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AMERICAN MOVIE CLASSICS CO. v. TURNER ENTERTAINMEN

April 11, 1996

AMERICAN MOVIE CLASSICS COMPANY, Plaintiff, against TURNER ENTERTAINMENT CO., as successor in interest to RKO PICTURES, INC. and TURNER CLASSIC MOVIES, INC., Defendants.


The opinion of the court was delivered by: SCHWARTZ

 ALLEN G. SCHWARTZ, DISTRICT JUDGE:

 This case concerns a dispute over the exhibition of classic motion pictures on cable television. Plaintiff American Movie Classics Company ("AMCC"), the owner and operator of the American Movie Classics ("AMC") cable network, alleges that defendants Turner Entertainment Co. ("Turner Entertainment") and Turner Classic Movies, Inc. ("Turner Classic") violated AMCC's exclusive exhibition rights in a library of classic RKO Pictures, Inc. ("RKO") motion pictures licensed by AMCC from Turner Entertainment. AMCC claims that Turner Entertainment and Turner Classic, which operate the TNT and Turner Classic Movies ("TCM") cable networks, respectively, violated AMCC's rights by airing certain RKO films on TNT and TCM during times in which AMCC had the exclusive right to exhibit these films on cable television.

 The question before the Court is the extent to which federal copyright law preempts certain state law causes of action. AMCC's Complaint presents six claims for relief for the wrongs alleged to have been committed by Turner Entertainment and Turner Classic. Four of these claims arise under state law. AMCC also asserts two claims for copyright infringement under federal law. Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, defendants move to dismiss plaintiff's four state law claims on the grounds that these claims are preempted by Section 301 of the Copyright Act, 17 U.S.C. § 301, and, therefore, fail to state a claim upon which relief can be granted. For the reasons set forth below, defendants' motion is granted.

 FACTS1

 AMCC's Complaint centers on its charges that Turner Entertainment and Turner Classic knowingly, intentionally, and repeatedly violated AMCC's exclusive exhibition rights in certain RKO classic films licensed by AMCC from Turner Entertainment. Complaint P 1. AMCC asserts that "exclusive exhibition windows" like those in its license agreement with Turner Entertainment -- which give AMCC the sole right to exhibit films on cable during specified periods of time -- are crucial to the ability of a cable network to define its identity in the increasingly crowded and competitive cable market. Complaint P 2.

 In March 1992 Turner Entertainment, as successor to RKO, amended and extended a prior film licensing agreement with AMCC. Under the March 1992 agreement ("the Agreement"), Turner Entertainment granted AMCC exhibition rights to a library of approximately 700 RKO films for a ten-year period, and AMCC agreed to pay some $ 48 million in license fees for such rights. The license was granted on an exclusive basis as set forth in the Agreement. Complaint P 24. AMCC acquired the exclusive right to exhibit the RKO films during specified windows. Outside of these windows, Turner Entertainment retained the right to exhibit the films covered by the Agreement. From AMCC's perspective, the exclusive exhibition windows were a cornerstone of the Agreement. Complaint PP 2-7, 25.

 Turner Classic launched TCM, its own classic movies cable network in competition with AMC, in April 1994. Complaint P 26, 46. AMCC alleges that Turner Entertainment and Turner Classic willfully violated AMCC's exclusive rights in certain RKO films at least 28 times during 1994 and 1995 by airing films on TNT and TCM during AMCC's exclusive exhibition windows. Complaint PP 6, 9. Asserting that AMCC has been seriously harmed by defendants' conduct, AMCC seeks compensatory damages in excess of $ 150 million, punitive damages of at least $ 100 million, and other relief necessary to fairly redress AMCC for defendants' allegedly unlawful conduct. Complaint P 13.

 Among its six claims for relief, AMCC asserts two claims for copyright infringement, one against Turner Entertainment and one against Turner Classic. The copyright claim against Turner Entertainment alleges that it "committed numerous infringements of the copyrighted films exclusively licensed to AMCC by granting to Turner Classic (or the TNT network) the right to exhibit, or otherwise allowing Turner Classic (or the TNT network) to exhibit, the same films on [TCM] (or TNT)." Complaint P 57. The copyright claim against Turner Classic alleges that it "committed numerous infringements of the copyrighted films exclusively licensed to AMCC by exhibiting the same films on [TCM]."

 AMCC also asserts four state law claims -- breach of contract, tortious interference with contract, unfair competition, and unjust enrichment -- which are the subject of defendants' motion to dismiss. In its First Claim for Relief, AMCC claims that Turner Entertainment breached its obligations under the Agreement "by violating AMCC's exclusive exhibition rights with respect to the films licensed thereunder." Complaint P 36. The Second Claim alleges that Turner Classic tortiously interfered with the Agreement between Turner Entertainment and AMCC "by inducing Turner Entertainment to provide [Turner Classic] with movies for exhibition to which AMCC has (and had) exclusive exhibition rights." Complaint P 41. In its Third Claim, AMCC alleges that Turner Entertainment and Turner Classic engaged in unfair competition by misappropriating "the exclusive property of AMCC (i.e., AMCC's exclusive rights in the films at issue) and have given such misappropriated property to Turner Classic in order to permit Turner Classic to gain an unfair competitive advantage against AMCC." Complaint P 48. AMCC alleges in its Fourth Claim that Turner Classic was unjustly enriched at AMCC's expense "by being able to exhibit classic movies covered by the agreement . . . on its cable network during the same period under which AMCC had the exclusive license to exhibit such films." Complaint P 52.

 DISCUSSION

 When Congress revised the copyright laws in 1976, it specifically provided for preemption of all state rights equivalent to those within the scope of federal copyright law. Section 301 of the Copyright Act, 17 U.S.C. § 301, *fn2" contains a two-part analysis for preemption. *fn3" First, the work of authorship in which state law rights are claimed must fall within the "subject matter of copyright" as defined in Sections 102 and 103 of the Act. Harper & Row, Publishers, Inc. v. Nation Enters., 723 F.2d 195, 200 (2d Cir. 1983), rev'd on other grounds, 471 U.S. 539, 85 L. Ed. 2d 588, 105 S. Ct. 2218 (1985). Second, the statute requires that a state law have created "legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified in section 106" if the state law is to be preempted. Id.

 A. Rights in Works Within Subject Matter of Copyright

 The first prong of the preemption analysis is satisfied here because AMCC's four state law claims assert rights in the RKO films, which come within the subject matter of federal copyright. The subject matter of copyright consists of any "original works or authorship fixed in any tangible medium of expression" and includes "motion pictures and other audiovisual works." 17 U.S.C. § 102(a); Universal City Studios, Inc. v. T-Shirt Gallery, Inc., 634 F. Supp. 1468, 1475 ...


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