I’m not sure what to say about this case. It’s an in-house counsel’s worst nightmare: an oversight or lost contract from fifty years earlier, combined with creative litigation tactics to skirt the statute of limitations.

Donen v. Paramount Pictures Corp., CV 08-03383 DDP, 2008 WL 5054340 (C.D. Cal. Nov. 20, 2008).

Stanley Donen directed the movie “Funny Face,” which included a famous Audrey Hepburn dance scene. Enter the Gap, Inc., which created this commercial in 2006:

Mr. Donen alleged that he never executed an employment contract with Paramount for his work on the film. Donen claimed that he “acquiesced” to Paramount’s licensing of “Funny Face” for fifty years as an “entire” work for exhibition in theaters, television, and “subsequently developed media.” But he claimed that the Gap’s use of the movie in a commercial infringed his copyright because he never “acquiesced” for the film to be used in a third party’s advert. Donen brought suit for copyright infringement or, in the alternative, an accounting and breach of implied contract.

1. Standing

Paramount argued that Donen doesn’t have standing to assert copyright infringement because, under his employment agreement, he had assigned any rights in “Funny Face.” At the time Donen directed “Funny Face” he was under an exclusive contract with Loews, that assigned to the film studio all rights and proceeds from all of his work. But, according to the court, the contract didn’t address any work Donen performed for third parties. The court found that when Loews agreed to permit Paramount to contract with Donen for his work, there was no express assignment of Donen’s rights in his work.

Paramount argued that Donen’s employment was presumptively deemed a “work made for hire” or, alternatively, that his services were merely “loaned” without granting him the capacity to acquire rights to his work. The court rejected this argument noting that the Loews agreement states that Donen could be loaned “in any capacity,” which the court asserts “includes relationships beyond the traditional employer-employee or work for hire settings.”

2. Separate ownership of dance scene

Donen claimed three separate ownership interests in “Funny Face”: full ownership of the entire picture; co-ownership of the entire picture; and ownership of the dance scene. The Court dismissed Donen’s claim to ownership in the dance scene on the grounds that Paramount registered and renewed the copyright for the “entirety” of “Funny Face.”

3. Copyright ownership/creation of an implied trust

The court explained:

Under the 1909 Act, when a copyright was registered by a co-owner or non-owner of the right, the copyright registrant held an ownership interest “in trust” on behalf of the non-registering additional or “true” owner. Maurel v. Smith, 271 F. 211, 215 (2nd Cir.1921); see also Oddo v. Ries, 743 F.2d 630 (9th Cir.1984) (a co-owner’s duty to account to another co-owner comes from “equitable doctrines relating to unjust enrichment and general principles of law governing the rights of co-owners” (internal quotations omitted)). Similarly, a co-owner who renews alone under the 1976 Act takes legal title to the renewal copyright as constructive trustee on behalf of the non-renewing co-owner. Pye v. Mitchell, 574 F.2d 476, 480 (9th Cir.1978).

Paramount argued that the ’09 Act only creates a trust when a co-owner registers an undisputed joint work solely in the first author’s name. The court found no precedence for this reading and denied dismissal.

4. Statute of limitations/latches

The court sets out two interrelated tests for addressing the statute of limitations issue:

• A claim for infringement must be commenced within three years after a claimant has “knowledge of a violation or is chargeable with such” (Roley v. New World Pictures, 19 F.3d 479, 480 (9th Cir.1994)); and
• An “authorship” claim or or subsidiary claim for accounting is barred three years from “plain and express repudiation” of authorship Aalmuhammed v. Lee, 202 F.3d 1227, 1230-31 (9th Cir.2000).

Donen contended that Gap’s advertisement was released in 2006, thus satisfying the infringement SOL, and that there was no “plain or express repudiation” of his claim of authorship to trigger the authorship SOL. The Defendants argued that “Funny Face” was released with a copyright notice in its opening credits that exclusively mentioned Paramount, and that this should represent a “plain or express repudiation.” The court noted that it’s unable to consider evidence outside of the pleadings on a motion to dismiss; and that the registration of a federal copyright by itself does not provide “plain and express repudiation.” The court similarly refused to rule on the latches claim, stating that a decision would require use of extrinsic evidence.

The court denied the motion to dismiss the breach of implied contract claim, finding that Donen’s agreement with Loews didn’t expressly cover his work for Paramount.

Documents:

• Donen v. Paramount Pictures Corp., CV 08-03383 DDP, 2008 WL 5054340 (C.D. Cal. Nov. 20, 2008) (Order).
• REPLY IN SUPPORT OF MOTION TO DISMISS UNDER FED. R. CIV. P. 12(B)(1) AND 12 (B)(6) filed by Defendants Paramount Pictures Corporation, Viacom Consumer Products, Inc., The Gap, Inc.
• OPPOSITION Plaintiff’s Opposition to Motion to Dismiss filed by Plaintiff Stanley Donen
• NOTICE OF MOTION AND MOTION to Dismiss Case [Pursuant to Fed.R.Civ.P. 12 (b)(1) and (6) filed by Defendants Paramount Pictures Corporation, Viacom Consumer Products, Inc., The Gap, Inc.
• FIRST AMENDED COMPLAINT against defendants Paramount Pictures Corporation, Viacom Consumer Products, Inc., The Gap, Inc.

Counsel:

• Stanley Donen: Greenberg Glusker Fields Claman & Machtinger LLP
• Paramount Pictures Corporation, et al.: Loeb and Loeb LLP