Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc.

886 F.2d 1545 (9th Cir. 1989)

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Nature of the Case

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Facts

Ps are the copyright owners and authors of Kismet, a dramatico-musical work. D under license produced a musical motion picture version of Kismet. Beginning April 26, 1974, MGM Grand presented a musical revue entitled Hallelujah Hollywood in the hotel's Ziegfeld Theatre. Hallelujah Hollywood was created by an employee of MGM Grand, Donn Arden. The show comprised ten acts. Four were billed as 'tributes' to MGM motion pictures. Act IV was entitled 'Kismet', and was a tribute to the MGM movie of that name. It was based almost entirely on music from Kismet and used characters and settings from that musical. Act IV was performed about 1700 times, until July 16, 1976, when, MGM Grand substituted a new Act IV. Ps sued alleging copyright infringement, unfair competition, and breach of contract. The court held that the use of Kismet in Hallelujah Hollywood was beyond the scope of D's ASCAP license. In Frank Music I, the court upheld the district court's conclusion that Ps failed to prove actual damages arising from the infringement, but vacated the district court's award of $22,000 in apportioned profits as 'grossly inadequate,' and remanded it to the district court for reconsideration. On remand, the court calculated MGM Grand's net profit from Hallelujah Hollywood at $6,131,606, by deducting from its gross revenues the direct costs MGM Grand proved it had incurred. In apportioning the profits the court found that Act IV was one of ten acts, approximately a ten-minute segment of a 100-minute revue. The Court concluded that ten percent of the profits of 'Hallelujah Hollywood' were attributable to Act IV. Ps point out that on Saturdays Hallelujah Hollywood contained only eight acts, not ten, and that on Saturdays the show ran only 75 minutes, not 100. Act IV was approximately eleven and a half minutes long, not ten. Because the show was performed three times on Saturdays, and twice a night on the other evenings of the week, the district court substantially underestimated the running time of Act IV in relation to the rest of the show.