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TRI-STAR v. LEISURE TIME PROD.

October 15, 1990

TRI-STAR PICTURES, INC., PLAINTIFF,
v.
LEISURE TIME PRODUCTIONS, B.V., DEFENDANT AND THIRD PARTY PLAINTIFF, V. COLUMBIA PICTURES INDUSTRIES, INC., COLUMBIA PICTURES ENTERTAINMENT, INC., HORIZON PICTURES G.B., ACADEMY PICTURES A.G. AND DAVID BOTTOMS, AND HON. RAYA S. DREBEN AS EXECUTORS OF THE ESTATE OF SAMUEL SPIEGEL, THIRD PARTY DEFENDANTS.



The opinion of the court was delivered by: Edelstein, District Judge:

OPINION & ORDER

On July 23, 1986, Tri-Star entered into an agreement with Leisure Time to distribute the movie "Return From The River Kwai" in the United States and Canada. Academy Pictures A.G. ("Academy") has alleged trademark rights to the movie "Bridge On The River Kwai" and asserts that the title "Return From The River Kwai" infringes the trademark in the title of its movie. Tri-Star is in the middle of this dispute. If Tri-Star refuses to release "Return From The River Kwai," it will be sued by Leisure Time for breach of contract. If Tri-Star releases the movie, it will be sued by Academy for trademark infringement.

Tri-Star has moved for summary judgment on its claim that Leisure Time breached an express warranty in the 1986 agreement which provided that the film would be delivered to Tri-Star free of all claims against it. Leisure Time has cross-moved for summary judgment claiming that no such warranty exists and, in the alternative, that the warranty was not breached because Academy does not have a valid trademark infringement claim and did not comply with the provisions of the contract relating to such a breach. Leisure Time has moved for summary judgment on Academy's trademark infringement claim. Leisure Time has also moved for summary judgment on its counter-claims against Tri-Star and cross-claims against Columbia Pictures, Inc. and Columbia Pictures Entertainment, Inc. ("Columbia") and Academy for tortious interference of contract based on the false assertion of Academy's trademark claim.

For the reasons stated below, Tri-Star's motion for summary judgment against Leisure Time is granted. Accordingly, Leisure Time's cross motion for summary judgment is denied. Leisure Time's motion for summary judgment on Academy's trademark infringement claim is denied. Leisure Time's motion for summary judgment on its counterclaims against Tri-Star and cross-claims against Columbia and Academy for tortious interference of contract is also denied.

I. BACKGROUND

There are two series of events relevant to this dispute. The first involves the release of the movie "Bridge On The River Kwai." The second involves the planned release of the movie "Return From The River Kwai."

"Bridge On The River Kwai" was produced in 1956 by Sam Spiegel. The corporate vehicles through which Mr. Spiegel produced "Bridge On The River Kwai" were Horizon-American Pictures, Inc. and Horizon G.B. Ltd. ("Horizon"). Columbia was the distributor.

On April 18, 1956, Albatross Trust, the predecessor of Academy, entered into an agreement ("the 1956 royalty agreement") with Horizon in which Albatross Trust obtained a 25%, royalty interest in revenues for the motion picture "Bridge on the River Kwai" in the Western Hemisphere, excluding the United States and Canada. "Bridge On The River Kwai" was released in 1957 and has since been viewed by millions of people in the United States and abroad.

On January 5, 1959, Columbia entered into an agreement ("the January 5, 1959 agreement") with Horizon in which Columbia obtained the rights to "Bridge on the River Kwai" subject to the already existing rights of Albatross Trust created by the 1956 royalty agreement. On February 2, 1959, Columbia reached a separate agreement ("the February 2, 1959 agreement") with Albatross Trust to settle existing claims for overdue royalties. The new agreement included (1) a change in Albatross Trust's royalty rate; (2) the right for Albatross Trust to receive royalties on United States and Canadian revenues generated by "Bridge on the River Kwai" and (3) a change in the method of computation of Albatross Trust's share of the net proceeds in "Bridge on the River Kwai."

Almost twenty years later, in 1978, Leisure Time registered the title "Return From The River Kwai" with the Motion Picture Association of America ("MPAA") pursuant to a set of MPAA rules which requires its members to register the prospective titles of movies they plan to release. When a prospective title for a movie is filed, the MPAA is then charged with the duty of notifying interested members of the MPAA of the prospective title. Under the MPAA's rules, any member of the MPAA with a complaint then has seven days to protest the title. Leisure Time registered "Return From The River Kwai," but Columbia's protest to the title was not received by the MPAA until after the seven day time limit and was therefore not considered.

In July, 1986, Tri-Star and Leisure Time entered into an agreement ("the 1986 distribution agreement") whereby Leisure Time granted Tri-Star exclusive distribution rights for the movie "Return From The River Kwai" in the United States and Canada. Unbeknownst to Tri-Star, before the 1986 agreement, a dispute had arisen regarding the title "Return From the River Kwai." Academy and Columbia had communicated to Leisure Time their position that as a result of the widespread exposure received by the motion picture "Bridge On The River Kwai," the title and the geographic term "River Kwai" had attained secondary meaning and were therefore entitled to trademark protection.

On December 17, 1987, after the execution of the 1986 agreement, Tri-Star and Columbia Pictures merged and became "sister" companies as wholly owned subsidiaries of Columbia Pictures Entertainment, Inc.. Since that time, Columbia has not asserted any of the trademark claims it believes it has against "Return From The River Kwai."

Upon learning of the title dispute, Tri-Star requested that Leisure Time change the name of "Return From The River Kwai" to avoid potential liability. In early November 1988, Leisure Time offered to change the title to "March From The River Kwai" and to add a disclaimer disassociating the motion picture from "Bridge On The River Kwai." This offer was not acceptable to Academy. By a letter dated November 17, 1988, Academy advised Tri-Star that any use of the name "River Kwai" would be met with a lawsuit to protect Academy's rights in the title.

On December 5, 1988, Tri-Star wrote Leisure Time notifying them of Academy's trademark infringement claim. In the letter, Tri-Star stated that because of Academy's claim, Tri-Star considered Leisure Time in breach of its warranty to deliver the movie free from claims against it and therefore considered itself free to terminate the agreement. In response, Leisure Time threatened to sue for breach of contract if Tri-Star terminated the agreement.

On December 27, 1988, Tri-Star then filed the instant declaratory judgment action, 88 Civ. 9127 (DNE), and the companion declaratory judgment action, 88 Civ. 9129 (DNE). Tri-Star moved for summary judgment in the first action claiming that Leisure Time had breached its warranty in the 1986 distribution agreement that the movie "Return From The River Kwai" would be delivered free of all claims against it. Leisure Time cross-moved for summary judgment against Tri-Star, but also (1) moved for summary judgment on its claims for tortious interference of contract against Columbia and Academy, and (2) moved for summary judgment on Academy's trademark infringement claim. Columbia moved pursuant to Federal Rule of Civil Procedure 11 ("Rule 11") for the imposition of sanctions on Leisure Time for Leisure Time's motion for summary judgment on its claim against Columbia for tortious interference of contract. Academy also moved pursuant to Rule 11 for the imposition of sanctions on Leisure Time for both Leisure Time's motion for summary judgment on its claim against Academy for tortious interference of contract and Leisure Time's motion for summary judgment on Academy's claim for trademark infringement. After this Court held a hearing on the Rule 11 motions, the parties were able to settle the issue of sanctions.

II. DISCUSSION

A party moving for summary judgment must establish "that there is no genuine issue as to any material fact" and that it "is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party has the initial burden of establishing the absence of a genuine issue of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). The non-moving party then has the burden of coming forward with specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e). In meeting this burden, the non-moving party may not rely on speculation and conjecture as to the true nature of the facts. Knight v. U.S. Fire Insurance Co., 804 F.2d 9, 12 (2d Cir. 1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987). To avoid summary judgment, there must be enough ...


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