Plaintiff Kings Road Entertainment, Inc., brought suit against defendants West Coast Pictures, LLC, and others, seeking a declaration that defendants have no copyright interest in the motion picture All of Me under a Production Services Agreement allegedly transferring to plaintiff all interest in the film. Plaintiff alleged that, notwithstanding the provisions of the agreement and plaintiff’s rights under “applicable law,” defendants made claims to plaintiff and others asserting an ownership interest in the copyright. Defendants filed a motion to dismiss for lack of subject matter jurisdiction, arguing that a dispute over the validity and interpretation of the agreement is merely a state court contractual issue and does not confer federal jurisdiction. The court denied defendants’ motion, holding that a dispute about defendants’ rights to co-ownership of the copyright for All of Me requires interpretation of the Copyright Act and plaintiff’s claim therefore arises under federal law.
The court initially addressed the import of the Declaratory Judgment Act. While the act permits a federal court to declare the rights and other legal relations of parties in a case of actual controversy, it does not confer federal jurisdiction. To bring an action in federal court under the Declaratory Judgment Act, plaintiff must have an independent jurisdictional basis. In determining whether plaintiff’s action “arises under” the Copyright Act and may be brought in federal court, the court applied the Ninth Circuit’s T.B. Harms test. Under the test, a district court shall exercise jurisdiction if: “(1) the complaint asks for a remedy expressly granted by the Copyright Act; (2) the complaint requires an interpretation of the Copyright Act; or (3) federal principles should control the claims.” Applying the T.B. Harms test, the court concluded, consistent with all federal circuit courts of appeal, that a determination of copyright ownership based on a disputed allegation of co-authorship requires an interpretation of the Copyright Act.
The court rejected defendants’ contention that the case must be litigated in state court because the complaint presents only a contractual dispute. Defendants argued that the only issue contained within plaintiff’s complaint is whether the Production Services Agreement assigned all interest to plaintiff, not defendants, and that a mere contract dispute is insufficient to confer federal jurisdiction. The court disagreed, noting that, contrary to defendants’ contention, the complaint alleges that “notwithstanding the provisions of the Production Services Agreement and plaintiff’s rights under applicable law,” defendants claimed ownership interest in the copyright. The “applicable law,” stated the court, is clearly the Copyright Act. Because a dispute over co-authorship of a motion picture (and therefore over ownership of the copyright) requires an interpretation of the Copyright Act, the court held that the case clearly arises under federal law.