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Ace Arts, LLC v. Sony/ATV Music Publ'g, LLC

United States District Court, S.D. New York

September 26, 2014

Ace Arts, LLC, Plaintiff,
Sony/ATV Music Publishing, LLC, et al., Defendants

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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For Ace Arts, LLC, Plaintiff: Kara A. Elgersma, Wexler Wallace LLP, Chicago, IL; Kenneth A. Wexler, Wexler Toriseva Wallace LLP, Chicago, IL; Olimpio Lee Squitieri, Squitieri & Fearon LLP, New York, NY.

For Sony/ATV Music Publishing, LLC, Defendant: Donald S. Zakarin, Leighton Elizabeth Dellinger, Lisa M. Buckley, Pryor Cashman LLP, New York, NY.

For Apple Corps Limited, Defendant: Paul V. LiCalsi, LEAD ATTORNEY, Robins, Kaplan, Miller & Ciresi, LLP (NYC), New York, NY; Michael Anthony Kolcun, Jr., Linsey Law Firm, PLLC, New York, NY.

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ALISON J. NATHAN, United States District Judge.

This action arises from the use of eight Beatles songs in the documentary film The Beatles: The Lost Concert (" The Lost Concert " ). Specifically, Plaintiff Ace Arts, LLC (" Ace" ) alleges that Defendants Sony/ A TV Music Publishing, LLC (" SATV" ) and Apple Corps Limited (" Apple" ) unlawfully interfered with the United States distribution of The Lost Concert by asserting copyright claims regarding those songs. Defendants have moved to dismiss or stay this case in deference to an action previously filed in the United Kingdom, and to dismiss the amended complaint for failure to state a claim pursuant to Rule 12(b)(6). Dkt. Nos. 41, 45. For the reasons that follow, the motion to dismiss or stay the case in deference to the United Kingdom action is denied, and the motion to dismiss for failure to state a claim is granted in part and denied in part.

I. Legal Standard

" To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, 'to state a claim to relief that is plausible on its face." ' Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). In determining whether this standard has been met," a court must accept as true all well-pleaded facts and draw all reasonable inferences in the light most favorable to the non-moving party." Church & Dwight Co. Inc. v. SPD Swiss Precision Diagnostics, GmbH, No. 14-cv-585 (AJN), 2014 WL 2526965, at* 1 (S.D.N.Y. June 3, 2014) (citing Kassner v. 2nd Ave. Delicatessen, Inc., 496 F.3d 229, 237 (2d Cir. 2007)). This presumption of truth is not, however, accorded to a legal conclusion that is merely " couched as a factual allegation" in the complaint. Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) (quoted in Twombly, 550 U.S. at 555).

In this context, " [d]ocuments that are attached to the complaint or incorporated in it by reference" are " deemed part of the pleading and may be considered" in deciding the motion. Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007). In addition, certain documents outside the complaint, including judicially noticeable documents such as federal copyright registrations, see Island Software & Computer Serv. v. Microsoft Corp., 413 F.3d 257, 261 (2d Cir. 2005), may be considered on a motion to dismiss for the limited purpose of " determin[ing] what the documents state[]," Roth, 489 F.3d at 509 (emphasis in original). For example, in Staehr v. Hartford Financial Services Group, Inc., 547 F.3d 406 (2d Cir. 2008), the Second Circuit approved of the district court's consideration of judicially noticeable publications and court documents " to show that certain things were said in the press, and that assertions were made in lawsuits and regulatory filings." Id. at 425. However,

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such documents may not be used to " prove the truth of their contents," Roth, 489 F.3d at 509, and it is inappropriate to discredit the factual allegations of a complaint merely because they are contradicted by assertions made in judicially noticeable documents, see id. at 511 (finding that it was improper for the district court to discredit allegation that defendants acted in concert based on judicially noticeable assertion that they were not a " group" ); see also Chechele v. Scheetz, 466 F.App'x 39, 40-41 (2d Cir. 2012) (affirming district court's refusal " to consider certain SEC filings, which were not incorporated into the complaint, for the truth of their assertions" ). As the Second Circuit has emphasized, " a ruling on a motion for dismissal pursuant to Rule 12(b)(6) is not an occasion for the court to make findings of fact." Roth, 489 F.3d at 509.

II. Background

As set forth above, the following facts are taken from the Amended Complaint (" Am. Compl." ) and the documents attached to it, and they are assumed true for purposes of deciding this motion. See Roth, 489 F.3d at 509. In addition, the Court takes judicial notice of the existence of certain documents and statements raised by Defendants, see Dkt. No. 33, but does not consider them for the truth of the matters asserted. Roth, 489 F.3d at 509.

The first live public performance by the Beatles in the United States took place at the Coliseum in Washington, D.C. on February 11, 1964, and was preserved on a two-inch standard American " quad" videotape (" Tape" ) by the National General Corporation. Am. Compl. ¶ ¶ 18-19. The Court takes judicial notice of the fact that, of the twelve songs played at the concert, Am. Compl. ¶ ¶ 18-19, 49, Defendant Sony/ATV (" SATV" ) has filed Copyright Registrations with the U.S. Copyright Office for the following eight: (1) " She Loves You" ; (2) " All My Loving" ; (3) " I Wanna Hold Your Hand" ; (4) " This Boy" ; (5) " From Me to You" ; (6) " I Saw Her Standing There" ; (7) " I Wanna Be Your Man" ; and (8) " Twist and Shout" (collectively, " Songs" ). See Buckley Decl., Ex. J. However, the Amended Complaint alleges that, since 2011, Round Hill Music and Adage Classics have owned the North American copyright and publishing rights to " She Loves You," " I Saw Her Standing There," " From Me to You," and " I Wanna Be Your Man." Am. Com pl. ¶ 49.[1]

After the live performance, the Tape was screened via a closed-circuit telephone network to an audience of approximately 500,000 in March 1964. Am. Compl. ¶ 23. Ownership of the Tape was transferred twice without copyright notice: first to Malcolm Klein in the early 1970's, and then to James Karnbach in 1987. See Am. Compl. ¶ ¶ 27-31. In addition, footage from the Tape was " commercially exploited" several times between 1964 and 2010, including in the 1991 motion picture The Beatles: The First U.S. Visit, which Apple released in 1998. See id. ¶ ¶ 32-39.

In 2009, the Tape was acquired by production company WPMC Limited (" WPMC" ). Am. Compl. ¶ 41. WPMC and Iambic Media Ltd. (" Iambic" and, collectively with WPMC, " Producers" ) used the Tape to produce The Beatles: The Lost Concert (" The Lost Concert " ), which " consists

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of the entire D.C. Concert footage, fully digitally remastered, and newly original filmed sequences, including contemporary interviews with individuals and celebrities connected to the D.C. Concert as well as expert commentary on the cultural significance of the event." Id. ¶ ¶ 41-44. Iambic is a production company founded by Chris J. Hunt. Id. ¶ 42. Ace, the Plaintiff here, was granted distribution rights to The Lost Concert by the Producers.[2] Id. ¶ 41.

In or about 2009, the Producers approached SATV about using the Songs in The Lost Concert, believing at the time that SATV " owned all applicable copyright and publishing rights to the Songs," Am. Compl. ¶ ¶ 53-54, including the " so-called synchronization right, or ... right to reproduce the music onto the soundtrack of a film or videotape in synchronization with the action," Freeplay Music, Inc. v. Cox Radio, Inc., 404 F.Supp.2d 548, 551 (S.D.N.Y. 2005) (quoting Buffalo Broad. Co., Inc. v. Am. Soc'y of Composers, Authors & Publishers, 744 F.2d 917, 920 (2d Cir. 1984)). Mr. Hunt was involved in these discussions and accepted SATV's April 22, 2010, offer of a synchronization license to use the Songs in The Lost Concert on behalf of the Producers. Id. ¶ 55. The Producers believed these negotiations to be confidential, but later learned that they had been disclosed to Apple by SATV. Id. ¶ ¶ 54-57. The Complaint alleges that, at Apple's request, SATV refused to honor the agreement to grant the Producers a synchronization license and instead granted Apple an exclusive synchronization license. Id. ¶ ¶ 59, 60-62, 65-66. On November 16, 2010, Apple announced that it would be distributing a new compilation of Beatles songs--including footage from the Tape--on iTunes. Id. ¶ 64. At around the same time, both Apple and SATV contacted the Producers to assert that use of the Tape in The Lost Concert would infringe SATV's copyright and Apple's exclusive synchronization license. Id. ¶ ¶ 61-63.

Despite the ongoing conflict with Apple and SATV, the Producers' own research led them to believe that there was no legal obstacle to distributing the film in the United States. See Am. Compl. ¶ ¶ 67-68. Based upon this research, Ace secured errors and omissions coverage for any infringement liability from its insurers and entered into a March 2012 agreement with Screenvision to distribute the film in the United States, see id. ¶ ¶ 68-69, Ex. A (" Distribution Agreement" ), pursuant to which a May 6, 2012, premiere at the Ziegfeld Theater in New York was planned, id. ¶ 71. Meanwhile, Apple prepared for its own United States Beatles-related film premiere, scheduling the re-rerelease of" Yellow Submarine" at the Ziegfeld on May 5, 2012. Id.

On March 16, 2012, Mr. Hunt contacted SATV to inform them of the planned United States distribution of the film, and to offer SATV a payment to avoid infringement litigation, although Mr. Hunt believed such litigation would be meritless. Am. Compl. ¶ 70. In April, SATV refused the offer and indicated that it would take legal action. Id. ¶ 72. Soon thereafter, United Kingdom-based counsel for SATV sent a letter to the Producers indicating that it would seek to enjoin exhibition of the film. Id. ¶ 74. Ace received no similar letter, although SATV was aware that

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Ace was the intended United States distributor, and that no United Kingdom distribution of the film was being planned. Id. ¶ ¶ 74-75.

On May 2, 2012, SATV and its United Kingdom affiliate sought an injunction against the Producers in London (" UK Action" ), alleging that exhibition of The Lost Concert would infringe SATV's copyrights. Am. Compl. ¶ 77. Shortly thereafter, SATV contacted Screenvision--Ace's United States distribution partner--to assert that exhibition of The Lost Concert would violate rights owned by SATV and Apple, and to demand that no exhibition of the film occur. See Am. Compl. ¶ ¶ 76, 80. In response, Screenvision requested from Ace written confirmation of Ace's right to use the Songs in the film. Id. ¶ 81. Due to Ace's inability to provide such a written license, Screenvision cancelled the premiere. Id. ¶ 83. On May 16, 2012, Mr. Hunt, on behalf of the Producers, and SATV entered a consent order enjoining Ace from distributing The Lost Concert in the United States " pursuant to Ace's agreement with [Screenvision] or otherwise howsoever." Am. Compl., Ex. F. On June 11, 2012, SATV and its United ...

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