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The licensed distribution
of Russian DVDs without a subtitle "shut off" did not infringe a separate copyright
license to distribute Russian-language-only DVDs, according to a recent
decision from the Eastern District of New York.
In Russian Entm't Wholesale, Inc. v.
Close-Up Int'l, Inc., 2011 U.S. Dist. LEXIS 23419 (E.D.N.Y. Mar.
3, 2011) [enhanced version available to lexis.com subscribers], the plaintiff, Close-Up, which owned a license
to distribute Russian films in a Russian-language-only format, sued defendants,
collectively referred to as the Ruscico defendants. The defendants owned a
license from the same licensor to distribute the same films - but with
Plaintiff based its infringement claim on the defendants'
failure to include a mechanism that prevented viewers from turning off
subtitles. In addressing the claim, the court stated:
The issue is simple to state
but difficult to resolve. ... The problem is that neither the licensor nor the
two licensees, when they granted and obtained their respective rights,
considered an obvious fact - a viewer can turn off the subtitles unless special
protection is built into the films to prevent that.
The court held that the plaintiff could only sue for
infringement of the limited rights for which it was granted exclusivity,
namely, the Russian-language-only rights. Because defendants' DVDs were all
multilingual versions of the films, not Russian-language-only, plaintiff could
not sue for infringement of its limited exclusive rights. The court noted that
the mere fact that defendants' DVDs might compete with plaintiff's DVDs for
some portion of the market did not necessarily mean that defendants infringed
plaintiff's rights. The court went on to hold that:
The evidence presented at
trial proves that Mosfilm and Lenfilm elected to grant a "Russian language
only" right to one licensee, and a separate "multilingual" right
to another. The rights-holders did not consider sales of the multilingual DVDs
manufactured by the Ruscico defendants to violate the "Russian language
only" license .... Instead, they considered the multilingual DVDs to be a
distinct line of products, geared towards the separate non-Russian-speaking
market. Whereas Russian speakers would be willing to purchase Russian-only DVD
copies of the films, non-Russian speakers would pay a premium to purchase DVD
copies that contain foreign language subtitles and/or dubbing. In this way, the
non-Russian-speaking market would subsidize the Ruscico defendants for the
expense of having to added foreign-language subtitles and dubbing to the films.
Because Mosfilm and Lenfilm
chose to split up Russian-language-only DVD rights and multilingual DVD rights
between two different licensees, plaintiff's rights are limited to the
Russian-language-only rights .... And because plaintiff may only sue for
infringement of the limited rights that it possesses, plaintiff is unable to
satisfy the second element of a copyright infringement claim, namely, that the
defendant copied the constituent elements of the protected work. Plaintiff has
failed to put forth any evidence that defendants ever produced or distributed
works that infringed plaintiff's limited rights in Russian-language-only DVDs
of the Subject Works. Instead, the evidence shows that all of the DVDs produced
and distributed by defendants were multilingual DVDs, which Mosfilm and Lenfilm
viewed as being distinct from the Russian-language-only DVDs .... Plaintiff thus
has failed to make out a claim for copyright infringement against any of the
In so holding, I recognize
that the case presents a "chicken and egg" problem. That is, from Close-Up's perspective, defendants were indeed
distributing Russian-language-only DVDs because if a viewer turned off the
subtitles, the product would be the functional equivalent of a
Russian-language-only DVD. But to determine the proper perspective - whether
the chicken or the egg came first - the proper framework is to analyze the
parties' licensing agreements and determine if they thought, as Close-Up
asserts now, that the products were the same. ... they did not, and the
contractual language defines the proper scope of the licenses.
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