USDC C.D. California, June 8, 2009

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  • Court holds that an accounting of profits between co-owners of a copyright is not a federal question arising under the Copyright Act and remands breach of contract action back to state court

Plaintiff Don Johnson Productions (DJP) entered into an agreement (the “term agreement”) with defendant Rysher Entertainment to produce the television series Nash Bridges. Under the agreement, DJP was to receive a fifty-percent ownership interest in the series copyright if CBS agreed to purchase 66 episodes of Nash Bridges, making the series eligible for syndication. Rysher produced, and CBS purchased, 122 episodes of Nash Bridges, and the show aired on CBS from 1996 through 2001.

Plaintiff filed an action against defendants for breach of contract, conversion, unjust enrichment and an accounting of profits in state court in Los Angeles. DJP alleged that defendants profited from the syndication of Nash Bridges since 1999, and that, as co-owner of the copyright in Nash Bridges, it is owed 50% of defendants’ profit from exploitation of the series. DJP further asserted that, in addition to its rights as copyright co-owner, it is contractually entitled to fifty percent of Rysher’s “gross” in the series, as that term is defined in the term agreement.

Defendants removed the case to federal court, arguing that an accounting for profits between co-owners of a copyright arises under the Copyright Act. Plaintiff sought to remove the case back to state court on the grounds that a cause of action for an accounting is based on the parties’ contract and is thus a state law question.

The Copyright Act does not provide for an accounting between co-owners of a copyright, so defendants argued that a claim for an accounting is based on federal common law doctrines of unjust enrichment. The court disagreed, citing to Ninth Circuit and First Circuit decisions in which those courts explicitly held that a claim for an accounting derives from state law, not federal common law. See Oddo v. Ries, 743 F.2d 630 (9th Cir. 1984) and Cambridge Literary Properties, Ltd. v. W. Goebel Porzellanfabrik G.m.b.H. & Co. KG, 510 F.3d 77 (1st Cir. 2007).

The court also held that plaintiff’s claims for unjust enrichment and conversion are not preempted by the Copyright Act because the rights plaintiff was asserting are not equivalent to the rights afforded by the Copyright Act. According to the court, because defendants are co-owners with plaintiff of a copyright in the series, their actions cannot constitute copyright infringement. Therefore, plaintiff is not attempting to vindicate the right to prevent infringement; rather, plaintiff’s unjust enrichment and conversion claims are based on defendants’ violation of plaintiff’s state law rights as a co-owner.

Finally, the court denied plaintiff’s request for attorney’s fees, noting that defendants’ effort to keep the law suit in federal court was not frivolous and was based, in part, on plaintiff’s complaint which referenced the Copyright Act when stating a claim for an accounting between co-owners of a copyright.