Pot Luck, LLC v. Freeman, 06 cv10195 DAB, 2009 WL 693611 (S.D.N.Y. 2009)
Judge Batts issued a second copyright decision last week. Pot Luck created a film High Times’ Potluck, for which it entered into two distribution agreements with Ardustry. Pot Luck alleged that, subsequent to the release, Ardustry failed to distribute and promote the film as agreed under the licenses, and that it had yet to receive proper compensation. Ardustry, at the time of the motion, continued to distribute the Film under the licenses.
Pot Luck brought an action for, among others things, copyright infringement, and false designation & unfair competition under the Lanham Act. Ardustry moved to dismiss the copyright and trademark claims for lack of subject matter jurisdiction.
Judge Batts dismissed the copyright action finding that Pot Luck must rescind the licenses before it could recover for infringement. The Court found that the licenses “unambiguously” denied Pot Luck the right to rescind its agreement, and that similar limitations have been upheld under New York law (Cafferty v. Scotti Bros. Records, Inc., 969 F.Supp. 193, 198 (S.D.N.Y.1997)):
Both the License Agreement and the World Rights Agreement . . . explicitly limit Plaintiff’s right to rescind the licenses, stating under “Grant of Rights” that “[l]icensor hereby grants, sells, transfers, and assigns to Licensee the exclusive and irrevocable right[s]. . .
Because any claim for rescission is barred by the unambigious language of the licenses, and because Plaintiff must show a plausible claim that the licenses were rescinded in order to bring a cause of action arising under the Copyright Act, Defendants’ motion to dismiss Plaintiff’s copyright claim for lack of subject matter jurisdiction is GRANTED.
Lanham Act (trademark)
Pot Luck brought its trademark claim under Section 43(a), alleging that by distributing its film, Ardustry was likely to confuse as to the true origin of the film. Judge Batts dismissed the claim, finding that consumers weren’t confused as to “the origin” of the film, because Ardustry was indeed “the origin” of the film, as the term is used in Section 43 of the Lanham Act:
[T]he Supreme Court has read the phrase “origin of goods” as it is used in § 43 to refer only “to the producer of the tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods.” Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 37 (2003). The Court found that to “hold otherwise would be akin to finding that § 43(a) created a species of perpetual patent and copyright, which Congress may not do.” Id.
Therefore, under Dastar, “[t]he right to copy creative works, with or without attribution, is the domain of copyright not of trademark or unfair competition. The failure to credit the true author of a copyrighted work is not a false designation of origin, but a violation of copyright.”
Lanham Act (unfair competition)
Judge Batts dismissed the Lanham Act unfair competition claim finding that Section 43 does not provide a general action for unfair competition, but is instead a “category of claims consisting primarily of causes of action for false designation of origin and false advertising.”
Rebecca Tushnet provides more commentary on the trademark implications here.