Ace Arts, LLC v. Sony/ATV Music Publishing, LLC
2014 U.S. Dist. LEXIS 136947
| S.D.N.Y. | 2014Background
- In 1964 the Beatles’ Washington, D.C. concert was recorded on a two-inch quad tape; eight songs at issue had U.S. copyright registrations filed by Sony/ATV (SATV). Producers (WPMC/Iambic) later used the Tape to create The Beatles: The Lost Concert; Ace Arts obtained U.S. distribution rights.
- Producers negotiated a synchronization license with SATV in 2010; Ace alleges SATV disclosed negotiations to Apple and then granted Apple an exclusive synchronization license, asserting Apple would distribute Beatles material in the U.S.
- SATV and a UK affiliate sued the Producers in the U.K. (UK Action) seeking to enjoin exhibition; communications from SATV to Ace’s U.S. distributor Screenvision led to cancellation of a planned U.S. premiere and a consent order restraining Ace’s U.S. distribution.
- Ace filed this suit in the Southern District of New York seeking declaratory relief (no infringement, fair use, public domain), and asserting Sherman Act §1, tortious interference (contract and prospective relations), state unfair competition, and NY GBL §349 claims.
- Defendants moved to dismiss or stay under international comity (deference to UK Action) and moved to dismiss under Rule 12(b)(6). The court denied abstention and dismissed most claims, but allowed the declaratory judgment claim to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether U.S. court should dismiss/stay for deference to UK Action (international comity) | UK case governs related disputes; this case should defer | Parallel foreign proceeding warrants dismissal/stay | Denied — no exceptional circumstances; proceedings not sufficiently parallel and no strong efficiency justification to surrender jurisdiction |
| Declaratory judgment (rights to exploit film in U.S.; fair use/public domain) | Declaratory relief needed to settle uncertainty and permit U.S. distribution | Apple: plaintiff fails to plead facts to support declaratory relief | Granted — court will hear declaratory judgment claim as it can clarify legal relations and relieve uncertainty |
| Sherman Act §1 — Per se horizontal conspiracy | SATV and Apple are competitors; their agreement to block distribution is a horizontal, per se unlawful restraint | Relationship is vertical (exclusive synchronization license to Apple), so per se treatment inappropriate | Dismissed as per se — pleaded facts show a vertical supplier-licensee relationship requiring rule-of-reason analysis |
| Sherman Act §1 — Rule of reason (antitrust injury/market harm) | Blocking distribution reduced output in relevant Beatles-historical audiovisual market and injured competition | Plaintiff fails to plead market-wide harm or relevant market; injury is to a single competitor | Dismissed — plaintiff alleges only harm to itself (no market-wide antitrust injury); claim fails at pleading stage |
| Noerr-Pennington / sham-litigation immunity | N/A (plaintiff argues litigation was a sham) | Defendants argue communications and UK suit are privileged petitioning activity | Court did not decide — unnecessary because §1 claims dismissed on other grounds |
| Tortious interference with contract (Screenvision distribution agreement) | Defendants knowingly communicated false infringement claims to Screenvision, causing breach/cancellation and damages | No actual breach pleaded; communications were legitimate assertions of rights; not wrongful means | Dismissed — complaint fails to plead an actual breach and fails to plead use of wrongful means or bad-faith litigation |
| Tortious interference with prospective economic relations | Defendants intentionally disrupted prospective distributor/exhibitor relations through false claims | Same: lawful enforcement and no bad faith; inadequate allegations of malice or improper means | Dismissed — plaintiff fails to plead that defendants acted solely out of malice or used improper means |
| State common-law unfair competition (palming off/misappropriation) | Defendants’ conduct amounted to unfair competition harming Ace and consumers | Allegations derive from asserted copyright enforcement; do not fit palming-off or misappropriation theories | Dismissed — plaintiff does not plead either recognized New York theory |
| NY General Business Law §349 (consumer-oriented deceptive acts) | Defendants’ false statements deprived consumers of access to the film; statute applies | Communications targeted a business distributor (Screenvision), not consumers; transaction was case-specific and not consumer-oriented | Dismissed — plaintiff fails to allege consumer-directed deceptive acts required by §349 |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard requires plausible factual allegations)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
- Roth v. Jennings, 489 F.3d 499 (2d Cir. 2007) (judicially noticeable documents may be considered for their existence, not truth)
- Royal & Sun Alliance Ins. Co. of Canada v. Century Int'l Arms, Inc., 466 F.3d 88 (2d Cir. 2006) (factors for international comity/abstention)
- Landis v. N. Am. Co., 299 U.S. 248 (1936) (court's power to stay proceedings)
- Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007) (distinction between per se and rule-of-reason antitrust analysis)
- Elecs. Commc'ns Corp. v. Toshiba Am. Consumer Prods., Inc., 129 F.3d 240 (2d Cir. 1997) (exclusive distribution is a vertical restraint evaluated under rule of reason)
- Arkansas Carpenters Health & Welfare Fund v. Bayer AG, 604 F.3d 98 (2d Cir. 2010) (plaintiff must plead market-wide adverse effect to state §1 claim)
- Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20 (1995) (GBL §349 requires consumer-oriented deceptive acts)