TEAM ANGRY FILMWORKS, INC. v. LOUISE A. GEER et al.
Filing
71
MEMORANDUM OPINION re 65 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM MOTION to Dismiss for Lack of Jurisdiction MOTION for Joinder as to 64 Amended Complaint /Defendant's Motion to Dismiss Plaintiff's Second Amended Complaint Pursuant to FRCP Rules 12(b)(1) and 12(b)(6), and for Joinder of Necessary or Dismissal for Lack of Indispensable Parties filed by LOUISE A. GEER. Signed by Chief Judge Joy Flowers Conti on 10/14/16. (jp)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
TEAM ANGRY FILMWORKS, INC.,
a California company,
Plaintiff,
v.
LOUISE A. GEER, as Trustee of the
Dille Family Trust,
Defendant.
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Civ. No. 15-1381
OPINION
CONTI, Chief District Judge
I.
INTRODUCTION
In its second amended complaint, California film-production company Team
Angry Filmworks, Inc. (“plaintiff”) calls upon the court to declare that Philip Francis
Nowlan’s 1928 science-fiction novella Armageddon–2419 A.D. (“Armageddon”) and
character “Buck Rogers” entered the public domain, pursuant to the Declaratory
Judgment Act (the “DJA”), 28 U.S.C. § 2201(a). As trustee of the Dille Family Trust (the
“Trust”), defendant Louise A. Geer (“defendant”) filed a motion:
• to dismiss this action under Federal Rule of Civil Procedure 12(b)(1) for
failure to present a justiciable controversy under the DJA and Article III
of the Constitution; or
• in the alternative, to join necessary parties under Federal Rules of Civil
Procedure 12(b)(7) and 19. (ECF No. 64.)
1
Having been fully briefed, defendant’s motion is ripe for disposition. For the
reasons explained in this opinion, plaintiff fails to allege facts sufficient to establish a
justiciable controversy under the DJA and Article III, particularly with respect to the
immediacy of plaintiff’s allegedly infringing activity. Accordingly, the court will grant
defendant’s Rule 12(b)(1) motion to dismiss plaintiff’s complaint without prejudice.
II.
PROCEDURAL HISTORY
On August 8, 2015, plaintiff filed a complaint against defendant in the United
States District Court for the Central District of California. (ECF No. 1.) On September
15, 2015, defendant filed a motion in the California district court to dismiss the action for
want of personal jurisdiction and Article III standing. (ECF No. 15.) On October 23,
2015, the California district court found venue proper in the Western District of
Pennsylvania under 28 U.S.C. § 1391(b)(1) and transferred the action to this court under
28 U.S.C. §§ 1404(a) and 1406(a). (ECF No. 27 at 2.)
On November 6, 2015, defendant renewed her Rule 12(b)(1) motion to dismiss
plaintiff’s complaint in this court. (ECF Nos. 43, 44.) On November 25, 2015, plaintiff
filed a brief in opposition to defendant’s renewed Rule 12(b)(1) motion to dismiss. (ECF
No. 47.) On January 7, 2016, the court held a hearing on defendant’s renewed Rule
12(b)(1) motion to dismiss. (Text Minute Entry, 1/7/2016.) Because plaintiff’s complaint
failed to allege a justiciable controversy under the DJA and Article III, the court granted
defendant’s Rule 12(b)(1) motion to dismiss without prejudice. (ECF No. 53.)
2
On January 29, 2016, plaintiff filed an amended complaint. (ECF No. 54.) On
February 19, 2016, defendant filed a motion to dismiss plaintiff’s amended complaint,
with accompanying exhibits, under Rules 12(b)(1) and 12(b)(7) and a motion for joinder
of necessary parties or dismissal for lack of indispensable parties under Rules 12(b)(7)
and 19. (ECF Nos. 55, 56, 57.) On March 11, 2016, plaintiff filed a response in
opposition to defendant’s motion and objections to defendant’s exhibits. (ECF Nos. 58,
59.) On March 21, 2016 this court issued an opinion and order granting defendant’s Rule
12(b)(1) motion to dismiss without prejudice. Team Angry Filmworks, Inc. v. Geer, Civ.
Action No. 15-1381, 2016 WL 1086370 (W.D. Pa. Mar. 21, 2016).
On May 20, 2016, plaintiff filed a second amended complaint. (ECF No. 64.) On
June 2, 2016, defendant filed a motion to dismiss plaintiff’s second amended complaint,
with accompanying exhibits, under Rules 12(b)(1) and 12(b)(7) and a motion for joinder
of necessary parties or dismissal for lack of indispensable parties under Rules 12(b)(7)
and 19. (ECF Nos. 65, 66, 67.) On June 22, 2016, plaintiff filed a response in opposition
to defendant’s motion and objections to defendant’s exhibits. (ECF Nos. 68, 69.) On
October 5, 2016 the court heard arguments on the motion. Having been fully briefed and
argued, defendant’s Rule 12(b)(1) motion to dismiss is ripe for disposition.
III.
ALLEGATIONS IN PLAINTIFF’S SECOND AMENDED COMPLAINT
As alleged in plaintiff’s second amended complaint, plaintiff is a California
corporation with its principal place of business in Los Angeles, California. (ECF No. 64 ¶
3.) Plaintiff’s president is Don Murphy (“Murphy”), a motion picture producer whose
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production credits include “Natural Born Killers,” “The League of Extraordinary
Gentlemen,” “From Hell,” and the “Transformers” franchise. (Id.) “Motion pictures on
which [Murphy] has acted as a producer have generated in excess of [$4 billion] in box
office revenues.” (Id.)
Defendant resides in New Castle, Pennsylvania. (Id. ¶ 4.) Defendant is trustee of
the Trust. (Id.) Defendant is “actively engaged in offering to license and licensing . . .
rights in and to the character of ‘Buck Rogers,’” who “first appeared” in Armageddon in
1928 as “Anthony Rogers.” (Id.)
Philip Francis Nowlan (“Nowlan”) was a science-fiction writer “best known for
creating the character of ‘Buck Rogers.’” (Id. ¶ 7.) Buck Rogers “first appeared” in
Armageddon as “‘Anthony Rogers’” in the magazine “‘Amazing Stories’ (Volume 3, No.
5, August 1928).” 1 (Id.) Nowlan died in 1940. (Id.) Plaintiff alleges that under copyright
law, Armageddon “entered the public domain in the United States in or about 1956 and
[worldwide] in or about 2010.” (Id. ¶¶ 8, 12.)
Plaintiff is “currently developing a motion picture project based upon”
Armageddon “including the character of ‘Anthony Rogers’ aka ‘Buck Rogers’ first
appearing therein.” (Id. ¶ 9.) “In connection with its development of the motion picture
project,” plaintiff is “involved in the creation of a screenplay adaptation” of Armageddon,
“which necessarily includes utilization and portrayal of the character ‘Buck Rogers.’”
(Id.) Plaintiff’s “development of the motion picture project is well underway,” and
1
Defendant correctly points out that only “Anthony Rogers” appears in Armageddon.
The story does not mention “Buck Rogers.” See (ECF No. 54-1.)
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plaintiff “has taken significant, concrete steps toward producing and releasing its film.”
(Id. ¶ 10.)
Plaintiff has “retained the services” and has a “fully executed writer agreement”
with Flint Dille and Ed Neumeier to write the screenplay for the film based on an already
completed written treatment thereof, which plaintiff has submitted for registration with
the U.S. Copyright Office. (Id. ¶ 10.) “One of the screenwriters” of plaintiff’s adaptation
“happens to be” Robert Nichols Flint Dille (“Dille”), “one of two” beneficiaries of the
Trust. (Id. ¶ 9.) Plaintiff has “retained the services of” and has a “fully executed producer
agreement” with Susan Montford and Don Murphy as producers on the project. Plaintiff
has “retained the services of” and has a “fully executed visual effects agreement” with
Edward Irastorza as visual effects supervisor to start pre-visualization on the project. (Id.
¶ 10.)
Plaintiff has “preliminarily obtained firm interest from three major motion picture
studios, Warner Brothers, Sony, and Legendary Pictures to fund the production of a
major motion picture based on the project” with a budget “equal to or in excess of [$100
million], none of which can presently be pursued until the declaratory relief sought herein
can be obtained.” (Id.) Plaintiff has attached “correspondence from Warner Bros.’ Senior
Vice President Jon Berg [and] Sony’s then-President of Production Michael Deluca . . .
expressing firm interest in the motion picture project.” (Id.)
Plaintiff has attached
correspondence from Legendary Pictures’ Executive Vice President Cale Boyer
expressing firm interest in the motion picture project “but declining to move forward with
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the project due to the litigation threats and claims of ownership by The Dille Family
Trust.” (Id.)
Plaintiff “publicly announced its development of the motion picture project based
upon” Armageddon at “Comic-Con in San Diego, California in July 2015.” (Id. ¶ 11.)
According to the second amended complaint, “[s]ince [plaintiff’s] public announcement
regarding its motion picture project and appearance of a Deadline Hollywood article to
the same effect in June 2015” Dille received a voicemail in California from the Trust’s
counsel “threatening to sue” plaintiff, Murphy, and “its affiliates in connection with the
[Armageddon] project in ‘every court in the land.’” (Id. ¶ 15.) The Trust’s counsel
“informed [Dille] that he was [at] Comic-Con but would be leaving the convention early
‘to sue them.’” (Id. ¶ 14–15.)
“At or about such time,” the Trust’s counsel and its “licensing representative” Jane
MacGregor (“MacGregor”) called plaintiff in California “emphatically instructing
[plaintiff] and its affiliates to cease and desist from developing the motion picture project
based upon [Armageddon]” and “making similar threats to sue if such demands were not
complied with.” (Id. ¶ 16.) MacGregor is the “licensing agent” for the Trust “responsible
for negotiating all film and television deals on its behalf, including deals for character
licensing. . . .” (Id.) During this call, the Trust’s counsel asserted that the Trust “had not
given [plaintiff] or anyone affiliated with it permission to license or use any elements
under the ‘Buck Rogers Universe,’ including [Dille], and that “the copyright in
[Armageddon] was owned by [the Trust].” (Id. ¶ 17.) The Trust’s counsel “concluded this
call by indicating that unless the demand to ‘cease and desist’ was complied with,
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immediate legal action seeking injunctive relief under copyright and trademark would be
initiated against [plaintiff], its president [Murphy], and their affiliates, including [Dille].”
(Id.)
“On or about July 28, 2015,” Dille’s counsel received a letter in California signed
by defendant on behalf of the Trust. (Id. ¶ 19.) In the letter, defendant asserted that the
Trust “had not given permission or license for the use of ‘Buck Rogers’ or any of the
elements of the Buck Rogers Universe to [Dille] or [plaintiff].” (Id.) “The letter also
accused [Dille] of acting to damage the interests of the [Trust] and the interests of his cobeneficiaries, asserting that he may be liable to the Trust and other beneficiaries for any
damages caused, and threatening to proceed with legal action if a satisfactory response
was not received within ten days.” (Id.) “[L]etters were also sent” by the Trust’s counsel
to Murphy “in August 2015 reiterating the above cease and desist demands and
threatening imminent litigation against [plaintiff] and its affiliates if such demands were
not complied with.” (Id. ¶ 20.)
Plaintiff alleged “[s]uch efforts” by defendant “to intentionally interfere with the
lawful motion picture development by [p]laintiff have rendered much further
development, financing, and production thereof unreasonably difficult if not unfeasible at
this time under such cloud of title.” (Id. ¶ 22.) “[A]s a practical matter[,] there is
obviously little if any commercial interest by third parties such as Warner Brothers, Sony,
or Legendary Pictures in financing, acquiring, licensing[,] or distributing a motion picture
(project) embroiled in a chain of title dispute.” (Id. ¶ 23.) “By virtue of the cloud that now
hangs over this motion picture project, exploitation proves virtually impossible, as
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virtually any commercial distribution of any motion picture requires securing of errors
and omissions insurance,” and “[d]efendant and [her] counsel are well aware that insurers
may well refuse to issue a policy in the first place under these circumstances.” (Id.)
“Alternatively, that [sic] they would only do so subject to such exclusions that
distributors would find unacceptable.” (Id.)
Plaintiff further alleges “[t]here is a generally understood principal in the motion
picture industry that as long as a claimant asserts that a public domain work is still under
copyright, even if lacking a factual basis or a good faith belief in making such assertion,
no reputable producer can realistically proceed with actual full scale production.” (Id. ¶
24.) Plaintiff attaches letters to that effect from “former Fox CEO and chairman William
M. Mechanic, and successful producer and founder and emeritus president of the
Producers Guild of America Mark Gordon. (Id. ¶ 24–26.)
Defendant “asserts exclusive ownership rights under [c]opyright to the character
of ‘Anthony Rogers’ aka ‘Buck Rogers’ originally created by [Nowlan] in
[Armageddon].” (Id. ¶ 27.) “[A]lthough plaintiff lacks personal knowledge,” plaintiff
“assumes and does not deny that [defendant] is the sole owner of [Nowlan’s] rights in
[Armageddon], but only to the extent that any such rights are valid and existing.” (Id.)
Defendant “asserts sole and exclusive ownership under [c]opyright as to all enumerated
rights under 17 U.S.C. [§] 106 regarding the use of the ‘Anthony Rogers’ aka ‘Buck
Rogers’ [c]haracter originally created by [Nowlan] in [Armageddon].” (Id. ¶ 28.) “Such
assertion of exclusive ownership over a work that has entered the public domain is
wrongful and improper as a work in the public domain cannot be infringed.” (Id.)
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Plaintiff claims that “[a]n actual controversy of a justiciable nature currently exists
. . . as to whether the development of a motion picture project based upon [Armageddon]
including the character of ‘Anthony Rogers’ aka ‘Buck Rogers’ first appearing therein,
infringes the rights asserted by [defendant].” (Id. ¶ 30.) “Specifically, in connection with
[plaintiff’s] development of the motion picture project, the creation of a screenplay
adaptation of [Armageddon] necessarily includes utilization and portrayal of the character
‘Buck Rogers.’” (Id.) Plaintiff’s “development of the motion picture project is well
underway and it has taken significant, concrete steps toward producing and releasing its
film.” (Id. ¶ 31.)
Plaintiff seeks a declaratory judgment from the court that:
• “copyright having expired in the United States and the world as to
[Armageddon], . . . any member of the public, including [p]laintiff,
has the right in the United States to copy the expression embodied in
this public domain work”;
• “copyright having expired in the United States and the world as to
[Armageddon], . . . and as to the ‘Anthony Rogers’ aka ‘Buck
Rogers’ character originating therein, any member of the public,
including [p]laintiff, has the right in the United States to copy the
expression embodied in this public domain work, and to create and
exploit derivative works incorporating any and all of the ‘Anthony
Rogers’ aka ‘Buck Rogers’ character without infringing any right of
[defendant] under copyright”; and
• copyright having expired in the United States as to [Armageddon], . .
. any member of the public, including [p]laintiff, has the right in the
United States to copy the expression embodied in this public domain
work, and to create and exploit derivative works incorporating any
and all of the ‘Anthony Rogers’ aka ‘Buck Rogers’ character
without infringing any right of [defendant] under the Lanham Act.”
(Id. at 20–21.) In addition, plaintiff requests that
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[defendant] be enjoined from directly or indirectly asserting rights under
[c]opyright in and to [Armageddon] and/or the “Anthony Rogers” aka
“Buck Rogers” story elements originating therein, or assisting in any such
activity, and from interfering with the exploitation of the “Anthony Rogers”
aka “Buck Rogers” character and story elements by [p]laintiff.
(Id. at 21.) Plaintiff seeks costs and attorney’s fees under 17 U.S.C. § 505. (Id. at 22.)
IV.
DEFENDANT’S MOTION TO DISMISS
A.
RULE 12(b)(1) STANDARD
A motion to dismiss challenging the “actual controversy” requirement under the
DJA and Article III is properly brought under Rule 12(b)(1) because “‘standing is a
jurisdictional matter.’” Constitution Party of Pa. v. Aichele, 757 F.3d 347, 357 (3d Cir.
2014) (quoting Ballentine, 486 F.3d at 810). In deciding a Rule 12(b)(1) motion to
dismiss, the court must first determine whether the motion presents a “‘facial’ attack” or
a “‘factual’ attack” on the claim in issue because that distinction determines “how the
pleading must be reviewed.” Id. at 357–58 (citing In re Schering Plough Corp. Intron,
678 F.3d 235, 243 (3d Cir. 2012)); Mortensen v. First Fed. Sav. & Loan Ass’n, 549 F.2d
884, 891 (3d Cir. 1977).
A facial attack “is an argument that considers a claim on its face and asserts that it
is insufficient to invoke the [subject-matter] jurisdiction of the court” because “some . . .
jurisdictional defect,” e.g., failure to present a justiciable controversy, “is present.”
Constitution Party of Pa., 757 F.3d at 358. In reviewing a facial attack, the court “‘must
only consider the allegations of the complaint and documents referenced therein and
attached thereto, in the light most favorable to the plaintiff.’” Id. (quoting In re Schering
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Plough, 678 F.3d at 243). In other words, a facial attack calls for the court to apply the
“same standard of review it would use in considering a motion to dismiss under Rule
12(b)(6), i.e., construing the alleged facts in favor of the nonmoving party.” Id. If the
defendant challenges jurisdiction in its Rule 12(b)(1) motion before answering the
complaint or “otherwise present[ing] competing facts,” the Rule 12(b)(1) motion is, “by
definition, a facial attack.” Id. (citing Mortensen, 549 F.2d at 892 n.17 (“A factual
jurisdictional proceeding cannot occur until [the] plaintiff’s allegations have been
controverted.”)); Askew v. Church of the Lord Jesus Christ, 684 F.3d 413, 417 (3d Cir.
2012) (“As the defendant had not answered [the complaint] and the parties had not
engaged in discovery, the [Rule 12(b)(1)] motion to dismiss was facial.”)).
A factual attack, on the other hand, is “an argument that there is no jurisdiction
because the facts of the case—and [in a factual attack] the [court] may look beyond the
pleadings to ascertain the facts—do not support the asserted jurisdiction.” Constitution
Party of Pa., 757 F.3d at 358. “So, for example, while diversity of citizenship might have
been adequately pleaded by the plaintiff, the defendant can submit proof that, in fact,
diversity is lacking.” Id. (citing Mortensen, 549 F.2d at 891 (“[T]he trial court is free to
weigh the evidence[,] . . . and the existence of disputed material facts will not preclude
the trial court from evaluating for itself the merits of jurisdictional claims.”)) (emphasis
added). In a factual attack, the plaintiff bears the burden of proof that jurisdiction in fact
exists, and the court need not presume the truth of the plaintiff’s allegations. Mortensen,
549 F.2d at 891.
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“‘In sum, a facial attack ‘contests the sufficiency of the pleadings,’ [In re Schering
Plough], 678 F.3d at 243, ‘whereas a factual attack concerns the actual failure of a
[plaintiff’s] claims to comport [factually] with the jurisdictional prerequisites.’”
Constitution Party of Pa., 757 F.3d at 358 (quoting CNA v. United States, 535 F.3d 132,
139 (3d Cir. 2008)).
In this case, defendant did not answer plaintiff’s complaint or otherwise present
competing facts (through, for example, affidavits, depositions, or other evidence) to
challenge the court’s subject-matter jurisdiction over plaintiff’s claims. Instead,
defendant argues plaintiff’s amended complaint fails to allege facts sufficient to support a
justiciable controversy under the DJA and Article III. The exhibits accompanying
defendant’s motion to dismiss relate solely to her arguments under Rules 12(b)(7) and 19,
i.e., that the court must join necessary parties in this action. See (ECF No. 67.) Those
contentions do not relate to the court’s subject-matter jurisdiction over plaintiff’s claims
in this case. Consequently, defendant’s Rule 12(b)(1) motion to dismiss presents a facial
challenge to jurisdiction. Cf. Constitution Party of Pa., 757 F.3d at 358 (“A factual attack
requires a factual dispute, and there is none here.” (emphasis added)).
Because defendant challenges jurisdiction on its face in this case, the court draws
the factual background from plaintiff’s second amended complaint. (ECF No. 64.) The
court accepts plaintiff’s well-pleaded factual allegations as true and construes them in
plaintiff’s favor. Ballentine v. United States, 486 F.3d 806, 810 (3d Cir. 2007).
B. BURDEN OF PROOF
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Plaintiff claims that the burden of proving jurisdiction in this matter lies with the
defendant. Accordingly, plaintiff contends that it does not have the burden of proving that
an actual case or controversy exists in the instant action, but rather that defendant has the
burden of proving that a case or controversy does not exist. Plaintiff bases this claim on
the United States Supreme Court’s decision in Medtronic, Inc. v. Mirowski Family
Ventures, LLC, 134 S. Ct. 843 (2014). Plaintiff claims that Medtronic shifted the burden
of proving jurisdiction to defendants in declaratory judgment cases where the owner of
the disputed intellectual property is “nominally the defendant.” (ECF No. 68 at 7–8.)
Plaintiff argues that this matter involves such a “nominal defendant,” and that under
Medtronic, the burden of proof with respect to jurisdiction, therefore, rests with
defendant.
The Court’s decision in Medtronic, however, speaks only to the burden of proving
infringement, not to the burden of proving jurisdiction. Medtronic, 134 S. Ct. at 846
(“We hold that, when a licensee seeks a declaratory judgment against a patentee to
establish that there is no infringement, the burden of proving infringement remains with
the patentee.”). Contrary to plaintiff’s claim, it is well established that the “initial burden
of establishing the trial court's jurisdiction rests on the party invoking that jurisdiction.”
Cardinal Chem. Co. v. Morton Int'l, Inc., 508 U.S. 83, 98 (1993); McNutt v. Gen. Motors
Acceptance Corp. of Indiana, 298 U.S. 178, 189 (1936) (holding that the party seeking
exercise of jurisdiction in federal district court must allege facts essential to show
jurisdiction and carry the burden of showing he is properly in federal court). The United
States Supreme Court has placed this jurisdictional burden on plaintiffs seeking
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declaratory judgment. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 140 (2007)
(“[i]n the trial court . . . a party seeking a declaratory judgment has the burden of
establishing the existence of an actual case or controversy”) (quoting Cardinal Chem.,
508 U.S. at 95).
Courts within the Third Circuit have consistently found that the party seeking
declaratory judgment has the burden of establishing the existence of an actual case or
controversy sufficient to support jurisdiction. See e.g., Frontline Techs., Inc. v. CRS, Inc.,
833 F. Supp. 2d 480, 484 (E.D. Pa. 2011) (“the party seeking declaratory relief, shoulders
the burden of establishing the existence of an actual case or controversy sufficient to
support jurisdiction.”); Dey, L.P. v. Sepracor, Inc., 595 F. Supp. 2d 355, 359 (D. Del.
2009), aff'd sub nom. Dey Pharma, LP v. Sunovion Pharm. Inc., 677 F.3d 1158 (Fed. Cir.
2012) (“Plaintiffs bear the burden of proving the existence of an actual controversy by a
preponderance of the evidence with regard to their declaratory judgment complaint.”);
Dodge-Regupol, Inc. v. RB Rubber Prod., Inc., 585 F. Supp. 2d 645, 650 (M.D. Pa. 2008)
(quoting Benitec Australia, Ltd. v. Nucleonics, Inc., 495 F.3d 1340, 1343 (Fed. Cir.2007))
(“[a] party seeking to base jurisdiction on the Declaratory Judgment Act bears the burden
of proving that the facts alleged, ‘under all the circumstances, show that there is a
substantial controversy, between the parties having adverse legal interests, of sufficient
immediacy and reality to warrant the issuance of a declaratory judgment.’”); Glaxo Grp.
Ltd. v. Dr. Reddy's Labs., Ltd., 325 F. Supp. 2d 502, 506 (D.N.J. 2004) (quoting Sierra
Applied Sciences, Inc. v. Advanced Energy Indus., 363 F.3d 1361, 1373
(Fed.Cir.2004) (“The burden rests on the party requesting declaratory judgment ‘to
14
establish that jurisdiction over its declaratory judgment action existed at, and has
continued since, the time the [claim] was filed.’”).
Subsequent to the Supreme Court’s decision in Medtronic, federal courts have
continued to place the burden of proving jurisdiction in declaratory judgment actions on
the party seeking the declaratory judgment. See Asia Vital Components Co. v. Asetek
Danmark A/S, Civ. Action No. 2015-1597, 2016 WL 4698960, at *2 (Fed. Cir. Sept. 8,
2016) (“The burden is on the party claiming declaratory judgment jurisdiction to establish
that such jurisdiction existed at the time the claim for declaratory relief was filed.”);
Clarus Therapeutics, Inc. v. Lipocine Inc., Civ. Action No. 15-1004, 2016 WL 3519888,
at *3 (D. Del. June 27, 2016) (“The burden is on the party claiming declaratory judgment
jurisdiction to establish jurisdiction existed when the action was filed and has since
continued.”); U.S. Water Servs., Inc. v. ChemTreat, Inc., 794 F.3d 966 (8th Cir. 2015)
(finding that although a declaratory judgment plaintiff has the burden of demonstrating
that an actual case or controversy exists, that burden does not extend to showing that the
declaratory judgment defendant holds meritorious positions on the issues in controversy);
Intel Corp. v. Future Link Sys., LLC, Civ. Action No. 14-377, 2015 WL 649294, at *4 (D.
Del. Feb. 12, 2015) (“The burden is on the party asserting declaratory judgment
jurisdiction (here, Plaintiff) to establish that an Article III case or controversy existed at
the time that the claim for declaratory relief was filed and that it has continued since.”).
Plaintiff’s argument that under Medtronic defendant now has the burden not only
of proving that plaintiff has infringed on defendant’s rights, but also of establishing that
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no actual case or controversy exists in the instant action is without merit. The burden of
establishing jurisdiction lies with plaintiff.
C. DISCUSSION
In relevant part, the DJA provides that
[i]n a case of actual controversy within its jurisdiction, . . . any court of the
United States . . . may declare the rights and other legal relations of any
interested party seeking such declaration, whether or not further relief is or
could be sought.
28 U.S.C. § 2201(a). “[T]he phrase ‘case of actual controversy’ in the [DJA] refers to the
type of ‘Cases’ and ‘Controversies’ that are justiciable under Article III.” MedImmune,
Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (citing Aetna Life Ins. Co. of Hartford
v. Haworth, 300 U.S. 227, 240 (1937)).
Before the United States Supreme Court decided MedImmune, courts applied a
two-part test to determine whether a justiciable controversy existed for a declaration of
noninfringement of intellectual property rights. See Sony Elecs., Inc. v. Guardian Media
Techs., Ltd., 497 F.3d 1271, 1283 (Fed. Cir. 2007) (citing pre-MedImmune decisions). 2
Under this test, courts sought to determine whether:
(1) the declaratory-judgment plaintiff actually produced or was prepared
to produce an allegedly infringing product; and
2
The United States Court of Appeals for the Federal Circuit applied this test to patent
disputes. But in the intellectual property realm, the “same principles that control patent
cases” apply “if a declaratory judgment is sought about a copyright” under the DJA. 10B
CHARLES WRIGHT et al., FEDERAL PRACTICE AND PROCEDURE § 2761 (3d ed. 2015)
(citing decisions); see, e.g., Young v. Vannerson, 612 F. Supp. 2d 829, 839 (S.D. Tex.
2009) (“The [United States Court of Appeals for the] Fifth Circuit adopted this [two-part
test] and extended it to all types of intellectual property disputes. . . .” (citing Texas v. W.
Publ’g Co., 882 F.2d 171, 175 (5th Cir. 1989)).
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(2) the declaratory-judgment defendant’s conduct created in the
declaratory-judgment plaintiff a “reasonable apprehension” that the
defendant would file suit if the alleged infringing activity continued.
Id.
In MedImmune, the United States Supreme Court rejected the “reasonable
apprehension of suit” requirement of this test. 549 U.S. at 132 n.11 (“The reasonableapprehension-of-suit test . . . conflicts with our decisions. . . .”); SanDisk Corp. v.
STMicroelectronics, Inc., 480 F.3d 1372, 1380 (Fed. Cir. 2007) (“MedImmune represents
a rejection of [the] reasonable apprehension of suit test.”); Boston Sci. Corp. v. Johnson
& Johnson Inc., 532 F. Supp. 2d 648, 652 n.7 (D. Del. 2008) (acknowledging
MedImmune’s rejection of the “reasonable apprehension of suit” test).
In MedImmune, the Court reaffirmed the totality-of-the-circumstances approach
and held that a controversy is justiciable under Article III and the DJA if it is “‘definite
and concrete, touching the legal relations of parties having adverse legal interests.’” 549
U.S. at 127 (quoting Aetna Life Ins. Co., 300 U.S. at 240–41). It must also be “‘real and
substantial[,]’ . . . admit[ting] of specific relief through a decree of a conclusive
character.” Id. (quoting Aetna Life Ins. Co., 300 U.S. at 240–41). In sum, the “‘question
in each case’” after MedImmune is “‘whether the facts alleged, under all the
circumstances, show there is a substantial controversy, between parties having adverse
legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory
judgment.’” Id. (quoting Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)
(emphasis added)). The court cannot issue “‘an opinion advising what the law would be
upon a hypothetical state of facts.’” Id. (quoting Aetna Life Ins. Co., 300 U.S. at 240–41).
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After MedImmune, whether there has been potentially infringing activity or
meaningful preparation to conduct potentially infringing activity “‘remains an important
element in the totality of circumstances [that] must be considered in determining whether
a declaratory judgment is appropriate’” in an intellectual property dispute. See Prasco,
L.L.C. v. Medicis Pharm. Corp., 537 F.3d 1329, 1336 (Fed. Cir. 2008) (quoting Cat Tech
L.L.C. v. TubeMaster, Inc., 528 F.3d 871, 881 (Fed. Cir. 2008)). If a declaratoryjudgment plaintiff has not taken “significant, concrete steps to conduct infringing
activity,” the dispute is neither “‘immediate’ nor ‘real’ and the requirements for
justiciability have not been met.” Cat Tech L.L.C., 528 F.3d at 880 (quoting Lang v. Pac.
Marine & Supply Co., 895 F.2d 761, 765 (Fed. Cir. 1990)). Put another way, in order to
demonstrate “a ‘case or controversy’ in a declaratory relief action, ‘the plaintiff must
have actually produced the accused article or have engaged in preparations for production
such that ‘but for a finding that the product infringes or for extraordinary and unforeseen
contingencies, the plaintiff would and could begin production immediately.” Sobini Films
v. Tri-Star Pictures Inc., Civ. Action No. 01-6615, 2001 WL 1824039, at *4 (C.D. Cal.
Nov. 21, 2001) (quoting Heerema Marine Contractors v Santa Fe Int’l Corp., 582
F.Supp. 445, 448–49 (C.D.Cal. 1984)) (emphasis original).
In the instant matter, the infringing activity is plaintiff’s anticipated production
and release of a film derived from Armageddon and depicting the character “Buck
Rogers.” In preparation to produce and release this film, plaintiff has “retained the
services of” and entered into “fully executed agreement[s]” with producers Murphy and
Montford, screenwriters Dille and Neumaier, and visual effects supervisor Irastorza.
18
(ECF No. 54 ¶ 10.) A “screenplay adaptation” is “currently underway” and a treatment of
the film has been completed, “submitted for registration with the U.S. Copyright Office,”
and attached herein. (Id. ¶ 11.) “Pre-visualization” on the film has “start[ed].” (Id. ¶ 10)
Plaintiff has “preliminar[y,] . . . firm interest” in the project from Warner Brothers, Sony,
and Legendary Pictures. (Id.) Plaintiff “publicly announced its development of the
motion picture project based upon” Armageddon at “Comic-Con in San Diego, California
in July 2015.” (Id. ¶ 11.)
When accepted as true and viewed favorably, the facts alleged in the second
amended complaint show plaintiff has taken “significant, concrete steps” toward
producing and releasing its film. Cat Tech L.L.C., 528 F.3d at 880. A dispute requires
both “‘immediacy’” and “‘reality’” to warrant the issuance of a declaratory judgment.
MedImmune, 549 U.S. at 127 (quoting Md. Cas. Co., 312 U.S. at 273). At this time,
plaintiff has made the requisite showing of reality, but has not yet established the
immediacy of this dispute.
1.
IMMEDIACY
The second amended complaint fails to allege facts establishing the immediacy of
this dispute, as required under Article III. Generally, the “greater the length of time
before potentially infringing activity is expected to occur, ‘the more likely the case lacks
the requisite immediacy’” under Article III. Cat Tech L.L.C., 528 F.3d at 881 (quoting
Sierra Applied Scis., Inc. v. Advanced Energy Indus., Inc., 363 F.3d 1361, 1379 (Fed. Cir.
2004)); see Sobini Films, 2001 WL 1824039, at *7 (citing Lang, 895 F.2d at 761).
19
The second amended complaint does not contain specific, or even approximate,
allegations about when plaintiff could begin film production, let alone release the
allegedly infringing film, assuming a declaratory judgment was to be entered in
plaintiff’s favor. Plaintiff asserts in its Memorandum of Law in Opposition to the Motion
to Dismiss that “Plaintiff is immediately prepared to physically shoot this film, but [for]
the fact . . . that financing can never be secured as a proximate cause of Defendant’s
repeated threats.” (ECF No. 68 at 2.) Plaintiff, however, makes no such allegations with
respect to the timing of production within the second amended complaint or the attached
exhibits. See Pension Ben. Guar. Corp. v. White Consol. Indus., Inc. 98 F.2d 1192, 1196
(3d Cir. 1993) (“To decide a motion to dismiss, courts generally consider only the
allegations contained in the complaint, exhibits attached to the complaint and matters of
public record.”).
A dispute “lacks immediacy” where there are no allegations in the complaint with
respect to “when, if ever,” the product will be “used in a manner that could potentially
infringe” the intellectual property rights of another. See Matthews Int’l Corp. v. Biosafe
Eng’g, L.L.C., 695 F.3d 1322, 1328 (Fed. Cir. 2012). Plaintiff’s nebulous allegations that
“development of the [film] is well underway” and that “it has taken significant, concrete
steps toward producing and releasing its film” are conclusory and insufficient to show the
immediacy required by Article III. Cf. id. at 1329 (“[P]otential future infringement . . . [is
not] sufficiently immediate. . . .”). Plaintiff has provided no specific or new allegations
with respect to the timing of their proposed film. There is no way to determine from the
face of plaintiff’s second amended complaint when, if ever, plaintiff would begin
20
production on their proposed film as plaintiff has not “indicated the estimated time frame
for completing the potentially infringing product.” Sobini Films, 2001 WL 1824039, at
*5.
While the court is aware that plaintiff cannot secure financing without a
declaratory judgment in its favor, plaintiff alleges no schedule or timeline for the
production of the film even in the event that this court does issue the judgment.
Consequently, the court cannot determine from the face of the second amended complaint
that but for the instant action plaintiff would immediately be able to begin production.
See Id. at *4.
The court is especially concerned about the immediacy of this production, because
at the present time plaintiff does not appear to have incurred any real obligations or
expenses with respect to the production of their proposed film. While plaintiff has “fully
executed agreements” with screenwriters, producers, and a visual effects supervisor,
(ECF No. 54 ¶ 10.), these agreements appear to be contingent on some later instruction
from plaintiff. There is no indication from the complaint or the attached exhibits as to
when, if ever, the obligations laid out in these agreements will be triggered by plaintiff.
Additionally, the second amended complaint makes no allegations about the expenses
plaintiff has already incurred in preparation for this film.
While pre-production
investment is not dispositive, plaintiff’s development costs can serve as an indication that
plaintiff has engaged in concrete steps sufficient to demonstrate immediacy. Sobini
Films, 2001 WL 1824039, at *4 (“vagueness surrounding how much of [the development
cost] was borne by Plaintiff supports [the] conclusion that Plaintiff is prematurely seeking
21
declaratory relief at this preliminary stage and that Plaintiff is impermissibly requesting
an advisory opinion.”).
Because the second amended complaint alleges neither when film production
could begin nor when the infringing film could be released, the court cannot conclude
from the face of the complaint that plaintiff is “immediately prepared” to engage in
copyright-infringing activity, as required under the DJA and Article III. Sobini Films,
2001 WL 1824039, at *5; cf. Matthews Int’l Corp., 695 F.3d at 1329 (concluding that
without “specific and concrete evidence” about when infringement will occur, “any
judicial determination” regarding infringement “would be premature”); Sierra, 363 F.3d
at 1379 (no immediacy where a prototype of an allegedly infringing product would not
operate until more than one year after the complaint was filed); Telectronics Pacing Sys.,
Inc. v. Ventritex, Inc., 982 F.2d 1520, 1527 (Fed. Cir. 1992) (no immediacy where
clinical trials of a potentially infringing product began shortly after the complaint was
filed and the product was “years away” from being approved by the Food and Drug
Administration); Lang, 895 F.2d at 764 (no immediacy where the allegedly infringing
product “would not be finished until at least [nine] months after the complaint was
filed”).
While the court recognizes that full production cannot begin on this project
without financing and that plaintiff cannot acquire financing while this action remains
outstanding, the second amended complaint makes no allegations regarding the time
frame for the start of production or release of plaintiff’s film even in the event that
plaintiff is successful in the instant action. Without factual allegations about the timing of
22
plaintiff’s infringing activity, the court cannot find that the second amended complaint
establishes the immediacy of this dispute.
2.
REALITY
Conversely, plaintiff’s second amended complaint alleges sufficient facts to
establish the reality of this dispute. A dispute is not sufficiently real if it involves
“contingent future events that may not occur as anticipated, or indeed may not occur at
all.” Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568, 580–81 (1985). The
dispute must not be “nebulous or contingent” but must have taken on a “fixed and final
shape” so the court can “see what legal issues it is deciding, what effect its decision will
have on the adversaries, and some useful purpose to be achieved in deciding them.” Pub.
Serv. Comm’n of Utah v. Wycoff Co., 344 U.S. 237, 244 (1952). The purpose of the “case
or controversy” requirement is to ensure that the court’s judgment is not purely advisory.
Sierra, 363 F.3d at 1379. “The greater the variability of the subject of a declaratoryjudgment suit, particularly as to its potentially infringing features, the greater the chance
that the court’s judgment will be purely advisory, detached from the eventual, actual
content of that subject.” Id.
The second amended complaint contains sufficient allegations showing that the
proposed film has taken on a fixed shape, such that a decision by the court on the
underlying merits of plaintiff’s claim would not be purely advisory. In particular, plaintiff
makes several allegations in the second amended complaint, not included in their earlier
complaints. These include that (1) plaintiff has a “fully executed producer agreement
with Susan Montford and Don Murphy” (ECF No. 64 ¶ 10.); (2) plaintiff has a “fully
23
executed writer agreement with Flint Dille . . . [and a] fully executed writer agreement
with Ed Neumeier” (Id.); (3) “[plaintiff] has retained the services of Edward Irastorza as
visual effects supervisor to start pre-visualization on the project in California” and has a
“fully executed visual effects agreement with Edward Irastorza” (Id.); (4) “[t]he
screenplay adaptation [is] currently underway based on an already completed treatment
thereof which Plaintiff has submitted for registration with the U.S. Copyright Office”
(Id.); and (5) “[p]laintiff has preliminarily obtained firm interest from several major
motion picture studios . . . none of which can presently be pursued until the declaratory
relief sought herein can be obtained” and “[t]here is a generally understood principal in
the motion picture industry that as long as a claimant asserts that a public domain work is
still under copyright, even if lacking a factual basis or a good faith belief in making such
assertion, no reputable producer can realistically proceed with actual full scale production
of a motion picture based thereon.” (Id. ¶ 23–24.) The second amended complaint also
attaches multiple exhibits supporting these allegations, as well as correspondence from
two respected movie producers attesting that as a matter of course production companies
do not finance films when there are disputes with respect to the underlying rights. (Id. ¶
25–26.)
Through these newly pleaded facts the second amended complaint establishes and
provides documentary support demonstrating that, at this time, plaintiff’s infringing
activity is neither nebulous, nor based solely on contingent future events. Most notably,
unlike plaintiff’s earlier complaints, the second amended complaint includes a treatment
for plaintiff’s film, which plaintiff submitted to the U.S. Copyright Office for registration.
24
(ECF No. 54 ¶ 10.) In registering this treatment for a copyright plaintiff demonstrates that
the film is sufficiently concrete, such that the court can make a determination about
whether the final product will, in fact, use infringing features of Armageddon and the
character of “Buck Rogers.” The creation and subsequent registration of this treatment
indicate that the potentially infringing material has taken on a sufficiently “fixed and final
shape,” which in turn can allow the court to “see what legal issues it is deciding, what
effect its decision will have on the adversaries, and some useful purpose to be achieved in
deciding them.” Pub. Serv. Comm’n of Utah, 344 U.S. at 244.
Based on the court’s reading of both the Armageddon novella and plaintiff’s
treatment for their film, this court is persuaded that the eventual screenplay, even if it
differs in certain aspects from the proffered treatment, will encompass “infringing
features,” including characters, story lines, settings, and thematic elements. This finding
supports plaintiff’s argument that this dispute demonstrates the reality necessary to show
an actual “case or controversy” exists under the Declaratory Judgment Act.
Plaintiff’s complaint is further bolstered by the inclusion of new allegations
pertaining to the financing of the proposed film. The second amended complaint contains
sufficient allegations for the court to conclude that, but for the litigation, plaintiff would
be able to secure the necessary financial backing to produce this movie. Sobini Films,
2001 WL 1824039, at *4 (in order to demonstrate “a ‘case or controversy’ in a
declaratory relief action, ‘the plaintiff must have actually produced the accused article or
have engaged in preparations for production such that ‘but for a finding that the product
infringes or for extraordinary and unforeseen contingencies, the plaintiff would and
25
could begin production immediately.” (quoting Heerema, 582 F.Supp. at 448–49)
(emphasis original). Plaintiff has shown that Team Angry Filmworks, Inc. has a history
of securing large scale funding for similar action films, (ECF No. 64 ¶ 3.); that at least
three motion picture studios have expressed interest in financing this film, but are
unwilling to provide financing while this action is pending, (id. ¶ 10.); and that as a
matter of course motion picture studios do not finance projects that are engaged in
copyrights disputes. (Id. ¶ 24–26.)
These allegations, along with plaintiff’s new allegations that it entered into fully
executed agreements with screenwriters, producers, and a visual effects supervisor (Id. ¶
10.), support the conclusion that plaintiff’s proposed film is “substantially fixed,
particularly with respect to its potentially-infringing characteristics.” Sierra, 363 F.3d at
1379. The evidence strongly suggests that the final film will contain infringing features –
including the character of Buck Rogers – and that the Trustee will assert the film
infringes upon its rights. While plaintiff’s second amended complaint could have made
stronger claims with respect to the reality of this dispute – for instance by alleging that
plaintiff had a fully developed screenplay, had acquired at least conditional financing, or
had entered into agreements with a director, lead actors, or other “key talent,” Sobini
Films, 2001 WL 1824039, at *6 – this court, based upon the allegations in the second
amended complaint and the exhibits attached to it, is persuaded that the proposed film is
in a sufficiently “fixed and final shape,” to successfully place plaintiff across the
imprecise threshold of reality.
26
VI.
CONCLUSION
While plaintiff’s second amended complaint successfully establishes the reality of
this dispute, it fails to establish the requisite immediacy needed to support jurisdiction.
For this reason, the court will grant defendant’s Rule 12(b)(1) motion to dismiss for want
of Article III standing. Plaintiff’s complaint will be dismissed in its entirety without
prejudice to its amendment. Plaintiff may file an amended complaint within sixty days of
the issuance of this opinion and order.
Defendant’s request to join necessary parties under Rules 12(b)(7) and 19 and
plaintiff’s evidentiary objections to the exhibits accompanying defendant’s motion will
be denied because they are moot.
An appropriate order follows.
DATED:
October 14, 2016
/s/ JOY FLOWERS CONTI
Joy Flowers Conti
Chief United States District Judge
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