PASADENA, Calif.—The Ninth Circuit U.S. Court of Appeals has completely reversed the verdicts issued in Jules Jordan's and Jules Jordan Video's lawsuit against Canadian companies Kaytel Video Distribution, Leisure Time Video Canada, Inc. and their principal Alain Elmaleh, finding that the trial court had erred both in dismissing Jordan's copyright claim against the defendants and in allowing the jury verdict for Jordan on his right of publicity claim to stand.
The decision appears to be based in large part on Evil Angel's unusual distribution arrangement, wherein the creators of adult movies retain full copyrights to their works, even though Evil Angel distributes them.
As AVN readers will recall, in August, 2007, a federal court jury found that the above-named defendants had infringed both the copyright and trademark of various Evil Angel and Jules Jordan Video titles, and also had infringed upon Jordan's right of publicity because his name appears in several places on his DVDs' packaging. At the time, Jordan's share of the verdict was estimated to be $5.4 million—roughly $2.85 million on the infringement and $2.5 million in punitive damages—but that amount was subsequently reduced by Judge S. James Otero on the basis that Jordan did not have standing to press his copyright claim because 1) Jordan was an employee of Jules Jordan Video (JJV) and therefore his copyright rights were subsumed by the company's, and 2) JJV also lacked standing because its copyright registration was invalid, apparently because of JJV's distribution deal with Evil Angel.
"I was never an employee of Evil Angel; they just did the distribution," Jordan told AVN. "I was an employee of my own company; that's how I drew a salary, as president, so it wasn't a question of me working for Evil Angel; that was just a distribution deal. It was me being an employee of my own company, and I always felt—we filled out our copyright certificates and listed me as the holder of the copyright, and it's just crazy to think that's not where it all ends right there. Certainly I'm the creative force behind what I'm doing, so why shouldn't I be able to hold the copyrights under my own name?"
In its opinion issued yesterday, the Ninth Circuit vacated Jordan's "right of publicity" win, reinstated his and his company's copyright claim and remanded the case to Judge Otero for "proceedings consistent with this opinion."
In the decision's "analysis" section, the panel held that under the 2006 Ninth Circuit case of Laws v. Sony Music Entertainment, Inc., Jordan's "right of publicity" claim was subsumed by his copyright claim, because although he had originally argued that the Kaytel defendants had misappropriated both his name and his "persona" in addition to having pirated his "dramatic performance, Jordan's attorneys later argued that the "right of publicity" claims related to the appearance of his name and likeness on the DVD packaging. However, the panel held that whatever appears on the packaging is part and parcel of the copyright claims, and cannot be litigated apart from the copyright issues.
"The question is whether the rights are works of authorship fixed in a tangible medium of expression and come within the subject matter of the Copyright Act," wrote Judge Robert W. Gettleman for the panel. "If a plaintiff asserts a claim that is the equivalent of a claim for infringement of a copyrightable work, that claim is preempted, regardless of what legal rights the defendant might have acquired. In the instant case, we conclude that [Jordan's] right of publicity claim falls within the subject matter of copyright, and that the rights he asserts are equivalent to the rights within the scope of §106 of the Copyright Act."
The panel also disagreed with Judge Otero's "judgment as a matter of law" (JMOL) for the defendants regarding the claimed infringement itself.
"The court held that because [Jordan] was employed by JJV, the motion picture works were 'works for hire' under the Copyright Act, 17 U.S.C. §101," the panel recounted. "Therefore, JJV, not [Jordan], was the author of the works and [Jordan] lacked standing. The court implicitly held that JJV lacked standing because the registration was invalid. Plaintiffs have appealed that decision, arguing that it is both legally erroneous, inequitable and illogical given that only [Jordan] or JJV could possibly own the copyrights and both were plaintiffs in the action. We agree."
"The way [Judge Otero] looked at it was, it was more of a Jules Jordan Video versus [Jules Jordan]; me as an individual," Jordan said. "My case was so interesting because the issue was work-for-hire, and I'm kind of the dominant employee because in my production company, I'm basically the only employee there is, and their argument was, this was a work-for-hire, but there were claims from Jules Jordan Video and myself personally. We assigned just a handful of titles to Jules Jordan Video also, so in the original case, the judge should have decided for one or the other."
Indeed, the district court had correctly concluded that the DVDs at issue couldn't have been "works for hire" because there was no contract between Jordan and his company which would assign ownership to JJV. However, Judge Otero had also ruled that Jordan's testimony that "he always intended that his 'creative work' be kept separate from his work for JJV and that he would have ownership of the copyrights" had merely been "concocted at trial," and that essentially JJV had given Jordan orders that he would "hold the camera, light the set, write the screenplay, produce and direct."
The Ninth Circuit found this analysis to be absurd.
"The problem with the district court’s analysis is that JJV was a one-man shop," Judge Gettleman wrote. "[Jordan] was the sole officer, director, and shareholder of JJV, exercised complete control over it, and made all decisions concerning JJV and production of the films. It was all [Jordan] all the time. JJV as employer and [Jordan] as employee could certainly agree as to the scope of the employee’s employment, and could agree that [Jordan] should retain all copyrights. Since JJV was [Jordan], JJV intended whatever [Jordan] intended, and if [Jordan] intended that his creative work be outside the scope of his employment with JJV, there was no one to disagree. Perhaps more importantly, even if the films were works for hire, the district court was correct that [Jordan] simply made a 'mistake in listing himself as the author' on the copyright registration forms. That mistake does not constitute a basis to invalidate the copyright." [Citations removed here and below]
Moreover, the panel noted, the defendants didn't care who owned the copyrights to the works they pirated, so they could hardly legitimately argue that issue on appeal.
Sadly, however, the appeals panel decided not to simply reinstate the jury's verdict, agreeing with Kaytel's arguments that "the trial was so tainted by error that reinstatement would be unfair."
At issue in part were a series of 716 "requests for admission" (RFAs) that co-plaintiff John Stagliano Inc. (JSI) had served on the defendants—admissions that would be deemed to be uncontested unless Kaytel responded to them with 30 days of their being served. During this process, however, Kaytel changed attorneys, while in that same time period, JSI requested and received a default judgment against Kaytel, even though the 30 days had not yet expired. Judge Otero's predecessor in the case, Judge Dickran Tevrizian, granted the default but later vacated it, after which Kaytel moved for leave to respond to the RFAs which had become due while the default judgment was in effect. Judge Tevrizian denied Kaytel's motion, and later, Judge Otero similarly denied Kaytel's motion in limine to exclude the RFAs from the trial. Worse, after the "admissions" were read to the jury, Judge Otero instructed the jury that the RFAs were "true." Kaytel objected to the judge's characterization of the RFAs, but the objection was overruled. However, Judge Otero "corrected" his misstatement during the final jury instructions, where he said that the alleged facts were simply "admitted."
While the appeals panel agreed that Judge Otero had erred in deeming the RFAs "admitted," but it also denied the defendants' motion for a new trial on that basis because "we conclude that the error did not affect the defendants’ substantial rights."
"We come to this conclusion for two reasons," the panel ruled. "First, the evidence was admitted in the JSI action only, and the jury was properly and specifically instructed that the admissions in the RFAs entered into evidence in one case were not to be considered in the other case. There is a strong presumption that juries follow curative instructions. We see nothing in the record to conclude that the jury failed to follow these instructions. Second, although the admissions in the JSI action were damaging as to Kaytel Distribution as well as other defendants, their exclusion from the trial would not have helped the Kaytel defendants in the JJV action. This is because plaintiffs in that action read to the jury 99 equally damaging deemed admissions that defendants do not and cannot challenge on appeal."
Also at issue was the defendants' claim that Judge Otero had given the jurors "a 'confusing and misleading' special verdict form that was 31 pages long containing 170 separate questions," but the panel found that although the form was lengthy, "we do not find it particularly confusing," and refused to find the form's use to be "plain error" because "[t]he form fully and fairly presented to the jury the issues it was called upon to decide and afforded defendants adequate opportunity to present their case."
Despite the reversal of both verdicts, Jordan was gratified by the appeals panel's decision.
"You know, the two decisions weren't far off; they were only a couple hundred thousand apart, I think," Jordan told AVN. "It sounds like the copyright would be more significant, but for some reason, they weren't that far apart. I think the verdict was about $5 million with the right of publicity, so we're looking at around between $3 million and $4 million for the copyright issue after the attorneys fees, which we have to figure out, because the attorneys fees are going to be significant. I definitely spent at least $1 million on attorneys. After all, it's been five years."
"It's kind of cool to have some case law out there that other people might be able to use when they have issues like I've had," he continued. "I honestly can't tell you what Judge Otero was motivated by when he made some of his decisions, but I don't think they were really sound decisions for copyright holders."
"Now it's going to be months of spending more money trying to collect on this, but I'm optimistic that we have him personally. Whether we can agree on a settlement at this point, or we have to go and put padlocks on his buildings, I don't know, but it's unfortunate that people like this can still be doing business in our industry."
Jordan said that he's unlikely to appeal the vacating of his "right of publicity" claim, and opined that Kaytel, even if it were to appeal the Ninth Circuit's decision to the U.S. Supreme Court, would not be able to get it overturned.
