Mahon v. Mainsail LLC

Background

Mark Mahon brought five copyright-infringement actions concerning the motion picture and screenplay “Strength and Honor.” He also asserted an alleged “Right of the Author” in the works. Against Mainsail and Entertainment One, he added claims for willful copyright infringement, trafficking in illicit labels, and conversion; against Mainsail alone, he asserted fraud. Each defendant moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. Entertainment One and Apple also moved under Rule 12(b)(2), which challenges personal jurisdiction.

Mahon alleged that he wrote, directed, and produced the Film; created Maron Pictures Ltd.; and assigned Maron Pictures literary and authorship rights in exchange for €300,000 and 40% of royalties. Maron Pictures entered a 2009 distribution agreement with Mainsail. Mahon alleged that the Film was later distributed with unauthorized covers and trailers, that Mainsail continued licensing or distribution after Mahon revoked its rights, and that Entertainment One supplied the Film to digital platforms. The court also considered records from related state-court litigation and appeals as public records, while giving them their proper evidentiary weight.

Mainsail’s motion

The court rejected Mainsail’s argument that Mahon lacked standing to enforce the copyright claims. The court held that Mahon adequately alleged that he became the legal owner of the motion-picture rights after revoking the transfer in October 2015 and that he remained a beneficial owner throughout the relevant period because of his royalty interest. The court also found the copyright allegations timely as to infringements described in a Visual Data report and other instances that might be uncovered in discovery. Other copyright allegations were dismissed with leave to amend.

The court found that Mahon plausibly alleged direct infringement based on Visual Data’s report showing that Mainsail received copies of the Film in California in May 2017, together with allegations that the Film continued to be shown without authorization. The court also allowed the contributory-infringement theory to proceed because Mahon alleged that Mainsail knowingly enabled distribution by Entertainment One and directed Visual Data to distribute the Film in the United States. The court therefore denied Mainsail’s motion to dismiss the direct and contributory copyright claims under Rule 12(b)(6), and denied Mainsail’s Rule 12(b)(1) motion challenging subject-matter jurisdiction.

The court granted Mainsail’s motion to dismiss the Right of the Author claims without leave to amend. It concluded that the Visual Artists Rights Act did not cover the Film, screenplay, posters, or trailer; the Berne Convention did not itself create a private cause of action; and the Berne Convention Implementation Act did not authorize the court to create broader common-law author rights.

The court found that Mahon adequately alleged counterfeit-label trafficking under 18 U.S.C. § 2318 because the unauthorized posters could qualify as simulated genuine labels, but dismissed the claim against Mainsail as untimely based on the allegations presented. Leave to amend was granted to the extent Mahon could allege timely, specific claims connected to Mainsail. The court granted dismissal of the fraud claim with leave to amend because the theory was confusing and changed between the complaint and briefing. It also granted dismissal of the conversion claim with leave to amend because the Copyright Act preempted the claim.

Entertainment One’s motion

The court granted Entertainment One’s personal-jurisdiction motion with leave to amend after limited jurisdictional discovery. Mahon’s alter-ego and minimum-contacts allegations were insufficient as pleaded, but the court found a colorable basis for discovery about whether Entertainment One US LP or another Entertainment One defendant provided the Film to Apple, Google, and YouTube in the District; whether licensing activity occurred there; the defendants’ corporate roles; and whether Entertainment One US LP acted as an agent for a parent company.

The court did not dismiss the copyright-infringement claims. Although overseas exploitation alone generally could not support liability under the Copyright Act, the court found it plausible that Entertainment One US LP provided the Film to technology companies in the United States, which could constitute domestic distribution or copying, and that exporting illicit copies could also support a claim.

The court granted dismissal of the Right of the Author claim without leave to amend. It did not dismiss the counterfeit-label claim, finding that Mahon adequately alleged that Entertainment One trafficked in counterfeit labels in the United States within the limitations period, including through 2019 distributions. The court granted dismissal of the conversion claim with leave to amend only to the extent Mahon could allege conversion of tangible property, because the asserted conversion of copyright rights was preempted by the Copyright Act.

YouTube, Alphabet, and Apple

The court granted YouTube’s motion to dismiss both claims. It dismissed the copyright claim because Mahon alleged that the Film was available in Ireland, the United Kingdom, and Europe, not in the United States, and did not allege that YouTube participated in or contributed to copying in the United States. Leave to amend was granted for that claim. The Right of the Author claim was dismissed without leave to amend.

The court granted Alphabet’s motion to dismiss both claims on the same grounds. Leave to amend was granted as to copyright infringement but denied as to the Right of the Author claim.

Apple did not move to dismiss the copyright claims against Apple Inc., iTunes Store, or the Doe defendants. The court granted Apple’s motion to dismiss the Right of the Author claim and granted dismissal of the personal-jurisdiction allegations concerning Apple Distribution International Ltd., finding that Mahon had not adequately alleged an alter-ego relationship with Apple Inc., minimum contacts with the United States or the District, or a colorable basis for jurisdictional discovery. The order’s conclusion states that Apple’s motion was granted, with no leave to amend the Right of the Author claim.

Final orders and effect

The court ordered that Mainsail’s motion was granted in part and denied in part; Entertainment One’s motion was granted in part and denied in part; and the motions of YouTube, Alphabet, and Apple were granted. Mahon could file amended complaints in each action other than case number 20-cv-01527 by September 4, 2020. In case number 20-cv-01527, he could conduct the specified jurisdictional discovery and file an amended complaint within 90 days of the order. Defendants were given 21 days to respond to any amended complaint. The court also denied Mahon’s request to file a supplemental response concerning statements in Mainsail’s reply.