Scandinavian Satellite System, As v. Prime Tv Ltd.

• Decision Date: 16 May 2001
• Docket Number: No. 1: 00-CV02482 (ESH).,1: 00-CV02482 (ESH).
• Citation: 146 F.Supp.2d 6
• Parties: SCANDINAVIAN SATELLITE SYSTEM, AS, Plaintiff, v. PRIME TV LIMITED, et al., Defendants.
• Court: U.S. District Court — District of Columbia

146 F.Supp.2d 6

SCANDINAVIAN SATELLITE SYSTEM, AS, Plaintiff, v. PRIME TV LIMITED, et al., Defendants.

No. 1: 00-CV02482 (ESH).

United States District Court, District of Columbia.

May 16, 2001.

Gary Clifford Tepper, Arent, Fox, Kintner, Plotkin & Kahn, Washington, DC, for Plaintiff.

Michael J.E. Dixon, Dilworth Paxson, P.L.L.C., Washington, DC, for Defendants.

MEMORANDUM OPINION

HUVELLE, District Judge.

INTRODUCTION

Before this Court is a case brought by plaintiff Scandinavian Satellite System AS ("SSS"), a Norwegian corporation that is controlled by Raja Nasir Hussain, a Pakistani citizen who resides in England. The defendants are Prime TV ("Prime"), a company organized under the laws of the United Kingdom, and two Pakistani individuals — Yusaf Baig Mirza, who controls Prime, and Abdul Jabbar, the chairman of Prime. Plaintiff sues these parties for copyright infringement under 17 U.S.C. §§ 106 and 602. At issue are the broadcast rights for television programs produced by Pakistan Television Corporation Limited ("PTV"), a government-owned enterprise based in Pakistan that produces news and entertainment programs ("PTV Programming").

While defendants have raised a host of legal issues, the Court need not address them, since it concludes that this is not a "civil action arising under an Act of Congress relating to ... copyrights." 28 U.S.C. § 1338(a). Thus, there is no subject matter jurisdiction and the case must be dismissed.

FACTUAL BACKGROUND

The events, contracts, and parties that give rise to this action form a tangled web. While denominated as a copyright action, this case really involves three contracts signed by four interrelated foreign entities. As will become clear, plaintiff bases its action on two of the contracts, claiming that those agreements are valid, and it seeks to rescind the third contract as void on the grounds of duress. Plaintiff has not sued any of the signatories to the first two contracts, but instead has sued an entity that, prior to the signing of the third contract, was plaintiffs wholly-owned subsidiary. Moreover, all of the parties and all of the signatories to the contracts are foreign citizens, and all events relevant to both the formation and the alleged breach of these contracts occurred outside the United States. Nonetheless, by invoking the copyright laws, plaintiff has brought a claim that, on its face, may be cognizable in federal court.

Before the Court can evaluate the validity of plaintiffs copyright claim, it is necessary to more fully identify the cast of characters and the three contracts which are at the core of this action.

I. The Cast of Characters

A. The Corporate Entities

This dispute involves the rights to broadcast PTV Programming outside of Pakistan. PTV is an enterprise headquartered in Pakistan that produces news and entertainment programs. The government of Pakistan owns PTV. (Complaint ¶ 8.) PTV Programming is authored, produced, published, and first shown in Pakistan. It is neither first published nor simultaneously published in the United States. (Complaint ¶ 9.)

Plaintiff SSS is a Norwegian company. According to plaintiff, SSS holds an exclusive license to broadcast PTV Programming outside of Pakistan. Hussain, a citizen of Pakistan, is the president of SSS. (Complaint ¶ 14.)

Though not a party to the action, Sports Star International ("SSI") is a Pakistani company that is a central player in this drama. SSI also has an interest in the broadcasting rights to PTV Programming. In fact, defendants argue that SSI, rather than SSS, holds the exclusive rights to broadcast PTV Programming outside of Pakistan.

Defendant Prime is a British company that was a wholly-owned subsidiary of SSS prior to the events giving rise to this action. SSS states that it had intended for Prime, as its subsidiary, to broadcast PTV Programming outside of Pakistan. (Complaint ¶ 13.) However, as a result of the execution of a Joint Venture Agreement, the controlling interest in Prime was transferred from SSS to SSI.

B. The Individual Defendants

There are two individual defendants in this action, neither of whom has been served as of this time. Defendant Mirza is a citizen of Pakistan. According to plaintiff, Mirza has a variety of overlapping roles in these events. Plaintiff asserts that Mirza (1) is the managing director of PTV; (2) holds an interest in SSI; and (3) now controls the actions of Prime. (Complaint ¶¶ 3, 11, 14.)¹

Defendant Jabbar is also a citizen of Pakistan. Plaintiff contends that Jabbar is the chairman of Prime, and that he also controls the actions of Prime. It is unclear from the record whether Jabbar has an interest in either PTV or SSI.

II. The PTV Programming Agreements

The rights to broadcast PTV Programming rest on the interpretation of a series of three contracts. First, PTV granted SSI an exclusive license to broadcast PTV Programming outside of Pakistan in an agreement dated May 25, 1998 (the "SSI/ PTV Agreement"). In consideration for these rights, SSI paid PTV a cash deposit of $25,000. (Decl. of M. Taher Memon ("Memon Decl."), Ex. 1, ¶ 8.) This contract includes a forum selection clause referring all disputes to arbitration in Pakistan.² The parties do not dispute the validity of this contract. However, SSS argues that it is the intended beneficiary of the SSI/ PTV Agreement. SSS alleges that it structured and brought the idea for the contract to PTV, and that SSS participated in the bidding process using SSI as its agent and representative. SSS also asserts that it paid the $25,000 in consideration for the license. (Complaint ¶ 12.)

SSI, in turn, granted SSS the exclusive rights to broadcast PTV Programming outside of Pakistan in a second agreement dated July 1, 1998 (the "SSS/SSI License Agreement"). Like the first contract, this agreement also includes a forum selection clause referring disputes arising under the contract to arbitration in Pakistan.³ Though it is ultimately not relevant to the Court's determination as to subject matter jurisdiction, the parties disagree about the continued validity of the SSS/SSI License Agreement.⁴

Subsequent to entering into the SSS/SSI Agreement, Hussain, on behalf of SSS, signed a third contract — the Joint Venture Agreement (the "SSS/SSI Joint Venture Agreement") on February 17, 1999. The SSS/SSI Joint Venture Agreement had two significant consequences. First, it authorized SSI to assume a controlling position in Prime, which had previously been a wholly owned subsidiary of SSS. (Complaint ¶¶ 13-14; Memon Decl., Ex. 3 ¶ 2.2.) Second, the Joint Venture Agreement transferred the exclusive license to broadcast PTV from SSS to Prime, as controlled by SSI. (Memon Decl., Ex. 3, ¶ 1.3.) Like the other two contracts, the SSS/SSI Joint Venture Agreement contains a forum selection clause, as well as a choice of law provision.⁵

Despite plaintiffs protestations to the contrary, the validity of the Joint Venture Agreement is at the core of this action. SSS argues that the contract is null and void, because it was forced to sign the agreement under duress. Plaintiff contends that SSI and Mirza threatened harm to Hussain and his family if SSS did not enter into the Joint Venture Agreement. (Complaint ¶ 16.) SSS alleges that Hussain was not permitted to read the Agreement before signing it, and that he was not even able to obtain a copy until many months later. SSS also claims that neither it nor Hussain received any consideration for entering into this agreement. (Complaint ¶ 15.)

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, and (2) two individuals who would have no control over that subsidiary. As explained below, this 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.

III. Defendants' Activities in the United States

As noted, plaintiff is a Norwegian company, and it has sued a British corporation and two citizens of Pakistan based on three contracts executed in Pakistan and containing forum selection clauses mandating arbitration in that country. Yet this suit is denominated as a copyright action because SSS alleges that Prime, through its agent Kelly Broadcasting Systems ("Kelly"), has advertised in the United States and will air or broadcast PTV Programming in the United States. SSS contends that it is has the exclusive rights to PTV Programming in the United States, and that it has not authorized Prime to broadcast PTV Programming there. Kelly is a New Jersey corporation that licenses and distributes international television programming through direct-to-home and direct broadcast service in the United States. In spring 2000, Kelly became a subsidiary of EchoStar Communications Corporation. At some time subsequent to the signing of the SSS/SSI Joint Venture Agreement, Kelly and PTV — with the consent of SSI — reached an agreement to telecast PTV Programming in the United States through Prime (the "Kelly Agreement").⁶

According to SSS, Prime — through Kelly and Echostar — has advertised in the District of Columbia and elsewhere in the United States that it will air and broadcast PTV Programming in those locations. Plaintiff provides several examples in support of this argument. First, SSS alleges that Kelly's web page currently advertises...