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P.C. FILMS CORP. v. TURNER ENTERTAINMENT CO.

January 30, 1997

P.C. FILMS CORP., Plaintiff,
v.
TURNER ENTERTAINMENT CO., MGM/UA HOME VIDEO, INC., MGM/UA COMMUNICATIONS CO. AND WARNER HOME VIDEO, INC., Defendants.



The opinion of the court was delivered by: JONES

 Barbara S. Jones, United States District Judge:

 INTRODUCTION

 The parties come before this Court for a trial on stipulated facts, seeking resolution of one narrow issue: whether a license for "perpetual" distribution rights to a motion picture either (i) terminated upon expiration of the film's initial copyright term or (ii) continues in perpetuity. This Court finds that the perpetual distribution rights endure beyond the initial copyright term.

 BACKGROUND

 On August 4, 1960, Samuel Bronston Products, Inc. ("Bronston") and Metro-Goldwyn-Mayer Inc. ("MGM") executed a detailed agreement ("Basic Agreement") concerning the production, financing, and distribution of a film entitled "King of Kings" (the "Picture"). The 163-page document was the culmination of months of negotiations conducted by sophisticated and expert parties, each represented by counsel. (Deposition of Benjamin Melniker, January 9, 1992, J.Ex. 15 at R335-37) (hereinafter "Melniker Deposition").

 Pursuant to the Basic Agreement, MGM paid approximately $ 5 million to obtain exclusive distribution rights to the Picture. *fn1" Specifically, the Basic Agreement provides that:

 
8. [MGM] shall retain in perpetuity the exclusive right to distribute the said motion picture throughout the world except in Spain, Portugal, Germany, France, Belgium, Holland, and Luxembourg . . . .
 
11. Subject to the provisions of this agreement [MGM] shall be vested with the perpetual and exclusive right to distribute the said motion picture "KING OF KINGS" throughout the territories in which [MGM] acquires rights hereunder . . . .

 (J.Ex. 1 at R19, R28). Benjamin Melniker, MGM Vice President and General Counsel, testified that "King of Kings" was "a very high cost picture" for MGM (Melniker Deposition, J.Ex. 15 at R283); he recalled the Bronston-MGM deal because of the "amount of money and what we thought was a very extraordinary picture." (Melniker Deposition, J.Ex. 15 at R338). *fn2"

 Melniker further stated that it was MGM's policy to contract for "perpetual," as opposed to limited, distribution rights, and that MGM would not have financed the Picture for less than a perpetual term. (Melniker Deposition, J.Ex. 15 at R339-40) When asked whether Bronston had expressed a desire to limit the distribution rights to less than a perpetual term, he answered:

 
Absolutely not. We would never have continued the negotiation if that happened. . . . There was no mention of any shorter term of distribution than perpetual. It was understood from the very -- it was agreed to from the beginning, and the whole basis was on that term, perpetual term of distribution. Nobody brought up anything to the contrary.

 (Melniker Deposition, J.Ex. 15 at R340).

 The Picture was first exhibited on or about October 30, 1961. (Statement of Stipulated Facts and Documents for Trial on Stipulated Facts, August 17, 1994, P A.13) (hereinafter "Stip."). On October 15, 1962 the Copyright Office approved an application to register the copyright of the Picture. (Pl.Ex. 23 at R569-70).

 The parties before this Court are successors in interest to the rights and obligations of Bronston and MGM. As a result of a 1967 bankruptcy proceeding, Bronston assigned its interests in the Basic Agreement and the copyright of the Picture to plaintiff P.C. Films. (Stip. P A.14, Pl.Ex. 30 at R592-97). Through a series of mergers and name changes, defendant Turner is the successor to MGM's distribution license, which it continues to exercise. (Stip. P A.24). Defendant ...


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