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Ninth Circuit: Copyright owner's ambiguous reservation of rights clarified with extrinsic evidence

December 08, 2008
Post by Blog Staff

In a recent decision, the Ninth Circuit reversed a district court's grant of summary judgment that a copyright holder did not have standing to sue for copyright, trademark, unfair competition, and related declaratory judgment claims. The case involved the film Gone in 60 Seconds, produced and directed in 1974 by H.B. "Toby" Halicki, and remade in 2000. The key issue was the construction of a 1995 Agreement that provided an option to remake the movie, and assigned certain of Halicki's rights to Hollywood Pictures (a division of the Walt Disney Company and producer of the 2000 film), and more specifically what rights were reserved to Halicki's wife (who obtained Halicki's rights after his death). Based on the district court's construction of the agreement, the Plaintiffs did not have standing because they assigned all relevant rights in the Agreement, and specifically the rights to the remake of the famed Ford Mustang "Eleanor." The Ninth Circuit reversed, holding the agreement between the parties lacked explicit details about what rights the plaintiff might have in a derivative work – namely a remake of Eleanor. However, the court found that the agreement was "reasonably susceptible to the interpretation" that the plaintiff had retained rights to the remake of Eleanor. When combined with other extrinsic evidence not considered by the district court, it was clear to the court that plaintiff owned the rights to remake Eleanor, and therefore reversed the district court's holding of no standing to bring the copyright claim.The court also highlighted several errors by the district court regarding trademark standing. First, the district court held the plaintiff did not have standing to claim infringement of the "Eleanor" mark because she did not own a registration in the mark. This was the wrong legal standard, because a plaintiff may also have standing to claim infringement if they are the owner of an unregistered mark. The district court also held that the plaintiff did not have standing to sue on the "Gone in 60 Seconds" mark because her registrations were for toy cars and baseball caps, while the alleged infringement was for use of the mark on actual cars. The Ninth Circuit noted the district court confused the test for infringement with the test for standing: to establish standing under the Lanham Act, a plaintiff must only demonstrate that they are the owner of a mark for any class of products. Because the plaintiff owned a registration for the Gone in 60 Seconds mark (even for different goods), she had standing under the Lanham Act to bring an infringement claim against the defendant.More on Halicki Films, LLC v. Sanderson Sales & Mktg. after the jump.

The plaintiff, Denice Halicki, is the widow of the original "Gone in 60 Seconds" ("GSS") star, H.B. "Toby" Halicki. Toby Halicki directed, produced, acted in and marketed the movie. Halicki also registered a copyright for the original GSS. The 1974 version of GSS featured a yellow 1971 Fastback Ford Mustang, customized to appear as a Mach 1 Fastback Mustang, named Eleanor. Toby Halicki died on-set while filming a sequel to the original GSS. Denice Halicki obtained ownership of the 1971 Flashback Mustang used to portray Eleanor and all rights, title and interest, including copyrights, of the film owned by her late husband. Subsequently, she marketed the GSS brand and the Eleanor name and likeness for a line of toy cars. In May 2004, Halicki received a registration for the mark "Gone in 60 Seconds" for baseball caps.The famed Eleanor of the original GSS:Original EleanorIn 1995, Halicki sold "all sequel, remake and allied, ancillary and subsidiary rights therein of every nature [in the Original GSS] …" to Hollywood Pictures for the purpose of making a remake of the original movie. However, the agreement reserved to Halicki certain rights to manufacture, sell and distribute merchandise utilizing the car known as "Eleanor" from the original movie. In 2000, Halicki assigned to Original Gone in 60 Seconds, LLC the exclusive right to copy, distribute, exhibit, market, advertise and otherwise exploit all distribution rights of Halicki to the Original GSS.The 2000 "Gone in 60 Seconds" starred Nicolas Cage and again featured a car named Eleanor. The Remake Eleanor was customized to appear as a 1967 Shelby GT-500 by Carroll Shelby International Inc. Carroll Shelby subsequently applied for registration of the trademark "Eleanor" for automobiles, structural parts of automobiles, and model cars.The Remake Eleanor looks like this:Remake EleanorOn September 10, 2002, Carroll Shelby entered into a license agreement with Unique Motorcars authorizing the use of the trademarks "Shelby GT-500" and "Eleanor" in connection with the manufacture and sale of vehicles and merchandise relating to any 1960s Shelby automobiles. Unique Motorcars thereafter began to produce, manufacture and sell vehicles resembling Remake Eleanor.Halicki filed a complaint against Carroll Shelby and Unique Motorcars for creating unauthorized replicas of Eleanor. The district court granted summary judgment in favor of the defendants, finding that Halicki lacked standing to sue because she had assigned her rights to the remake Eleanor to Hollywood Pictures. Halicki filed a motion seeking reconsideration, arguing the district court had failed to consider extrinsic evidence supporting her interpretation of the agreement, specifically declarations of Halicki, two of her attorneys, and an "Acknowledgement and Agreement" signed by Halicki and Hollywood Pictures stating it was the intent of the original Agreement that Halicki would retain the rights to Remake Eleanor. The district court denied this motion without making mention of additional declarations and exhibits supporting Halicki's motion.The Ninth Circuit reversed. The court explained the agreement between Halicki and Hollywood Pictures was reasonably susceptible to the interpretation that Halicki had reserved her rights to the remake Eleanor, but did not require this reading, making resort to extrinsic evidence appropriate. The court focused on Paragraph 5(b) of the 1995 agreement, which reserved to Halicki the "right to manufacture, sell and distribute merchandise utilizing the car known as 'Eleanor' from the Original [film]." The court reasoned that the use of "from" indicated that "Eleanor" in a sequel or remake was still "Eleanor from the Original." The court compared other provisions of the contract addressing Halicki's merchandising rights for the original Eleanor and determined that the contested provision would be superfluous unless it was intended to reserve her rights to produce merchandise related to the remake Eleanor.The extrinsic evidence (submitted with the motion for reconsideration) established a more definitive construction of Paragraph 5(b). Declarations from Halicki, two of her attorneys, and an Acknowledgement and Agreement with Hollywood Pictures "unequivocally" demonstrated to the court that the contract reserved Halicki the rights to a remake of Eleanor as well as the original Eleanor. Given this reservation, the court held Halicki had standing to assert a copyright infringement claim. The court, however, remanded the question of whether the Eleanor "character" was entitled to copyright protection in the first instance.The court also highlighted several missteps by the district court regarding trademark standing. First, the district court held that Halicki did not have standing to claim infringement of the "Eleanor" mark because she was not a registered owner of the mark. This was fatally incomplete, according to the court, as the district court failed to consider whether Halicki had acquired ownership interest in the mark through use. The court stated "ownership of an unregistered trademark, like ownership of a registered mark, is sufficient to establish standing under the Lanham Act." The court instructed the district court on remand to consider whether Halicki established prior use.Second, the district court also held that the plaintiff did not have standing to sue on the "Gone in 60 Seconds" mark because her registration was for toy cars and baseball caps but the infringement was for use of the mark on actual cars. The Ninth Circuit noted this conclusion confused the analysis of trademark infringement with the analysis of trademark standing. To establish standing, a plaintiff need only demonstrate that she is the owner of a mark for any class, even one that does not compete directly with the defendant's products. Whether the products are sufficiently related to goods sold by the plaintiff is a question that goes to the merits of the case. Because Halicki owned a registration for "Gone in 60 Seconds," she had standing under the Lanham Act to bring an infringement claim against the defendant. To read the full decision in Halicki Films, LLC v. Sanderson Sales & Mktg., click here.


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