Case 5:13-cv-05570-JLS Document 64 Filed 03/11/14 Page 1 of 30 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA DISNEY ENTERPRISES, INC., et al., Plaintiffs, Case No: 5:13-cv-05570 (JSL) VS. ENTERTAINMENT THEATRE GROUP d/b/a AMERICAN MUSIC THEATRE; JAMES D. MARTIN; FREDERICK W. STEUDLER, JR.; and DWIGHT H. BRUBAKER, Defendants, and STAN LEE MEDIA, INC., Defendant / Intervenor. ENTERTAINMENT THEATRE GROUP d/b/a AMERICAN MUSIC THEATRE, Counterclaim-Plaintiff, and Case No: 5:13-cv-05570 (JSL) STAN LEE MEDIA, INC. Counterclaim-Plaintiff/Intervenor, -against- DISNEY ENTERPRISES, INC.; and MARVEL CHARACTERS, INC., Deadline.comCounterclaim-Defendants. DEFENDANTS' OPPOSITION IN RESPONSE TO PLAINTIFFS' MOTION TO DISMISS AMENDED COUNTERCLAIMS AND INTERVENOR COMPLAINT AND TO STRIKE AMENDED AFFIRMATIVE DEFENSES Case 5:13-cv-05570-JLS Document 64 Filed 03/11/14 Page 2 of 30 Table of Contents Page I. INTRODUCTION 1 II. BACKGROUND 3 III. ARGUMENT 6 A. Legal Standard 6 B. Res Judicata Does Not Bar AMT's Counterclaims And Affirmative Defenses As The Causes Of Action At Issue In This Litigation Are Not The Same Causes Of Action At Issue In The Prior SLMI-Related Litigations. 7 1. The Present Litigation Does Not Involve The Same Cause Of Action As The Prior SLMI-Related Litigations. 8 2. AMT Is Not In Privity With SLMI Or The Abadin Plaintiffs And, Thus, AMT Cannot Be Bound By The Decisions Reached In The Prior SLMI-Related Litigations. 12 C. Collateral Estoppel Or Issue Preclusion Does Not Bar AMT's Counterclaims As Identical Issues Are Not Present And The Issue Of Ownership Has Never Been Actually Litigated 15 D. AMT's Counterclaims And Affirmative Defenses Are Not Time Barred As Such Claims Have Been Defensively Asserted To Defeat Plaintiffs' Claims. 19 E. Plaintiffs Lack Standing To Challenge SLMI' s License To AMT SLMI Has The Capacity To License The Spider-Man Copyrights To AMT; AMT Should Not Be Precluded From Challenging Plaintiffs' Alleged Ownership In The Copyrights 21 F. AMT Should Not Be Precluded From Challenging The Validity Of Disney's And/OrDeadline.com Marvel's Alleged Copyrights In Spider-Man 22 IV. CONCLUSION 24 Case 5:13-cv-05570-JLS Document 64 Filed 03/11/14 Page 3 of 30 Table of Authorities Page(s) Cases Abadin et al. v. Marvel Entertainment, Inc. et al., 09-Civ-0715, 2010 U.S. Dist. LEXIS 32069 (S.D.N.Y. Mar. 31, 2010) passim Alexander Binzel Corp. v. Nu-Tecsys Corp., No. 91 C. 2092, 1991 U.S. Dist. LEXIS 13538 (N.D. Ill. Sept. 30, 1991) 14 Allen et al. v. McCurry, 449 U.S. 90 (1980) 14 Anspach v. City of Phila., 380 Fed. Appx. 180 (3d Cir. 2010) 15 Apparel Bus. Sys., LLC v. Tom James Co., Civ. No. 06-1092, 2008 U.S. Dist. LEXIS 26313 (E.D. Pa. Mar. 31, 2008) 17, 23 Arco Polymers, Inc. v. Studiengesellschaft Kohle mbH, No. 78-Civ-2917, 555 F. Supp. 547 (E.D. Pa. 1982) 15 Ashcroft v. Iqbal, 556 U.S. 662 (2009) 7 Awanderlust Travel, Inc. v. Kochevar, 21 P.3d 876 (Colo. App. 2001) 21 Bell Atlantic Corp. v. Twombley, 550 U.S. 544 (2007) 7 Bieg v. Hovnanian Enters., Inc., 157 F. Supp. 2d 475 (E.D. Pa. 2001) 23 Emad Elkadrawy v. The VanguardDeadline.com Group, Inc., 584 F.3d 169 (3d Cir 2009) 8 Estate of Hogarth v. Edgar Rice Burroughs, Inc., 342 F.3d 149 (2d Cir. 2003) 20 Humphreys v. Budget Rent A Car System Inc., No. 10-CV-1302, 2013 U.S. Dist. LEXIS 30377 (E.D. Pa. Mar. 4, 2013) 12 Luckenbach Steamship Co., Inc. v. United States, 312 F.2d 545 (2d Cir. 1963) 9, 11, 19 Marvel Characters, Inc. v. Kirby, 726 F.3d 119 (2d Cir. 2013) 22 Case 5:13-cv-05570-JLS Document 64 Filed 03/11/14 Page 4 of 30 Nat '1 Railroad Passenger Corp. v. Pa. Public Utility Commission et al., 288 F.3d 519 (3d Cir. 2002) 17, 18 O'Leary v. Liberty Mutual Ins. Co., 923 F.2d 1062 (3d Cir. 1991) 15 O'Leary v. Liberty Mutual Ins. Co., 923 F.3d F.2d 1062, 1065 (3d Cir. 1991) 8 Picture Patents, LLC v. Aeropostale, Inc., 788 F. Supp. 2d 127 (S.D.N.Y. 2011) 10, 11 Picture Patents, LLC v. Terra Holdings, LLC, No. 07-Cvi-5465 (HBP), 2008 U.S. Dist. LEXIS 98030 (S.D.N.Y. Dec. 3, 2008) 11 Pritchett v. Pound, 473 F.3d 217 (5th Cir. 2006) 20 In re Prosser, No. 12-2864, 2013 U.S. App. LEXIS 15853 (3d Cir. Aug. 1, 2013) 16, 17 Roche v. Sparkle City Realty, Civ. No. 08-2518, 2009 U.S. Dist. LEXIS 51555 (E.D. Pa. June 15, 2009) 8 Rumford Chem. Works v. Hygienic Chem. Co., 148 F. 862 (3d Cir. 1906) 13 Semtek Int I Inc. v. Lockheed Martin Corp., 531 U.S. 497 (2001) 8 SEPTA v. AECOM USA, Inc., No. 10-CV-117, 2010 U.S. Dist. LEXIS 130313 (E.D. Pa. Dec. 9, 2010) 7 Smith v. Bayer Corp., 131 S.Ct. 2368 (2011)Deadline.com 13 Smith v. Cowden (In re Cowden), 337 B.R. 512 (W.D. Pa. Bank. 2006) 11 Souders v. Bank of Am., 1:CV-12-1074, 2012 U.S. Dist. LEXIS 186082 (M.D. Pa. Dec. 6, 2012) 21 Stan Lee Media Inc., et al. v. Stan Lee, et al., No. 2:07-cv-00225, 2012 U.S. Dist. LEXIS 134307 (C.D. Cal. Aug. 23, 2012) 8 Stan Lee Media, Inc. v. The Walt Disney Company, No. 12-cv-2663, 2013 U.S. Dist. LEXIS 129393 (D. Col. Sept. 5, 2013) 8 Case 5:13-cv-05570-JLS Document 64 Filed 03/11/14 Page 5 of 30 Stan Lee v. Marvel Enterprises, Inc. et al., 765 F. Supp.2d 440 (S.D.N.Y. 2011) 8 Stone v. Hank Williams, Jr. et al., 970 F.2d 1043 (2d Cir. 1992) 10 Taggart v. Chase Bank USA, NA. et al., 375 Fed. Appx. 266 (3d Cir. 2010) 8 Taylor v. Sturgell, 553 U.S. 880 (2008) 12, 15 TruePosition, Inc. v. LM Ericsson Tel. Co., Civ. No. 11-4574, 2013 U.S. Dist. LEXIS 145898 (E.D. Pa Oct. 9, 2013) 7 United States v. Western Pacific Railroad Co. et al., 352 U.S. 59 (1956) 9, 20 Warren Gen. Hosp. v. Amgen Inc., 643 F.3d 77 (3d Cir. 2011) 6 William A. Graham Co. v. Haughey et al., 568 F.3d 425 (3d Cir. 2009) 10 Statutes 17 U.S.C. § 507(b) 20 Colo. Rev. Stat. § 7-114-105 (2013) 21 Other Authorities AMT's Broadway: Now and Forever 20 Fed. R. Civ. P. 12(f) Deadline.com 7 Melville B. Nimmer, David Nimmer, Nimmer on Copyright (2013) 18, 23 iv Case 5:13-cv-05570-JLS Document 64 Filed 03/11/14 Page 6 of 30 Defendant and Counterclaim-Plaintiff Entertainment Theatre Group d/b/a American Music Theatre ("AMT") and Defendants James D. Martin, Frederick W. Steudler, Jr. and Dwight H. Brubaker (collectively, along with AMT, the "AMT Defendants"), by and through their undersigned attorneys, hereby submit this Opposition in Response to Plaintiffs and Counterclaim-Defendants Disney Enterprises, Inc.'s ("Disney's") and Marvel Characters, Inc.'s ("Marvel's") Motion to Dismiss Amended Counterclaims and Intervenor Complaint and to Strike Amended Affirmative Defenses ("Motion"). For the reasons discussed in more detail below, AMT Defendants respectfully request that the Court DENY the Motion in its entirety. I. INTRODUCTION Plaintiffs are correct—this is a straightforward case. Motion at 1. AMT, a small theatre company in Lancaster, Pennsylvania—acting on appropriate advice of counsel and pursuant to valid licenses—put on a production of a highly original, transformative show called Broadway: Now and Forever that included, among other things, various performances of songs appearing in past and present Broadway musicals. Upon learning of AMT's production, Disney and Marvel (and other Plaintiffs in this action) felt it necessary to flex their muscles and force AMT to stop its small town production, asserting that the same infringed upon, inter alia, such parties' alleged copyrights. When AMT, again on advice of counsel, continued to produce this show despite Plaintiffs' baseless threats,Deadline.com Plaintiffs grew angry and, in September of 2013, filed suit against AMT in this district alleging, inter alia, causes of action for copyright infringement, including infringement of certain works relating to Spider-Man.' Upon learning of this suit and the fact that Disney and Marvel had asserted copyrights in Spider-Man against AMT, SLMI approached AMT and advised that SLMI was the actual owner 1 While Plaintiffs assert in their Motion that they own intellectual property from Spider-Man Turn Off the Dark, there is some question as to whether this is the case and discovery will illuminate this issue. It should be noted upfront, however, that Plaintiffs did not assert any copyrights in Spider-Man Turn Off the Dark against the AMT Defendants. See generally Complaint (D.E. 1). 1 Case 5:13-cv-05570-JLS Document 64 Filed 03/11/14 Page 7 of 30 of any and all copyrights in Spider-Man pursuant to a 1998 Agreement entered into between its predecessor and Stan Lee. Accordingly, SLMI, with an eye towards collecting assets owed to it and disposing of its property, offered to grant to AMT, in exchange for a royalty, a nunc pro tunc retroactive license 2 covering AMT's use of Spider-Man in Broadway: Now and Forever, as well as certain other exclusive rights.