The opinion of the court was delivered by: STEWART
This action involves a dispute over the ownership of the commercial rights to use the names and likenesses of Stanley Laurel and Oliver Hardy ("Laurel and Hardy"), the two famous comedians both now deceased. The complaint was filed on January 29, 1971 by plaintiff Larry Harmon Pictures Corporation ("Harmon"), a California corporation, against defendants Hal Roach Studios, Inc. ("Roach"), a Delaware corporation with its principal place of business in New York, and Richard Feiner & Co. ("Feiner"), a New York partnership. Jurisdiction is predicated upon diversity of citizenship. 28 U.S.C. § 1332. Plaintiff later moved for an order granting leave to file an amended and supplemental complaint and for an order granting Lucille Hardy Price ("Price") and Ida K. Laurel leave to intervene as parties-plaintiff in this action. Those motions were originally "marked off the calendar for non-appearance" by order of this court dated June 27, 1972. Defendants then moved to add Herbert Gelbspan, Executive Vice-President of defendant Roach, Richard Feiner, President of defendant Feiner, and Overseas Programming Companies, Ltd. ("Overseas") as defendants. On September 25, 1972, both plaintiffs' and defendants' motions were granted in a decision requiring an order to be settled upon ten days' notice. No order was ever drawn up by the parties who were apparently under the mistaken belief that no order was required to implement that oral decision. Nevertheless, all the parties have assumed from that time that the motions had been granted and have proceeded upon that basis. Therefore, we deem it unnecessary at this stage to require an order effecting that which the court has already granted and which the parties all assumed had been settled.
We proceed, therefore, on the basis of the amended complaint and acknowledge the additional parties-plaintiff and parties-defendant to this action.
Plaintiffs Price and Laurel are the widows of Oliver Hardy and Stanley Laurel, respectively, and are the sole beneficiaries of their estates under their wills. Plaintiff Harmon is engaged in the business of producing and distributing films and of licensing toys and games. Harmon is party to an agreement dated March 21, 1961 between it and Stanley Laurel, plaintiff Price, and Laurel and Hardy Feature Productions
which granted Harmon the right to acquire in perpetuity the exclusive right to utilize and merchandise the names, likenesses, characters and characterizations of Laurel and Hardy.
Defendant Roach is the purported holder of certain copyrights to Laurel and Hardy motion pictures. In February, 1971, Roach acquired the name and assets of Hal Roach Studios, Inc., a New York corporation ("Roach-New York"), which previously, in September, 1967, had acquired the name and assets of Hal Roach Studios, Inc. ("Roach-California"), a California corporation, by virtue of an order of the United States District Court for the Middle District of Pennsylvania. It was Roach-California, then a debtor in reorganization under Chapter X of the Bankruptcy Act, which originally held these copyrights alleged to have been acquired by Roach through Roach-New York.
Defendant Roach also claims by virtue of the acquisition of Roach-California to be the successor-in-interest to rights derived from certain employment agreements entered into between Roach-California and Laurel and Hardy. Presumably relying on the above-acquired interest, Roach entered into an agreement on May 1, 1969 with defendant Feiner, revised by later agreement dated January 21, 1971, purporting to convey to Feiner the "world-wide exclusive merchandising rights" to the names and likenesses of Laurel and Hardy. On those same two dates, Feiner, in turn, purported to convey to Overseas those same exclusive merchandising rights outside the United States.
In the present action, plaintiffs claim that defendants are not legally entitled to the rights which they claim and that their claims are in conflict with the exclusive rights granted to plaintiff Harmon.
The amended complaint asserts five causes of action against defendants. First, plaintiffs claim that the 1969 and 1971 agreements between Roach and Feiner and Overseas were "unauthorized by plaintiffs" and "constitute a wilful, unauthorized and wrongful appropriation of the commercial Laurel and Hardy rights." Plaintiffs here seek an accounting of profits. Second, plaintiffs allege that defendants' exploitation has caused confusion in the marketplace as to the true ownership of the commercial rights to Laurel and Hardy thereby depreciating their value and causing irreparable harm for which plaintiffs seek injunctive relief. The third cause of action alleges a conspiracy between Gelbspan and Richard Feiner to appropriate the commercial Laurel and Hardy rights. Plaintiffs seek an accounting of the unjust enrichment caused by this conspiracy. Fourth, plaintiffs seek damages of not less than $250,000 for interference with plaintiffs' property rights and a similar distinct amount for conversion of plaintiffs' property rights. Finally, plaintiffs seek punitive damages, claiming the appropriation and conversion of plaintiffs' rights was accomplished "wilfully . . . maliciously and with full knowledge of plaintiffs' rights."
Defendant Overseas has moved to dismiss plaintiffs' first, second, fourth and fifth causes of action and for summary judgment. In addition, defendant Overseas seeks a declaratory judgment that Overseas is the sole owner of certain Laurel and Hardy rights granted to it by defendant Feiner. All other defendants have joined in the relief sought by Overseas. Plaintiffs also have moved for summary judgment. While no notice of motion was ever filed, plaintiffs' motion apparently was made orally before another judge of this court and all supporting affidavits and memoranda of law were filed thereafter. For the reasons set forth below, we grant declaratory and injunctive relief in favor of plaintiffs. We deny plaintiffs' request for an accounting and for punitive damages. Determination of actual damages for wrongful conversion will be determined at a later hearing.
Defendants claim their prior and exclusive rights derive from defendant Roach and its predecessors Roach-California and Roach-New York. Defendants allege they are exclusively entitled to utilize commercially the names and likenesses of Laurel and Hardy and request injunctive relief against any such use by plaintiffs.
Defendants argue essentially three theories to support their claim of exclusive or concurrent right to commercial use of the names and likenesses of Laurel and Hardy. First, they contend that certain employment agreements entered into between Roach and Laurel and Hardy entitle them to exclusive right. Second, they maintain that they hold copyrights of certain motion pictures which give rise to the claimed rights. Finally, they assert that they are at least entitled to use the comedians' names and likenesses along with the general public since they are now in the public domain, either because plaintiffs never had any exclusive right to their names and likenesses or because they waived any rights which they had.
We will discuss each of these claims in turn.
3. The Employment Contracts
Between 1923 and 1939, Laurel and Hardy separately entered into a number of contracts to render services as motion picture actors to Roach-California. In interrogatories, defendant Roach was asked to identify any provision within these contracts upon which defendants rely for their claim to sole and exclusive use of the names and likenesses of Laurel and Hardy. Defendant Roach replied that it relies upon the contracts but failed to specify any provisions, stating: "Defendant respectfully refers [plaintiffs] to the original of the agreements . . . and states that each agreement must be read in its entirety for the meaning and effect of its terms." We agree with plaintiffs' characterization of this response as "evasive." In the absence of any specification by defendants of the relevant contract clauses, we have sought to determine which portions of the contracts bear on the rights in issue in this case.
While the language of the contracts varies, certain provisions which we find bear on the rights in dispute here are common to all of the contracts. First, each contract contains a clause granting Roach the exclusive right to photograph and record the "acts, poses, plays and appearances" of each of the actors. Then, each contract provides that Roach would have sole and exclusive ownership of such photographs and the right to copyright the materials produced. Finally, the contracts contain a provision granting Roach certain rights to use each actor's "name, voice and likeness for advertising, commercial and/or publicity purposes."
The first two common provisions relating to photography do not appear to be in dispute among the parties. Plaintiffs do not challenge defendants' right to the ownership and use of the films produced and copyrighted while Laurel and Hardy were each under separate contract to defendant Roach. Plaintiffs do contest, however, defendants' claimed rights arising from the third provision, that is, the use of the names and likenesses of Laurel and Hardy.
It is in the contractual provisions relating to the ownership and use of the photography not in the provision granting rights to use their names and likenesses where language is used to grant rights beyond the term of the specific contracts.
Those provisions grant to Roach the exclusive rights to photograph, copyright, and reproduce all the "acts, poses, plays and appearances" of Laurel and Hardy for the contract term and "perpetually." The context in which the perpetual grant appears, however, makes it clear that what is granted to Roach in perpetuity relates to the specific photographic reproductions and not to a perpetual and exclusive use in every context of the names and likenesses of Laurel and Hardy. This construction becomes clearer when we examine the contract provisions relating specifically to the use of the names and likenesses of Laurel and Hardy.
Some of the contracts contain a very limited grant of that use to Roach for advertising publicity only "in connection with all the pictures in the production of which [Laurel/Hardy] may take part . . . ." Other contracts provide Roach with a broader right to use the actors' names and likenesses: "the sole and exclusive right to make use of [Laurel's/Hardy's] name for advertising, commercial and/or publicity purposes, as well as the sole and exclusive right to make use of and distribute [Laurel's/Hardy's] pictures, photographs and other ...