Bit Parts

The U.S. District Court for the Southern District of New York decided that federal copyright law did not preempt a breach-of-contract counterclaim by the estate of author Mario Puzo against Paramount Pictures over rights to a book prequel to Puzo's novel The Godfather. Paramount Pictures Corp. v. Puzo, 12 Civ. 1268. In 1969, Puzo assigned to Paramount the copyright in his Godfather book “to make and cause to be made literary and dramatic and other versions and adaptations of every kind and character of said work'.” However, during negotiations the parties had deleted the phrase to “publish said work and/or any versions or adaptations thereof, or any part or parts thereof, and to vend copies thereof.” Paramount Pictures filed suit against Puzo's estate for copyright infringement and trademark violations over The Family Corleone, a prequel book to The Godfather authorized by Puzo's estate for publication beginning in 2011. The estate responded with several counterclaims, including breach of contract. Citing the recent decision by the U.S. Court of Appeals for the Second Circuit in Forest Park Pictures v. Universal Television Network Inc., 683 F.3d 424 (2d Cir. 2012), District Judge Alison J. Nathan noted that “accepting the Estate's construction of the 1969 Agreement, ' it requires Paramount to comply with a separate contractual obligation (i.e., not to engage in conduct violative of the implied covenant of good faith and fair dealing). Because it is the alleged violation of the latter obligation that forms the basis of the Estate's breach of contract claim, the claim is not preempted, and Paramount's motion to dismiss the Estate's breach of contract counterclaim is DENIED.” But Judge Nathan also denied the Puzo estate's bid to cancel the 1969 agreement.

The U.S. Court of Appeals for the Eighth Circuit held that a subsequent purchaser of non-creative rights in a television network wasn't liable for royalty payments to the original seller. Retro Television Network Inc. v. Luken Communications LLC, 12-1287. In 2005, Equity Broadcasting Corporation bought the non-creative rights to the Retro Television Network (RTN) and agreed to pay RTN 10% of the net income that the network then earned. Lukens Communications later bought Equity's network-rights subsidiary and merged it into the Lukens subsidiary Retro Television Inc. In 2011, RTN sued Luken and Retro Television, seeking royalties under the 2005 Equity agreement. The Eight Circuit found, however, that the 2005 intellectual property agreement (IPA) between Equity and RTN “did not express an intent to make Retro Television, Inc. or any of [Equity's] predecessors a third party beneficiary. Not only do the IPA's recitals make clear that the transfer of rights was for Equity's benefit, but paragraph 13 of the IPA explicitly denies an intention to create a third party beneficiary, stating that '[n]o person or entity that is not a party to this agreement may claim any right or benefit hereunder.'” The appeals court added: “Instead, the terms of the IPA make clear that Equity was to provide all of the consideration for the transfer of rights and be the only obligor for such consideration.”

Counsel Concerns

The New York Supreme Court, New York County, ruled that the statute of frauds did not bar a lawyer's claim for payment commissions for representing a TV personality under an oral retainer agreement to negotiate future-season TV episodes work. Kastner v. MacLean, 100379/2011. New Jersey attorney Drew Kastner sought a 15% commission from New York-based personality Malcolm MacLean. In defense, MacLean and his companies raised N.Y. Gen. Oblig. Law (GOL) '5-701, which in part prohibits enforcing agreements that can't be performed within one year. But County Supreme Court Justice Lucy Billings noted in an unpublished opinion: “While the statute of frauds would bar plaintiff's claims seeking compensation for negotiating a business opportunity, as the statute of frauds applies to implied or express contracts, ' GOL '5-701(a)(10) specifically exempts from its application 'a contract implied in fact or in law ' to pay compensation to ' an attorney at law.'” Meanwhile, Judge Todd J. Campbell of the U.S. District Court for the Middle District of Tennessee, Nashville Division, has permitted attorney Chad Etheridge to intervene in litigation in which plaintiff James Martinez sued country artist Tim McGraw and others for song copyright infringement. Etheridge charges that Martinez hired him as counsel but then fired the lawyer without cause. Judge Campbell further decided, however, that resolution of Etheridge's claims against Martinez for breach of contract and related causes of action must be stayed “until the underlying litigation is completed.” Martinez v. McGraw, 3-08-0738.

Puzo Estate's Claim of Breach of 1969 Godfather Agreement Not Preempted by Federal Copyright Law

The U.S. District Court for the Southern District of New York decided that federal copyright law did not preempt a breach-of-contract counterclaim by the estate of author Mario Puzo against Paramount Pictures over rights to a book prequel to Puzo's novel The Godfather. Paramount Pictures Corp. v. Puzo, 12 Civ. 1268. In 1969, Puzo assigned to Paramount the copyright in his Godfather book “to make and cause to be made literary and dramatic and other versions and adaptations of every kind and character of said work'.” However, during negotiations the parties had deleted the phrase to “publish said work and/or any versions or adaptations thereof, or any part or parts thereof, and to vend copies thereof.” Paramount Pictures filed suit against Puzo's estate for copyright infringement and trademark violations over The Family Corleone, a prequel book to The Godfather authorized by Puzo's estate for publication beginning in 2011. The estate responded with several counterclaims, including breach of contract. Citing the recent decision by the U.S. Court of Appeals for the Second Circuit in Forest Park Pictures v. Universal Television Network Inc. , 683 F.3d 424 (2d Cir. 2012), District Judge Alison J. Nathan noted that “accepting the Estate's construction of the 1969 Agreement, ' it requires Paramount to comply with a separate contractual obligation ( i.e. , not to engage in conduct violative of the implied covenant of good faith and fair dealing). Because it is the alleged violation of the latter obligation that forms the basis of the Estate's breach of contract claim, the claim is not preempted, and Paramount's motion to dismiss the Estate's breach of contract counterclaim is DENIED.” But Judge Nathan also denied the Puzo estate's bid to cancel the 1969 agreement.

The U.S. Court of Appeals for the Eighth Circuit held that a subsequent purchaser of non-creative rights in a television network wasn't liable for royalty payments to the original seller. Retro Television Network Inc. v. Luken Communications LLC, 12-1287. In 2005, Equity Broadcasting Corporation bought the non-creative rights to the Retro Television Network (RTN) and agreed to pay RTN 10% of the net income that the network then earned. Lukens Communications later bought Equity's network-rights subsidiary and merged it into the Lukens subsidiary Retro Television Inc. In 2011, RTN sued Luken and Retro Television, seeking royalties under the 2005 Equity agreement. The Eight Circuit found, however, that the 2005 intellectual property agreement (IPA) between Equity and RTN “did not express an intent to make Retro Television, Inc. or any of [Equity's] predecessors a third party beneficiary. Not only do the IPA's recitals make clear that the transfer of rights was for Equity's benefit, but paragraph 13 of the IPA explicitly denies an intention to create a third party beneficiary, stating that '[n]o person or entity that is not a party to this agreement may claim any right or benefit hereunder.'” The appeals court added: “Instead, the terms of the IPA make clear that Equity was to provide all of the consideration for the transfer of rights and be the only obligor for such consideration.”