New York Court Rejects Paramount’s Preemption Argument in “The Godfather” Copyright Case

New York Court Rejects Paramount’s Preemption Argument in “The Godfather” Copyright Case

The Southern District of New York recently refused to dismiss a breach of contract counterclaim asserted by the Estate of Mario Puzo against Paramount Pictures. Paramount Pictures Corp. v. Puzo, 2012 U.S. Dist. LEXIS 139827 (S.D.N.Y. Sept. 26, 2012) [enhanced version available to subscribers]. The counterclaim is part of Paramount's copyright infringement lawsuit, which was filed after the Estate's publication of The Family Corleone, a prequel to The Godfather.

In 1969, Mario Puzo granted Paramount "any and all copyrights ... [in The Godfather] and all rights now known or hereafter accruing therein and thereto, forever and throughout the world ...." The parties, however, struck language that would have granted Paramount the right to "publish said work and/or any versions or adaptations thereof, or any part or parts thereof, and to vend copies thereof." The latter language is central to the dispute.

The New York court granted Paramount's motion to dismiss counterclaims for cancellation, rescission, and tortious interference. However, Paramount also moved to dismiss the Estate's breach of contract claim on the grounds of copyright preemption.

The Estate asserted that the obligation Paramount attempted to avoid, refused to perform, and actually failed to perform was its obligation, arising out of the implied covenant of good faith and fair dealing, not to interfere with the book publishing rights reserved in Puzo.  Because Paramount did not move to dismiss the Estate's breach of contract claim for any reason other than preemption, the New York court took no position on whether or not the Estate's theory of breach was viable.

On the question of preemption, the New York court determined that the contract claim was not preempted. The second prong of the preemption test ("general scope requirement") looks to determine if "the claim seeks to vindicate legal or equitable rights that are equivalent to one of the bundle of exclusive rights already protected by copyright law." The parties deeply contested whether the general scope requirement was satisfied.

The New York court cited Forest Park Pictures v. Universal TV Network, Inc., 683 F.3d 424 (2d Cir. N.Y. 2012) [enhanced version available to subscribers], in which the Second Circuit denied preemption because the breach of contract claim had three qualitative differences with the copyright claim: (1) it involved a right not provided for by the Copyright Act (i.e., receipt of payment for the use of a work); (2) it required proof of elements beyond use or copying (i.e., mutual assent and valid consideration); and (3) it involved a right held only against the network and not a right held against the world. The New York court determined that each of the three qualitative differences identified in Forest Park were present.

Accepting the Estate's construction of the 1969 Agreement, the contract did not simply require Paramount to honor the Estate's exclusive rights under the Copyright Act. Rather, it required Paramount to comply with a separate contractual obligation (i.e., not to engage in conduct violative of the implied covenant of good faith and fair dealing). It was the alleged violation of the latter obligation that formed the basis of the Estate's breach of contract claim. Consequently, the claim was not preempted. 


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