (May 25, 1998), reprinted in J.A. 237. SSI then transferred exclusive rights to SSS to broadcast PTV programming outside of Pakistan. See Agreement Between SSI and SSS ¶ 1 (July 1, 1998), reprinted in J.A. 234. SSS, then the sole shareholder of Prime TV, planned on using Prime TV to broadcast PTV programming in Europe. Am. Compl. ¶ 13, reprinted in J.A. 228. However, in February 1999, before SSS had undertaken any broadcast operations, Raja Nasir Hussain, the principal of SSS, signed a Joint Venture Agreement with SSI. Id. ¶ 14. The Joint Venture Agreement gave SSI a controlling interest in Prime TV and transferred SSS's license to broadcast PTV programming to Prime TV. Id. ¶ 14. Hussain now claims that defendant Yusaf Baig Mirza "coerced" him into signing the Joint Venture Agreement by threatening Hussain and his family. Id. ¶¶ 14, 16.

SSS filed suit in the District Court seeking a declaratory judgment that SSS (not Prime TV) owns the copyright in PTV programming, damages for copyright infringement, an injunction barring Prime TV from using PTV programming, and attorney's fees. Id. ¶¶ 26, 29. SSS's complaint asserts that "Prime [TV] will broadcast, or has broadcasted PTV Programming in the District of Columbia," and that "Prime [TV] is importing into the United States, without the authority of the owner of [the] copyright, copies ... of PTV Programming... in order to broadcast PTV Programming in the United States for profit." Id. ¶¶ 19-20. The defendants moved to dismiss the case, arguing that the choice of law and choice of forum clauses in all three contracts required the resolution of any disputes to take place in Pakistan under Pakistani law; that the principles of international comity dictated that the District Court defer to two pending court actions in Pakistan involving the same controversy; and that the court had no personal jurisdiction over the defendants. See Defs.' Mem. in Supp. of Mot. to Dismiss, reprinted in J.A. 22.

Before ruling on the motion to dismiss, the District Court sent a letter to counsel requesting briefing on whether the court had subject matter jurisdiction over the case and whether SSI was an indispensable party under Rule 19 of the Federal Rules of Civil Procedure. See Letter to Counsel (March 12, 2001), reprinted in J.A. 344. All parties subsequently agreed that the District Court properly had subject matter jurisdiction over the dispute. The District Court, however, granted the defendants' motion to dismiss, holding that the court had no subject matter jurisdiction over the dispute because the action was one for contract rescission, not copyright infringement:

The necessity of determining whether the Joint Venture Agreement was executed under duress — and, as a result, whether it is null and void — essentially preempts SSS' copyright claim. If the contract is found to be valid, then SSS has no rights to broadcast PTV Programming, and it cannot assert any copyright action. If the agreement is voided, SSS maintains the rights to the PTV Programming — but also retains its controlling interest as the sole shareholder in Prime. So while SSS would own the copyright license (assuming that the License Agreement was not terminated), the defendants in this action would be (1) a wholly-owned subsidiary of SSS [Prime TV], and (2) two individuals who would have no control over that subsidiary. [T]his unique posture means that this action does not "arise under" the federal copyright laws, but amounts to nothing more than a straightforward contract action for rescission of the Joint Venture Agreement.

Scandinavian Satellite, 146 F.Supp.2d at 10. SSS appeals from this decision.

II. DISCUSSION

The District Court dismissed appellant's complaint for lack of subject matter jurisdiction solely on a motion to dismiss. Therefore, in addressing this issue, we "must accept as true all of the factual allegations contained in the complaint." Swierkiewicz v. Sorema N.A., 534 U.S. 506, ___ n. 1, 122 S.Ct. 992, 995 n. 1, 152 L.Ed.2d 1 (2002).

28 U.S.C. § 1338(a) grants district courts subject matter jurisdiction to hear "any civil action arising under any Act of Congress relating to ... copyrights." As this case demonstrates, the scope of federal subject matter jurisdiction to hear contract disputes involving copyright ownership "poses among the knottiest procedural problems in copyright jurisprudence." 3 MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT § 12.01[A] (2002). It is clear that not every complaint that mentions the Copyright Act "arises under" that law for the purposes of § 1338(a). See, e.g., Bassett v. Mashantucket Pequot Tribe, 204 F.3d 343, 347 (2d Cir.2000). Thus, for example, a "suit on a contract does not `arise under' the copyright laws even though a copyright may have been the subject matter of the contract." 13B CHARLES ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE § 3582 (2d ed.1984). However, the mere existence of an underlying contract dispute in a suit relating to a copyright does not deprive a court of jurisdiction to hear an action for copyright infringement. See 28...