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Subafilms, Ltd. v. Mgm-Pathe Communs. Co. - 24 F.3d 1088 (9th Cir. 1994)

Rule:

Because there can be no liability under the United States copyright laws for authorizing an act that itself could not constitute infringement of rights secured by those laws, and that wholly extraterritorial acts of infringement are not cognizable under the Copyright Act, 17 U.S.C.S. §§ 101 et seq., Peter Starr Prod. Co. v. Twin Continental Films, Inc., 783 F.2d 1440 (9th Cir. 1986), is overruled insofar as it held that allegations of an authorization within the United States of infringing acts that take place entirely abroad state a claim for infringement under the Act.

Facts:

In 1966, the musical group The Beatles, through Subafilms, Ltd., entered into a joint venture with the Hearst Corporation to produce the animated motion picture entitled "Yellow Submarine" (Submarine). Over the next year, Hearst, acting on behalf of the joint venture (Producer), negotiated an agreement with United Artists Corporation (UA) to distribute and finance the film. In the early 1980s, with the advent of the home video market, UA entered into several licensing agreements to distribute a number of its films on videocassette. Subsequently, in 1987, UA's successor company, MGM/UA Communications Co. (MGM/UA), over the Producer's objections, authorized its subsidiary MGM/UA Home Video, Inc. to distribute Submarine for the domestic home video market, and, pursuant to an earlier licensing agreement, notified Warner Bros., Inc. that Submarine had been cleared for international videocassette distribution. Warner, through its wholly owned subsidiary, Warner Home Video, Inc., in turn entered into agreements with third parties for distribution of Submarine on videocassette around the world. In 1988, Plaintiffs Subafilms and Hearst brought suit against defendants MGM/UA, Warner, and their respective subsidiaries, contending that the videocassette distribution ofSubmarine, both foreign and domestic, constituted copyright infringement and a breach of the 1967 agreements. The trial court held that the defendants committed copyright violations. This was affirmed by the United States Court of Appeals for the Ninth Circuit. A petition for a rehearing en banc of the judgment was granted.

Issue:

Did the defendants’ act of authorizing its subsidiary to distribute the Picture constitute copyright infringement?

Answer:

No.

Conclusion:

The en banc court vacated the prior decision in part and remanded, holding where authorization of alleged infringement activity took place in the United States for extraterritorial acts not cognizable as copyright violations, authorization alone could not constitute infringement. Defendants' authorization was therefore not actionable.

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