Turner Entertainment Co. v. Degeto Film Gmb

25 F.3d 1512 (11th Cir. 1994)

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Nature of the Case

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Facts

The parties entered into a license agreement. Degeto (D) signed the Agreement with MGM/UA in 1984. Turner (P) acquired the rights and now stands in the shoes of MGM/UA. Ds paid at least $60 million for an exclusive license to telecast licenses works under German copyright to the German-speaking public only in the German language. The Agreement allowed Ds to telecast the licensed works for reception within the licensed territory by all means and methods now or hereafter known including but not limited to DBS so long as the works were broadcast in German. The licensed territory was virtually all of German-speaking Europe. The telecasts are allowed to originate in any place in the universe but only for reception within the defined territory. No clear definition of the term 'overspill' from those defined territories was put into the agreement. Because of technology, the satellite system used by Ds to broadcast their signals allowed the broadcasts to be received by practically anyone with a very cheap satellite system called FSS. The footprint from the broadcast satellite, Astra, used for this transmission was over 5 times the agreed upon territory but in effect that was the only way to reach certain areas of East Germany as their communications infrastructure was very poor after their departure from the communist bloc. The Agreement did not anticipate that such an easy method of reaching Pan-European audiences would become a standard mode of broadcasting during the life of the Agreement. P learned of an intent to broadcast works by the Astra system in 1993 and claimed that this was a violation of the Agreement. Lawsuits were filed in both Germany, and the U.S. Ds filed a declaratory judgment action against P in Germany with that litigation being concerned with the term 'overspill' and whether that term applied to the use of Astra. The German court held that D had no right under the Agreement to broadcast by Astra but that the parties had not contemplated the current circumstances and with the duty of D to broadcast, the German court was obligated to apply the doctrine of good faith. The court determined that P should permit D to use Astra to fulfill its obligations and that D should pay an increased fee to be determined by the court at a later date. Both parties appealed that decision. P filed a breach of contract action in Atlanta one week after the German action was filed. D moved to dismiss or stay the American proceedings, and the court denied the motion to say and the motion to dismiss. The court then granted P's preliminary injunction restraining Ds from using the Astra system. A stay of that injunction was granted if Ds posted a bond of $2 million. Ds filed an emergency motion of appeal.