Producers of the “Bullet” movie will attempt to dodge a lawsuit filed by Nicholas Lyon for copyright infringement, breach of contract, breach of covenant of good faith and fair dealing, promissory fraud, intentional interference with contractual relations, and unfair competition. Lyon contends that he entered into an agreement with American United Media and SC Films International to develop and produce the Bullet motion picture based on a script written by him, which script he intelligently registered with the U.S. Copyright Office. Writers, do not, I repeat, DO NOT, file your script with the WGA instead of the Copyright Office. Click here for a detailed explanation. Venting aside, the complaint alleges that Lyon was to receive “A Nick Lyon Film” credit on all posters, DVD covers and advertisements for the motion picture, in addition to receiving 30% of net receipts.
Lyon alleges that merely two days after execution of his agreement, American United Media and FUNimation entered into a deal memo for AUM to “produce and deliver” the motion picture, without any mention of Lyon’s rights, and granting FUNimation 50% equity in the movie. After this purportedly secret agreement was signed, plaintiff alleges that he was falsely convinced to assign his script’s copyrights to Bullet Film Production LLC, which LLC is owned by AUM, FUNimation, and SC Films to the exclusion of Lyon. Lyon alleges that the LLC’s operating agreement violates his agreement which prohibited AUM from entering into any agreement which would impair, interfere, or conflict with the terms of his agreement.
Once shooting began, Lyon contends that he was provided an “Agreement for Directing Services” by the LLC and not afforded an opportunity to consult with an attorney before execution. Instead, he was informed that if he did not immediately sign the agreement, production would be terminated. Lyon also contends that he never received an explanation regarding why he was omitted from ownership of the LLC and was not compensated for his services. Further, Lyon has become aware that the motion picture is being edited by a third party and is being readied for distribution, despite assurances that it had been vaulted while the legal issues are pending. Lyon is seeking unspecified damages.
There may not be federal jurisdiction in this case because courts have held that there is no federal jurisdiction under section 1338 where the focus of the complaint is on state law principles of fraud. See Bear Creek Productions, Inc. v. Saleh, 643 F. Supp. 489 (S.D.N.Y. 1986); see also Cresci v. Music Publishers Holding Corp., 210 F. Supp. 253, 256 (S.D.N.Y. 1962) (no federal jurisdiction exists when plaintiffs’ basic claim is that the assignment of their rights in a copyright 1 was procured by fraud). The lesson to be learned is to not assign your copyrights to an entity unless and until you’ve been provided an ownership interest in the assignee.
The case is Lyon v. Funimation Productions, Ltd., et al., SACV13-1322 MWF (C.D. Cal. 2013).