Narrative Ark Entertainment LLC v. Archie Comic Publications, Inc. et al

REPLY MEMORANDUM OF LAW in Opposition ., REPLY MEMORANDUM OF LAW in Support . Document

S.D.N.Y.February 28, 2019

R1 NEIL A. BURSTEIN, ESQ. The Law Offices of Neil A. Burstein 63 Winterberry Circle, Cross River, NY 10518 914-977-3467 Nabesq1@gmail.com Attorneys for Narrative Ark Entertainment LLC and Scott D. Fulop UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK NARRATIVE ARK ENTERTAINMENT LLC Plaintiff -against_ ARCHIE COMIC PUBLICATIONS, INC. Defendant Civil Action No. 7:16-cv-06109-vb REPLY MEMORANDUM OF LAW OF PLAINITFF --------------------------------------------------------------------- ARCHIE COMIC PUBLICATIONS, INC., Counterclaim Plaintiff and Third Party Plaintiff, -against- NARRATIVE ARK ENTERTAINMENT LLC Counterclaim Defendant, SCOTT D. FULOP, Third Party Defendant. PLAINTIFF NARRATIVE ARK ENTERTAINMENT LLC AND SCOTT D. FULOP REPLY MEMORANDUM IN FURTHER SUPPORT OF ITS CROSS MOTION FOR SUMMARY JUDMENT OF THIRD PARTY COMPLAINT OF ARCHIE COMIC PUBLICATIONS, INC. AND DECLARATORY JUDGMENET CLAIM Case 7:16-cv-06109-VB-LMS Document 150 Filed 02/28/19 Page 1 of 9 R2 Plaintiff Narrative Ark Entertainment LLC (“Narrative”) and Third Party Defendant Scott D. Fulop (“Fulop”) respectfully submits this Reply Memorandum of Law in further support of its Cross Motion for Summary Judgment (Dkt. 136-11) and Memorandum of Law in Support of the Cross Motion for Summary Judgment (Dkt. 136 p. 26-33). INTRODUCTION Narrative’s Amended Complaint alleges that ACP has infringed the eleven copyright registrations owned by Narrative (the “Narrative Registrations”) (Dkt 38). Archie Comic Publications, Inc. (“ACP”) counterclaimed against Narrative seeking a declaration that the copyrights registrations of Narrative are invalid for alleged lack of ownership and a slander of title claim against Fulop. (Dkt 74). ACP has no standing to bring any of these claims. There has never been any credible evidence in this entire litigation that anyone other than Fulop and Narrative ever owned the Narrative Registered Works registered by Fulop with the Copyright Office (and subsequently assigned to Narrative). ACP’s claims it has standing to assert claims on behalf of Sega of America, Inc. (Sega). However, such claims fail as a matter of law because, as will be discussed infra, it is clear that under the applicable the provisions of the Copyright Act neither Sega nor ACP every owned, or was the beneficial owner, of the Narrative Registered Works. At all times, the only bona fide owner of these works has been Fulop and Narrative. Because ACP never obtained a written work for hire agreement from Fulop or Narrative transferring the rights to the Narrative Registered Works, ACP as a matter of law was not the exclusive or beneficial rights at the time ACP filed the Third Party Complaint and declaratory judgment claim, nor was it ever the owner at any other time. 17 U.S. C. § § 201, 501 (b). These provisions provide, in pertinent part that: (i) the copyright in a work vests initially in the author Case 7:16-cv-06109-VB-LMS Document 150 Filed 02/28/19 Page 2 of 9 R3 or the work unless the parties have expressly agreed otherwise in a written agreement signed by them and (ii) only the legal or beneficial owner of an exclusive right under copyright is entitled to institute an action concerning that particular right and only while he or she owns it. I. ACP Has No Standing to Assert Either The Declaratory Judgement Claim or the Slander of Title Claim. ACP maintained in its Memorandum of Law in Support of Motion for Summary Judgment that it had exclusive rights under the January 1, 2011 license agreement with Sega, a copy of which was attached as an exhibit to the Ferdinand Declaration. (Dkt131, Ferdinand Decl., Exhibit 23). In its Combined Reply Memorandum, ACP now admits that the January 1, 2011 license agreement did NOT give ACP any exclusive or beneficial ownership rights. (Dkt 139, footnote 4 and pp. 11-12). Attempting a new misdirection, ACP belatedly and for the first time now asserts that it had such exclusive rights under the long expired June 11, 1992 license agreement between ACP and Sega. While this is not true, even assuming arguendo that it initially had such rights, the 2011 license agreement replaced and superseded all prior agreements between ACP and Sega. (Dkt 131, Ferdinand Decl, Ex. 23, par 15.3). As now admitted by ACP, it had no exclusive or beneficial ownership rights under the 2011 license agreement. Accordingly, is has no standing to assert either the declaratory judgment claim or the slander of title claim, both of which claims require the asserting party to have the requisite ownership. Under 17 U.S. Code Section 501, only the legal or beneficial owner of an exclusive right under copyright has rights to maintain an action and only “...while he or she is the owner of it.” 17 U.S. C. § 501 (b). The June 11, 1992 Sega/ACP License Agreement Case 7:16-cv-06109-VB-LMS Document 150 Filed 02/28/19 Page 3 of 9 R4 Moreover, ACP never explains how the prior June 11, 1992 license agreement gives it any rights to the Fulop or Narrative Registered Works which works ACP never owned, and were owned by Fulop as the creator by operation of law under the Copyright Act. 17 U.S.C. § 201. As provided in this section, copyright vests initially in the author or authors of the work. While ACP claims that such rights were transferred to Sega pursuant to the license agreements, no evidence of this has ever been proffered by ACP to support this claim. ACP cannot transfer rights to Sega that it never owned. It is undisputed that Fulop created such works as a freelance creator. (SMF ¶ 12). The Copyright Act provides that the creator of the work is the copyright owner unless such rights are transferred pursuant to a written agreement. 17 U.S. C. § 204. § 204 provides, in pertinent part, that a transfer of copyright ownership is not valid unless there is a writing signed by the owner of the rights conveyed. Neither Fulop nor Narrative was a party to any of the license agreements between ACP and Sega, and a written agreement from Fulop or Narrative transferring the copyrights was never obtained. (Dkt, 136, Fulop Declaration, par 6-9). Nor has ACP or Sega ever produced such a signed agreement. Accordingly, there is no legal basis whatsoever for ACP to assert any ownership rights to property it never owned in the first place and never subsequently obtained, and thus could not be transferred under any of the license agreements between Sega and ACP. The 2011 Sega/ACP License Agreement The subsequent 2011 license agreement between ACP and Sega expressly acknowledges that the intellectual rights may not have been obtained from the freelance creators in connection with the prior license agreement between the parties and required ACP to obtain such rights from the freelance creators. (Dkt 131, Ferdinand Decl, Ex. 23, par 6.3, 6.4) Paragraph 6.4 of said license, further provides in pertinent part, that ACP was required to obtain written agreements Case 7:16-cv-06109-VB-LMS Document 150 Filed 02/28/19 Page 4 of 9 R5 from the third party contributors to the works created pursuant to the license agreements. No such agreements were ever obtained from Fulop, and the other freelance “Sonic” comic creators transferring the rights to ACP. (Dkt 136, Exhibits 1 to 5, Declarations of Fulop, Penders, Shaw, Galan and Hebert). Knowing it never secured such rights and has no valid claim, ACP nevertheless disingenuously makes the unsupported and conclusory statement that at the very least, the 1992 exclusive licensing agreement shows that ACP does indeed possess exclusive rights to the Narrative Registered Works. (Dkt139, pg 12). However, ACP’s conclusory and self-serving statements are not evidence. As a matter of law, there is no factual or testimonial evidence that ACP has had, at any time, any beneficial or ownership in the Narrative Registered Works sufficient for standing. Indeed, the Copyright Law is very clear on this point that only the owner or beneficial owner, such as an exclusive licensee, has such rights, and only during the time which it had such rights. 17 U.S.C. § 501 (B). As noted by the Court of Appeals for the Second Circuit, “the Copyright Act does not permit copyright holders to choose third parties to bring suits on their behalf.” John Wiley & Sons, Inc. v. DRK Photo, 882 F. 3d 394 (U.S. Court of Appeals, Second Circuit 2018). Thus, as a matter of law, ACP lacks any standing to assert either the slander of title claim or the declaratory judgement claim seeking to clear title on behalf of Sega, and such claims should be dismissed in their entireties. I. There Are No Factual Disputes Precluding Summary Judgement on The Narrative/Fulop Cross Summary Judgement Motion ACP next argues that there are certain factual disputes precluding summary judgement on ACP’s slander of title claim and counterclaim for declaration judgement. However, as discussed supra, ACP has no standing to assert the slander of title or declaratory judgment Case 7:16-cv-06109-VB-LMS Document 150 Filed 02/28/19 Page 5 of 9 R6 claims because it does not have, and never had, any bona fide ownership or beneficial interest under the Copyright Act. Therefore, it is not necessary for the Court to even consider any of the other alleged factual claims raised by ACP. Nevertheless, even as to the alleged factual disputes asserted by ACP, there are no bona fide issues. A. ACP Has No Standing Because It Is Not, And Has Never Been, The Beneficial Owner As discussed supra, no evidence of beneficial ownership has ever been presented by ACP. The long expired 1992 license agreement between ACP and Sega was superseded by the 2011 license agreement between Sega and ACP. ACP admits that it had no exclusive or beneficial ownership rights under this license agreement. Moreover, even under the expired 1992 license agreement, ACP has not presented any evidence whatsoever that it obtained the rights from freelance creator Fulop to own or transfer any rights under the 1992 license agreement. Accordingly, as the creator of the works, Fulop at all times remained the owner absent a written agreement transferring such rights to ACP or Sega which agreement was never obtained. B. ACP’s Slander Of Title Claims Fails As a Matter of Law Because ACP Cannot Establish That the Alleged Statement Was Made with Reckless Disregard For the Truth ACP next argues, without presenting any evidence, that the record somehow supports a finding that Fulop acted with malice and reckless disregard for the truth because he assigned his copyright registrations to Narrative. This is a ludicrous argument entitled to no weight. ACP has presented no case law or authority to support its contention that a mere assignment of copyright somehow constitutes a slanderous statement. Moreover, ACP has not presented an iota of evidence that Fulop made such assignment with reckless disregard. The copyright registrations were duly issued to Fulop after examination and approval by the U.S. Copyright Office. Fulop had every right to rely on the validity of these registrations. Even assuming arguendo that Fulop Case 7:16-cv-06109-VB-LMS Document 150 Filed 02/28/19 Page 6 of 9 R7 was wrong to rely on the issuance of the registrations by the Copyright Office, mere mistakes do not constitute reckless disregard. Mere falsity, prior disputes between the parties, and “suspicion, surmise and accusation” are insufficient to raise an inference of malice. Donofro-Ferrezza v. Nier, No. 04-CV-1162m 2005 U.S. Dist. LEXIS 21103, 2005). “Some facts must be asserted to support the claim that the state of mind existed in order to survive summary judgment” Markowitz v. Republic Nat’l Bank, 651 F. 2d 825, 828 (2d Cir. 1981. Accordingly, there is no evidence in the record which supports ACP’s claim that Fulop made any communication with reckless disregard for the truth. Indeed, Chief Operating Officer William Mooar testified as the designed corporate representative of ACP that he was not aware of any such communications. (Excerpt of transcription of Mooar Deposition, page 93) 1. Copyright Office Issuance of Registrations to Fulop. Here again ACP fails to establish the required element of reckless disregard but seeks to reverse the statutory requirement but suggesting that Fulop has to prove reliance in good faith which is not the statutory standard. Further, there is no case law or authority to support ACP’s argument that Fulop is not entitled to rely in good faith on the issuance by the Copyright Office to him of the copyright registrations. This argument makes no sense. Even assuming arguendo that Fulop is not entitled in good faith to rely on such registrations, reliance on such registrations does not, by any stretch of the imagination, constitutes reckless disregard of the truth. Indeed, such registration is evidence that the copyright applicant met the statutory and regulatory requirements for the issuance of the registrations. This alone constitutes a reliance in good faith. Further, under the Copyright Act, there is no question that Fulop owned the work he created and registered thereby negating any possible claim of reckless disregard. 17 U.S.C. § 201. Case 7:16-cv-06109-VB-LMS Document 150 Filed 02/28/19 Page 7 of 9 R8 Next ACP argues that the subsequent filings by ACP of certain copyright applications naming Sega as a copyright claimant would negate his good faith belief in the merits of his own copyrights. This argument also makes no sense because it does not negate Fulop’s good faith belief in the validity of his own copyrights. Indeed, Fulop has y filing because 2. Alleged Evidence of Prior Transfers Here again ACP raises a far stretched claim not supported by any evidence. APC argues that because Fulop transferred his interest in certain stories he created as an ACP freelancer that this transfer somehow indicates that he does not own the other stories he created covered by the Narrative Registered Works. This is a ridiculous claim not supported by any cases or authorities. The fact that Fulop transferred certain other rights not part of this litigation to another “Sonic” comic freelancer, Ken Penders, does not undermine in any way his ownership to other rights. Moreover, the record shows that none of the works comprising the Narrative Works were subject to any prior assignments. (Dkt 136, Amended Complaint, Exhibit B). Further, ACP grossly misrepresents that Fulop testified that he didn’t recall what copyrights he assigned to Penders. (Dkt 139, pg 15). This is clearly not his testimony. What Fulop did testify, when discussing the transfer of certain stories not covered by the Narrative Registrations, is that he did not recall making “any other transfers to Penders” and not, as alleged by ACP, that he did not recall what was transferred. (see Supp, Ferdinand Decl., ¶ 3, Ex. 5 at 252:17-252 53) This is a horse of an entirely different color. To wrongly conclude, as ACP does, that such testimony reflects that Fulop does not own the registrations he assigned to Narrative strains credibility. ACP has not proffered any facts supporting evidence that Fulop’s communication was not made in good faith and was, as they allege, made in reckless disregard of the truth. CONCLUSION Case 7:16-cv-06109-VB-LMS Document 150 Filed 02/28/19 Page 8 of 9 R9 For the foregoing reasons, Narrative and Fulop respectfully request that the Court grant Summary Judgment in its favor dismissing the Declaratory Judgment and Third Party Complaint of ACP in its entirety and granting such other or further relief that the Court deems just and proper. Respectfully submitted, Dated: February 28, 2019 By: ___s/ Neil A. Burstein Law offices of Neil A. Burstein 63 Winterberry Circle Cross River, NY 10518 Phone: (914) 977-3467 Attorneys for Narrative Ark Entertainment LLC & Scott D. Fulop CERTIFICATE OF SERVICE I HEREBY CERTIFY that on February 28, 2019, I electronically filed the foregoing Plaintiff’s Reply Memorandum using CM/ECF. Notice of this filing will be sent to all parties by operation of the Court’s electronic filing system. Parties may access this filing through the Court’s system. _____ s/ Neil A. Burstein Neil A. Burstein \DRAFT_TEMPLATE_DRAFT_OPPOSITION_MEMO.2.5 Case 7:16-cv-06109-VB-LMS Document 150 Filed 02/28/19 Page 9 of 9