United States District Court, Southern District of New York
April 24, 1991
CLAIRE KENNETH DE BARDOSSY, PLAINTIFF,
SANDOR PUSKI AND CORVIN HUNGARIAN BOOKS, DEFENDANTS.
The opinion of the court was delivered by: Martin, District Judge:
MEMORANDUM OPINION AND ORDER
Plaintiff Claire Kenneth De Bardossy, a Hungarian born
writer of romance novels, commenced this copyright action
against Sandor Puski and Corvin Hungarian Books to recover
damages for and to enjoin the defendants' allegedly
unauthorized publication of plaintiff's novels in Hungary.
Defendants interposed a counterclaim which sought a
declaration that they have the right to publish plaintiff's
works in the Hungarian language in any locale in the world.
The matter is now before the Court on the parties'
cross-motions for summary judgment. For the reasons discussed
below, the Court finds that it lacks subject matter
jurisdiction over plaintiff's claims. Accordingly, both
plaintiff's complaint and defendants' counterclaim are
According to the complaint, plaintiff was born and raised in
Hungary and lived there until 1956 with her husband, Paul De
Bardossy, and their son. Paul De Bardossy's uncle, Laszlo
Bardossy, was the Prime Minister of Hungary in 1941 and 1942.
During that time, Laszlo Bardossy declared war on the Soviet
Union, was arrested in 1945 and was executed in 1946.
Given the Communist takeover of Hungary and the familial
connections between plaintiff and Laszlo Bardossy, plaintiff
was forced to adopt a non de plume — Claire Kenneth — in
order to have her books published in Communist Hungary.
In 1946 and 1947, plaintiff wrote two highly successful
romance novels entitled "Night in Cairo" and "Rendezvous in
Rome" (respectively the "Cairo book" and the "Rome book").
Sometime thereafter, plaintiff's true identity was discovered.
Accused of being a "class enemy," plaintiff's works were
banned and she was deported to an undeveloped area and drafted
to do forced labor.
During the turmoil created by the Hungarian Revolution of
1956, plaintiff, her son and her husband, who himself had been
imprisoned for three years for attempting to enter Austria,
escaped from Hungary and settled in the United States.
Plaintiff resumed her writing after arriving in New York.
Ultimately, plaintiff met defendant Sandor Puski sometime in
the 1970's. Puski, also Hungarian born, states that he was a
book publisher in Hungary from 1938 until 1950 when the
Hungarian government nationalized his business and forced the
defendant to seek other employment.
In 1970, Puski and his wife left Hungary and joined their
sons who had previously settled in the United States. Puski
eventually purchased the Corvin Book Store, a Hungarian
language book store located on Second Avenue in New York City.
Puski was also publishing books in the Hungarian language
through May Publishing Company.
Plaintiff claims that in the 1970's, Puski approached
plaintiff and requested that he be permitted to publish her
books. Plaintiff further claims that Puski told her that
he was a lawyer and that he would prepare the contracts which
would enable Puski to publish plaintiff's books in New York in
the Hungarian language.*fn1 Plaintiff states that during this
time, she had no separate legal representation.
Eight letter agreements were signed by the parties between
1976 and 1987. These agreements cover all of plaintiff's works
with the exceptions of the Cairo and Rome books. Although each
letter agreement differs to some insignificant degree, the
agreements provide in relevant part as follows:
You [plaintiff] sold and I [Puski-Corvin and/or
Puski] purchased the publishing rights in the
Hungarian language of your books entitled. . . .
for. . . .
I will publish the books . . . under the May
Publishing Co. publishing series.
In the event of my death, all my rights and
obligations hereunder are my wife's and in the
event of her death, are my estate's, but we may
assign these rights and obligations to another
person or entity.
With the exception of the right to publish in the
Hungarian language you retain all rights as
author, including rights of translation,
dramatization and screenplays.
In the event the above or any further edition is
sold out and not republished by me within two
years, the Hungarian language publishing right
reverts to you without any compensation.
The letter agreements further provide for a one-time royalty
payment to plaintiff ranging from $2,000 to $6,750.00 per
book. Eventually, all thirteen of plaintiff's books, including
the Cairo and Rome books not covered by the letter agreements,
were published and sold in the United States under the May
With respect to the Cairo and Rome books, defendants concede
that there is no written agreement between Puski or his
corporate entities and plaintiff. Defendants, however, claim
that Puski acquired the rights to publish these two books in
1983 when he purchased the stock and existing publishing
rights of Pilvax Publishing Corp. from its sole proprietor
Dezso Gero in 1983. See Puski Aff., ¶ 16 and Rule 3(g)
Statement, ¶ 5.
Puski's contention is supported by a letter, dated July 6,
1988, from plaintiff to Laszlo Rapcsanyi in Hungary, wherein
plaintiff states that:
When we arrived in New York penniless and without
any sponsors and Pali was cleaning at night at
Rockefeller Center and I was a manager in
Altman's Fifth Avenue Fur Salon, Pali met this
Udvardy, who had a bookstore on First Avenue.
To this man, he sold lock, stock and barrel, the
Hungarian rights to the Cairo and Rome books. The
guy became rich from this, even purchased a motel
in New Jersey and two apartment buildings on
Bruckner Boulevard. Then he sold it to the Roth and
Son Company which continued to print them without
end, flooding the Hungarian readership of five
continents. Finally, they sold it to a publisher
named Pilvax, who published the books of Peter
Halasz, Svetlana Stalin's diary and Exodous. He was
a crook, finally he died and his widow sold the
rights to Puski.
This is where we are presently. Puski is an
extremely honest and correct person.
He publishes all thirteen of my Hungarian books.
They are bestsellers on five continents and they
continue to appear edition by edition. I receive my
author's fee in lump sum. I don't like accounting,
and to concern myself how many thousands of copies
were printed and sold.
See Puski Aff., Exhibit D.*fn3
The story now shifts to the East Europe. In 1989, Janos
Kadar, the head of the Communist Hungarian government since
the Soviet Union crushed the 1956 uprising, was forced to
retire and the country joined the rest of Eastern Europe in
attempting to democratize the economy and political process.
Defendants, apparently sensing a liberalization of society,
one free of censorship, proceeded to contract with a
state-owned publisher in Budapest to have plaintiff's books
published in Hungary.
Contracts, dated June 14, 1989, for the publication of the
Cairo and Rome books were executed between
Puski-Corvin/Hungarian Books, Records, Tapes, as Proprietor,
and Arkadia Publishers, a subsidiary of Europa Publishers.
These contracts call for the publication of 200,000 copies of
each book, a sharp contrast to the 42,529 copies of
plaintiff's books that were sold in the United States over a
twelve year period.*fn4
The inside page of the Cairo book provides:
COPYRIGHT by Puski Sandor 1989
After being confronted by plaintiff, Puski claimed that this
copyright notice was a mistake and he promised that in
subsequent editions plaintiff would be listed as the copyright
On September 26, 1989, defendants contracted with Europa
Publishers for three additional books authored by the
plaintiff.*fn6 No further books, however, were published by
Europa after plaintiff's attorney's advised Europa in the fall
of 1989 that Claire Kenneth owned the copyrights to the five
books that Europa had published.
Sometime in 1988 or 1989, Puski moved back to Hungary and
started Puski Kiado (Publishers), a book publishing company.
The majority of shares in Puski Kiado is owned by defendant
Puski Corvin Hungarian Books and Puski is the company's
managing director. The defendants, Puski and Puski Corvin
Hungarian Books, thereafter proceeded to contract with their
Hungarian entity for the publication of additional books
written by the plaintiff. Defendant Puski signed the contracts
on behalf of the defendants and his son signed for Puski
Kiado. Approximately 883,742 copies of the three books were
published as of October 17, 1990 with defendants paying
themselves a royalty of 6,894,143, or $114,902.00 at the
current exchange rate.
Although at that time, Puski had not yet published
plaintiff's remaining books, he acknowledged at his deposition
that he intended to do so. Hearing this, plaintiff, in the
fall of 1990, contracted to have these last five novels
published by Magyar Vilag in Hungary. Plaintiff claims that
Puski, upon returning to Hungary after being deposed in the
United States, learned of Magyar Vilag's intentions and, as
result, proceeded to have Puski Kiado publish these same
As a result of defendants' actions as described above,
plaintiff seeks an order enjoining defendants from infringing
copyrights, damages flowing from the publication in Hungary of
plaintiff's books and an accounting of all profits defendants
have derived from the publication of plaintiff's books in
Hungary. Defendants seek an order declaring that, pursuant to
the letter agreements and their purchase of the Pilvax
inventory, they own the right to publish worldwide plaintiff's
works in the Hungarian language.
1. Jurisdiction under the Copyright Act
At the outset, the Court must consider defendants' claim
that the Court lacks subject matter jurisdiction under
28 U.S.C. § 1338(a) since subject matter jurisdiction is a
constitutional prerequisite to a federal court's power to act.
Update Art, Inc. v. Modiin Pub., Ltd., 843 F.2d 67, 72 (2d Cir.
Defendants argue that jurisdiction is lacking in the present
case because the United States Copyright laws generally do not
have extraterritorial application and because the exceptions
to this principle are inapplicable herein.
In Update Art, the Second Circuit succinctly set forth, as
follows, both the general principle and the exception to
[i]t is generally well established that copyright
laws do not have extraterritorial application.
There is an exception — when the type of
infringement permits further reproduction abroad —
such as the unauthorized manufacture of copyrighted
material in the United States.
Update Art, Inc., supra, 843 F.2d at 72. See also Filmvideo
Releasing Corp. v. Hastings, 668 F.2d 91, 93 (2d Cir. 1981);
Robert Stigwood Group, Ltd. v. O'Reilly, 530 F.2d 1096,
1100-1101 (2d Cir.), cert. denied, 429 U.S. 848, 97 S.Ct. 135,
50 L.Ed.2d 121 (1976); Gaste v. Kaiserman, 683 F. Supp. 63
(S.D.N.Y.), aff'd, 863 F.2d 1061 (2d Cir. 1988); Ahbez v. Edwin
H. Morris & Co., 548 F. Supp. 664, 667 (S.D.N.Y. 1982).
In Update Art, an Israeli newspaper included within its
weekend edition a full-page, full-color reproduction of a
"Ronbo" poster, a takeoff from the Rambo character depicting
President Reagan's head superimposed over Rambo's body.
Plaintiff owned exclusive contract rights for the worldwide
publication and distribution of Ronbo art work. The Second
Circuit stated that the applicability of American copyright
laws over the Israeli newspaper depended upon "the occurrence
of a predicate act in the United States." Id. Continuing, the
Court reasoned that if the illegal reproduction occurs in the
United States and then is exported abroad, subject matter
jurisdiction is proper. Id.
Thus, it appears that jurisdiction would be proper in the
United States in the present case if plaintiff can show that
an infringing act occurred in the United States and that this
act has led to further infringement abroad.*fn7
Plaintiff argues that subject matter is proper because (1)
defendants were authorized to publish the books in the United
States through agreements negotiated and executed in New York
between plaintiff and Puski, (2) all of the books were first
published in the United States by an American publisher and
(3) defendants authorized the removal to and foreign
publication of plaintiff's books through the letter
Although none of these three claimed bases for jurisdiction
involve any infringing act within the United States,*fn8
that the decisions of the Ninth Circuit in Peter Starr
Production Co. v. Twin Continental Films, 783 F.2d 1440, 1442
(9th Cir. 1986) and the district court in Thomas v. Pansy Ellen
Products, Inc., 672 F. Supp. 237, 241 (W.D.N.C. 1987) support
extraterritorial jurisdiction of her claims. This Court
In Peter Starr, plaintiff authorized a business acquaintance
to explore the possibilities of marketing his motion picture
abroad but specified that the agent had no binding authority.
After plaintiff rejected a number of offers, the agent
improperly entered into a license agreement purporting to
authorize the use of the copyright work abroad. The agreement,
while negotiated in France, was executed in the United States.
The Court upheld subject matter jurisdiction based upon the
fact that the contract authorizing the infringement was
executed in the United States. In so holding, the Court
reasoned that since the Copyright Act conferred on the owner of
the copyright "the exclusive rights . . . to authorize" the use
of his work, the improper authorization which occurred in the
United States itself constituted a violation of the Copyright
Similarly, in Thomas, defendant's agent sent a letter from
the United States to a Taiwan manufacturer authorizing the
manufacturer to reproduce the copyrighted work in Taiwan. The
Court, relying upon the Peter Starr decision, held that "[t]he
authorization thus occurred here . . ." 672 F. Supp. at
Unlike the above cases upon which plaintiff relies, there
was no unauthorized activity in the United States in the
present action. Specifically, plaintiff does not allege that
defendants' publication of Hungarian language editions of her
books in the United States violated the Copyright Act since
this is exactly what was called for under the letter
Moreover, plaintiff does not — and, indeed, cannot — claim
that the mere act of taking books legally produced in the
United States to Hungary violated the Copyright Act. The same
holds true for the transportation to Hungary of the letter
agreements. And the letter agreements, while undoubtedly
executed in the United States, were not the documents which
constituted the alleged infringing authorization. Finally, and
most significantly, the contracts authorizing the alleged
improper use of plaintiff's copyright in Hungary were
negotiated in Hungary and not in the United States.
Nevertheless, the Hungarian contracts, plaintiff claims,
were induced by the letter agreements, since they evidenced
the defendants' apparent authority to publish the works in the
Hungarian language. As a result, plaintiff argues that the
agreements were "links in the chain of links in the
This "link in the chain" argument, however, was rejected by
the Second Circuit in Robert Stigwood Group, Ltd. v. O'Reilly,
530 F.2d 1096, 1100-1101 (2d Cir.), cert. denied, 429 U.S. 848,
97 S.Ct. 135, 50 L.Ed.2d 121 (1976). In that action,
defendants, Roman Catholic priests, infringed plaintiffs'
copyright by performing the rock opera "Jesus Christ Superstar"
without authorization. Each party took exception to the
district court's decision on damages with plaintiffs contending
that the defendants' Canadian performances should have been
included in the damage calculation. Plaintiffs argued that
prior to each performance, the defendants assembled and
arranged in the United States all the necessary elements for
the performance and then simply traveled to Canada. Thus,
plaintiffs argued that the acts in the United States
constituted "an integral part of the Canadian performances . .
." 530 F.2d at 1100. The Court, however, found that the steps
taken by the defendants in the United States were "certainly
not the `manufacture' of anything, nor were the performances
`records' from which the work could be reproduced." Id. at
1101. The Court, thus, held that "[i]t is only when the type of
infringement permits further reproduction abroad that its
exploitation abroad becomes the subject of a constructive
trust." Id., citing, 2 Nimmer on Copyright § 156.
Having failed to produce any predicate act of infringement
in the United States or even a domestic improper
authorization, the Court finds that it lacks subject matter
jurisdiction under the Copyright Act to entertain plaintiff's
2. Jurisdiction under the Universal Copyright Convention
Although not pled in the complaint, plaintiff now
alternatively argues that the Court has jurisdiction over this
matter under the Universal Copyright Convention (the
"Convention").*fn11 The Convention, as reprinted in Nimmer on
Copyright, Appendix 25 (1987), provides that:
Published works of nationals of any Contracting
State and works first published in that State
shall enjoy in each other Contracting State the
same protection as that other State accords works
of its nationals first published in its own
territory, as well as the protections granted by
Plaintiff argues that, under the Convention, if the
infringements took place in and entitled plaintiff to sue in
Hungary, jurisdiction would also be conferred on an American
court. This is not so.
The Convention does not expand a member state's copyright
laws extraterritorially. Instead, the Convention simply
provides that a contracting state must accord the same
copyright protection to a work produced or created abroad but
infringed in the contracting state that it would to a domestic
work.*fn12 For this reason, the Court holds that there is no
subject matter jurisdiction over plaintiff's claims under the
For the reasons discussed above, the Court finds that it
lacks subject matter jurisdiction over plaintiff's complaint.
Accordingly, both the complaint and defendants' counterclaim