Tuesday, March 9, 2010
C.A. Rules for Sony in Dispute Over Three Stooges Films
By SHERRI M. OKAMOTO, Staff Writer
This district’s Court of Appeal yesterday ruled that the owner of The Three Stooges name, likeness and intellectual property rights was not due any payment from the release of certain films starring the comic trio in the home entertainment market and the licensing of them to two cable channels.
Div. Five concluded in an unpublished opinion that the actions of Sony Pictures Television Inc.—the predecessor in interest to Columbia Pictures Television Inc.—did not violate the terms of two contracts with C3 Entertainment Inc.
Sony owned the copyrights to 190 films made by the Three Stooges between 1934 and 1958, known as “shorts,” each about 12 to 18 minutes long. C3 claimed that Sony breached the terms of an agreement between the parties from 1960 by distributing compilations of the shorts in the home entertainment market without paying C3 a share of the proceeds and by failing to pay C3 a portion of the revenue it received when it licensed the shorts to two cable channels.
Sony also allegedly breached the terms of a separate agreement from 1996 by failing to make a reasonable good faith effort to maximize gross receipts in the home entertainment, TV syndication, basic cable, international cable and television, video on demand, and direct response markets from a series it produced utilizing the shorts and other interstitial material.
Under the terms of the 1960 agreement, Sony obtained the “unlimited right to produce, exhibit, distribute or otherwise exploit, in any medium or by any method whatsoever, whether now known or hereafter discovered, feature motion pictures utilizing therefor[e] and therein any or all short subjects featuring the performances of The Three Stooges,” in return for payment to C3 of 25 percent of the proceeds.
In the 1996 agreement, C3 granted Sony the right to cut, edit, or colorize the shorts for purposes of making a television “Special” and one or more television “Series.” The agreement defined “Series” as “one (1) or more television series consisting of one-half (1/2) hour episodes which [Sony] contemplates producing which would primarily utilize the Shorts with the addition of newly produced bridging and other interstitial material consisting of clips and extracts from existing material, whether owned by [Sony] or [C3] or other entities.”
Sony made a series incorporating the shorts and other material which it licensed to AMC in 1999, but AMC never broadcast any of it, choosing instead to make its own series using the shorts. Sony apparently did not attempt to sell the series it had created to Spike, which also created its own television series incorporating the shorts.
Sony moved for summary adjudication of C3’s breach of contract claims based on the 1960 agreement, contending that “feature motion pictures,” as used in the agreement, meant a full-length theatrically-released motion picture, and so the shorts licensed to the cable channels for distribution in the home entertainment market did not fall under the scope of that agreement.
The referee found that this was the “common sense meaning of a ‘feature motion picture’ ” and granted Sony’s motion. As for the causes of action based on the 1996 agreement, the referee found some breach, but no damages.
Los Angeles Superior Court Judge Kevin C. Brazile adopted the referee’s findings as his judgment and rejected Sony’s request to recover its share of the referee’s fees.
Writing for the appellate court, Justice Orville A. Armstrong disagreed that the term “feature motion picture” was limited to full-length theatrical releases, reasoning that such a restrictive definition “would nullify the express provision that Sony’s rights (and obligations) extend to feature motion pictures exhibited or exploited in ‘any medium or by any method whatsoever.’ ”
Armstrong opined that the terms of the 1960 agreement “are not ambiguous” and that the parties “chose to have the agreement apply broadly” by declining to limit the terms of the agreement to theatrical releases only.
But he explained that Sony had not distributed “feature motion pictures” when it distributed the shorts. He noted that the agreement “recognizes two kinds of product, Shorts and feature motion pictures” and emphasized that it “allows Sony to create a feature motion picture from the Shorts, but does not address distribution of the Shorts themselves.”
Accordingly, Armstrong concluded, “[d]istribution of the Shorts cannot be said to fall under the Agreement, and the Shorts cannot be said to be feature motion pictures.”
Turning to C3’s claims under the 1996 agreement, Armstrong posited that the cable channel’s use of the shorts also fell outside the scope of the contract.
“The 1996 Agreement unambiguously applies only to series which Sony produces, not to series others [produced] from the Shorts,” he explained.
The justice added that even if the trial court had erred in finding no breach of the 1996 agreement, C3 was not entitled to damages in light of evidence that neither cable channel would have licensed the series Sony had produced.
Armstrong was joined in his decision by Los Angeles Superior Court Judge William R Weisman, sitting by assignment, and Justice Sandy R. Kriegler.
C3 was represented by Douglas J. Rovens and Adam Fox of Squires, Sanders & Dempsey, along with Glendale attorney Robert N. Benjamin. Columbia was represented by Martin D. Katz, Lisa N. Stutz and Richard F. DeLossa of Sheppard Mullin Richter & Hampton.
The case is C3 Entertainment, Inc. v. Columbia Pictures Television, Inc., B208179.
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