Tardy Claim Over Film Copyrights Thrown Out

(CN) - It is too late for an English film company to claim in the United States that it owns copyrights in three movies released over a decade ago, the 9th Circuit ruled Wednesday.

Seven Arts Filmed Entertainment Ltd. had claimed in a 2002 federal action in Los Angeles that it owns copyrights in "Rules of Engagement" (2002), "American Rhapsody" (2001), and "Who Is Cletis Tout?" (2001), all of which are distributed by Paramount.

The company sued CanWest and others to enforce an alleged co-ownership agreement. Taking advantage of a forum-selection clause in the parties' contract, CanWest moved the issue to Canada in 2003, where it argued that the same contract was unenforceable.

Pending the outcome of that case in Canada, the U.S. District Court put the original Los Angeles case on hold in 2005. With nothing settled as of 2008, the court dismissed for failure to prosecute.

Seven Arts finally summary judgment only two years ago on its ownership claims in the Canadian action 2011 after the named defendants in the case went bankrupt.

It then went back to Los Angeles and filed a new lawsuit against Paramount and CanWest successor Content Media Corp. Largely a mirror of the complaint from nine years earlier, the new lawsuit cited the ruling from Canada as proof of its ownership rights to the films. Seven Arts later dropped Content from the action to pursue that part of the case in the High Court of England and Wales.

The company argued in Los Angeles that Paramount should have paid royalties to Seven Arts as the true owner of the films, but had instead paid them to CanWest and later Content.

U.S. District Judge Audrey Collins dismissed the action, however, after finding that Seven Arts had filed the suit against Paramount outside the federal Copyright Act's three-year statute of limitations and dismissed.

A unanimous appeals panel affirmed on Wednesday, saying that Paramount, by choosing to pay royalties to CanWest and Content, had "plainly and expressly repudiated Seven Arts's copyright ownership by 2005 at the latest."

Yet Seven Arts didn't file its claims until some seven years later in May of 2011, the Pasadena-based appellate panel noted.

It was an issue of first impression for the circuit to determine "whether a claim for copyright infringement in which ownership is the disputed issue is time-barred if a freestanding ownership claim would be barred," according to the 16-page opinion. Both the 6th and 2nd Circuits have found that in such cases infringement claims are barred as well.

"We join our sister circuits in holding that an untimely ownership claim will bar a claim for copyright infringement where the gravamen of the dispute is ownership, at least where, as here, the parties are in a close relationship," Judge Diarmuid O'Scannlain wrote for the three-judge panel. "Because it is apparent from the complaint that Paramount clearly and expressly repudiated Seven Arts's ownership of the copyrights more than three years before Seven Arts brought suit, the district court properly dismissed."

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