Seven Arts Entertainment Ltd v Content Media Corporation Plc and Others
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Sales,Mr Justice Sales |
| Judgment Date | 18 March 2013 |
| Neutral Citation | [2013] EWHC 588 (Ch) |
| Docket Number | Case No: HC11C03046 |
| Court | Chancery Division |
| Date | 18 March 2013 |
[2013] EWHC 588 (Ch)
The Honourable Mr Justice Sales
Case No: HC11C03046
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Guy Tritton & Thomas St Quintin (instructed by Hamlins LLP) for the Claimant
Guy Hollingworth (instructed by Olswang LLP) for the First Defendant
Hearing dates: 4-6/2/13
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This is an application for summary judgment in relation to copyright claims in respect of five motion picture films, An American Rhapsody, The Believer, Who is Cletis Tout?, Onegin and Rules of Engagement ("the Films"). The Claimant submits that it is entitled to judgment against the First Defendant ("Content") in England by reason of the success of companies associated with it in obtaining a judgment against other parties in proceedings in Canada. The successful claimants in the Canadian proceedings were Cinevisions and Stander Corporation Limited ("the Canadian plaintiffs"). They have assigned the benefit of rights in respect of the Films to the Claimant, and the Claimant says that as a result it is entitled to the benefit of the judgment obtained in Canada.
The Claimant is part of a group of companies ("the Hoffman companies") controlled by Peter Hoffman ("Mr Hoffman"), the Chief Executive Officer of the US parent company of the Claimant. The Canadian plaintiffs are part of the same group. In about 1999 certain of the Hoffman companies started to co-operate with a group of companies controlled by a Mr Firestone, primarily based in Canada ("the Canwest companies"), in the production of motion picture films. The Hoffman companies and the Canwest companies entered into agreements for financing the making of films, including the Films in issue on this application, and governing their distribution ("the Film Agreements"). The Film Agreements were made in the USA and are governed by relevant US law.
The Canwest companies maintained that under the terms of the Film Agreements, the copyright in the Films was granted to them. However, the Hoffman companies maintain that on proper interpretation of the contractual arrangements, the grant of copyright to the Canwest companies was conditional upon further agreement being reached about the distribution of revenue from the Films under the terms of a further agreement being negotiated between the parties, known as the Master Structure Agreement ("the MSA"). The Films were made while negotiations in relation to the MSA continued. Subsequently, the rights of relevant Hoffman companies in relation to the Films have been assigned by a chain of assignments via the Canadian plaintiffs to the Claimant.
The Hoffman companies and the Canwest companies fell out and litigation resulted. In 2002 the Hoffman companies commenced proceedings in California against the Canwest companies, alleging breach of the MSA and claiming a percentage interest in the films covered by the MSA, including the Films at issue in the present proceedings. The Hoffman companies did not at this stage include a claim for breach of copyright in relation to the Films. In the proceedings the Canwest defendants denied that the MSA had been finalised and become binding.
The MSA included a choice of forum clause nominating Ontario, Canada as the forum. Since the US court considered that the dispute between the Hoffman companies and the Canwest companies about the MSA could best be litigated in Canada, the court dismissed the proceedings brought by the Hoffman companies.
In 2003 the Canadian plaintiffs in the group of Hoffman companies commenced proceedings in the courts of Ontario ("the Ontario action"), again alleging breach of the MSA and again claiming a percentage interest in, amongst others, the Films. Once again, the Hoffman companies did not at that stage include a claim for breach of copyright in relation to the Films. In the Ontario action, the Canwest companies again adopted the position that the MSA had not been finalised and was not a binding agreement.
On 8 October 2004, the court in Ontario ordered the Canadian plaintiffs to provide security for costs in the sum of CAN$100,000. They failed to provide the security required and the Ontario action was stayed.
On 20 April 2005, the Hoffman companies commenced a second set of proceedings in California against the Canwest companies, this time alleging infringement of US copyright by the Canwest companies in relation to, amongst others, the Films ("the 2005 US action").
Shortly afterwards, the relevant Canwest companies assigned their rights in the Films to Content, an English company, pursuant to a written agreement dated 28 April 2005 ("the Canwest Assignment"). According to the evidence filed on this application for Content, this assignment was an arm's length transaction for value with Content paying some US$29 million for the rights assigned. According to the evidence of Mr Pasternak, the General Counsel for the Canwest companies at the relevant time, the Canwest companies only sold their rights in those films in relation to which they believed they had good title to copyright. The assignment was therefore limited to the rights of the Canwest companies in relation to certain films, including the rights in the five Films in issue on the application before me. The Hoffman companies quickly came to know about the assignment.
The Canwest Assignment included a provision whereby the Canwest companies agreed to indemnify Content in relation to any claims brought by the Hoffman companies in relation to the Films. The indemnity was included in recognition of the proceedings on foot between the Hoffman companies and the Canwest companies.
By an amendment dated 17 June 2005 of the Hoffman companies' claim in the 2005 US action, Content was joined as a defendant in that action. On 11 July 2005, the Hoffman companies issued an application for injunctive relief in relation to the Films, including against Content.
By a ruling dated 15 August 2005, the US court refused the application for an injunction on the grounds that there was a significant factual dispute in relation to the core issue in the proceedings, namely the ownership of the copyright in the Films.
The next day, 16 August, pursuant to an application made by the Canwest companies, the US court granted a stay of the 2005 US action on the basis that the real underlying dispute between the parties was a contractual dispute in relation to the Film Agreements and the MSA which ought to be determined by legal proceedings in Ontario. Content did not join in making this application and, according to its evidence, it was not made at Content's request.
After the stay was granted, the Hoffman companies applied back to the US court to lift it. At this stage, Content joined with the Canwest companies in opposing the lifting of the stay. Mr Tritton, who appeared for the Claimant before me, sought to attach significance to this, as an indication that Content itself at that stage wished issues of copyright entitlement in relation to the Films to be determined in proceedings in Ontario.
Mr Hollingworth, for Content, submitted that Content's joining with the Canwest companies for the purposes of opposing the lifting of the stay did not involve any express or implied representation on Content's part that the dispute between the parties should be referred to the courts in Ontario to be resolved in a way that bound everyone with interests in respect of the Films. In my view, Mr Hollingworth is correct about this. As he submitted, Content was simply concerned to resist any legal proceedings against it. At this stage, of course, the Ontario action was subject to a stay because the Canadian plaintiffs had not provided security for costs.
The Hoffman companies then applied in the Ontario action to have that action dismissed, in order to clear the way for them to pursue their copyright claims in the US proceedings. However, that application was dismissed by a ruling dated 11 September 2006 by Marrocco J. The learned judge followed the lead given by the US court, and its view that the dispute between the Hoffman companies and the Canwest companies and Content should be determined by the courts in Ontario.
It became clear to the US court that the proceedings in Ontario were not being prosecuted to a conclusion by the Hoffman companies, so by order dated 29 February 2008 it dismissed the 2005 US action "with prejudice", by reason of the Hoffman companies' failure to prosecute their claims. The Hoffman companies appealed against that order, but in due course, on 20 May 2009, the US Court of Appeals for the Ninth Circuit dismissed the appeal.
Meanwhile, since the Hoffman companies could not pursue their claims in the US courts, in May 2008 they eventually posted security for costs in the Ontario action and that action became active again.
On 3 December 2008, the Canadian plaintiffs amended their pleadings in the Ontario action to include, in the alternative to their claims based on the MSA, a claim for declaratory relief against the Canwest companies that they owned the US copyright in relation to the Films and for breach of copyright. Content was not a defendant in the Ontario action and the Canadian plaintiffs made no application to join it as a defendant.
In November 2009, Fireworks Entertainment Inc (Canada) ("FEI"), one of the Canwest companies which had assigned the rights in the Films...
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