Paramount Wins Ruling Over Movie Copyrights

, The Litigation Daily

This article originally appeared in the National Law Journal, an affiliate of the Litigation Daily.

A federal appeals court has ruled in a case of first impression that an independent movie production company with disputed ownership of copyrights to three films waited too long to assert infringement.

The U.S. Court of Appeals for the Ninth Circuit concluded that Seven Arts Entertainment Inc. therefore is barred from filing an infringement claim against Paramount Pictures Corp. In this case, the panel wrote, Paramount spent more than three years—the statute of limitations under the Copyright Act of 1976—rejecting ownership claims by Seven Arts to the films "Rules of Engagement," "An American Rhapsody" and "Who is Cletis Tout?"

In ruling for Paramount, the panel distinguished from infringement cases testing the fair use of copyrighted works.

"[T]his dispute is about ownership—Paramount concedes it is exploiting the pictures, but denies that Seven Arts owns the copyrights," Circuit Judge Diarmuid O’Scannlain wrote. "We must decide, then, whether a claim for copyright infringement in which ownership is the disputed issue is time-barred if a freestanding ownership claim would be barred."

Neil Netanel, a professor at the University of California, Los Angeles, School of Law who argued for Seven Arts, which is based in the United Kingdom, and Paramount attorney Joan Mack of Caldwell Leslie & Proctor in Los Angeles did not respond to requests for comment.

The dispute began about a decade ago, soon after the release of the films at issue. In 2003, Seven Arts sued CanWest Entertainment Inc. in the Superior Court of Justice in Ontario, Canada, claiming co-ownership of the copyrights. In 2011, Seven Arts obtained a summary judgment order against CanWest, which had filed for bankruptcy protection, affirming that it owned the copyrights to "An American Rhapsody" and "Who is Cletis Tout?" and had exclusive international distribution rights to "Rules of Engagement."

Armed with that order, Seven Arts filed suit in 2011, this time against Paramount, claiming the studio, which had paid distribution receipts to CanWest’s successor, Content Media Corp., had infringed on its copyrights. U.S. District Judge Audrey Collins dismissed the case, finding that Seven Arts had exceeded the Copyright Act’s statute of limitations to file suit.

The panel’s opinion on Wednesday, affirming that dismissal, cited the Second Circuit’s 2011 ruling in Kwan v. Schlein and the Sixth Circuit’s 2007 decision in Roger Miller Music Inc. v. Sony/ATV Publishing LLC, which held that when the "gravamen" of a copyright infringement case is ownership, and that if the Copyright Act’s statute of limitation prohibits the filing of an ownership claim, the related infringement claims also are barred.

"Our sister circuits’ approach makes good sense—allowing infringement claims to establish ownership where a freestanding ownership claim would be time-barred would permit plaintiffs to skirt the statute of limitations for ownership claims and lead to results that are ‘potentially bizarre,’ " O’Scannlain wrote. "We decline Seven Arts’s invitation to create a circuit split."