BY:
Michael I. Rudell(Originally published in the Entertainment Law column in the New York Law Journal, May 28, 2004.)
The well-known novelist Clive Cussler has filed a complaint against Crusader Entertainment alleging violation of certain of his approval rights contained in an Option/Literary Purchase Agreement (the “Agreement”) relating to novels written by him.1 The complaint is informative in setting forth the nature of the approval rights which Cussler was able to obtain and indicating the difficulty that one may encounter in attempting to enforce those rights.
The Agreement, dated as of May 9, 2001, grants to Crusader the option to purchase motion picture rights in and to novels written by Cussler. The complaint alleges that the Agreement provides that (a) Cussler would have an unqualified right of approval over the screenplays for Crusader’s pictures based on his novels, (b) the approved screenplay would not be materially changed without Cussler’s written consent and (c) if Crusader does not commence principal photography of a screenplay approved by Cussler no later than 24 months after the exercise of its initial option, Crusader would have no further options to purchase rights in other Cussler novels and Cussler could cause Crusader to purchase for 10 million dollars a third Cussler novel subject to all of the terms of the Agreement, including Cussler’s approval rights.
According to the complaint, during 2001 Crusader exercised its initial option under the Agreement to acquire the motion picture rights in two specific Cussler novels.
Plaintiffs (which are Cussler and certain corporate entities) allege that Cussler approved of a screenplay for Crusader’s initial picture under the Agreement and that Crusader thereafter materially altered the approved screenplay without his written consent and began to film a motion picture based upon that altered screenplay. They claim that more than 24 months have passed since Crusader’s exercise of its initial option and that Crusader has never commenced principal photography of a motion picture based upon the screenplay Cussler has approved, which was a condition to Crusader’s exercise of future options under the Agreement.
Plaintiffs seek a declaratory judgment so that the parties may know their respective rights and obligations. They also seek damages in excess of 10 million dollars as a result of the purported breach by Crusader of the terms and conditions of the Agreement.
The complaint alleges that, by Crusader’s filming a motion picture based upon a screenplay which is not one approved by Cussler (and, in fact one specifically disapproved by him), and by Crusader’s intending to advertise and publicly announce that Cussler was the Executive Producer of the disapproved Picture (a role in which he is not serving), there will be untrue and misleading assertions which will falsely attribute to Cussler approval, endorsement and sponsorship of the picture in violation of Section 43(a) of the Lanham Act.
Further, the complaint alleges that at the time Crusader made the promises to Cussler contained in the Agreement, it had no intention of keeping them and, thus, it made false and fraudulent promises in order to induce plaintiffs to enter into the Agreement. Most particularly, plaintiffs are concerned with paragraph 20B of the Agreement which limits plaintiffs’ remedies for Crusader’s breach to an action at law for money damages.
Plaintiffs claim that they would not have entered into the Agreement and would not have accepted the limitation of its remedies for breach of the Agreement in paragraph 20B had it known that Crusader did not intend to keep its promises and intended, instead, to ignore Cussler’s approval rights and to film whatever screenplay it chose, even if disapproved by Cussler.
Accordingly, plaintiffs allege that, because of Crusader’s fraud, they are entitled to reform the Agreement to delete paragraph 20B, thereby permitting them to exercise any and all of their legal and equitable remedies for Crusader’s breach. It further states that if Crusader is not enjoined from so acting, Crusader will make the disapproved picture based upon a screenplay which is materially different from the approved screenplay and will distribute and exploit that disapproved picture throughout the world in flagrant violation of Cussler’s essential creative rights. This will cause Cussler severe and irreparable harm for which he has no adequate remedy at law, in that the making of the Agreement and Cussler’s approval rights were of the essence and are unique creative rights, the loss of which are not fully measurable in dollars, rendering the full amount of his damages difficult, if not impossible to quantify.
The complaint highlights the difficulties which a rightsholder of stature (which normally is what is required to obtain any approval rights) may encounter in attempting to enforce approval rights he has obtained. Having obtained certain approval rights, the rightsholder still is faced with the provision contained in almost all motion picture agreements limiting his remedies to an action at law for money damages alone. At times it may be possible to negotiate for a provision that enables the rightsholder to have injunctive relief in certain specific situations in which there is no possible ambiguity as to whether a particular event has occurred. For example, the author of a series of books in which there is a continuing character may provide that the character may not be killed in any motion picture, and if this provision is violated, the author would be entitled to injunctive relief. This is contrasted with a provision providing that the character may not be shown committing any criminal activity. Because the scope of the term “criminal activity” is so broad and possibly blurred, it would be quite difficult to obtain a provision allowing for injunctive relief if this clause is violated.
Plaintiffs in the Cussler action have attempted to have the “no injunctive relief” clause reformed based upon its theory of fraudulent inducement. If this case proceeds to a point in which decisions are rendered, it will be interesting to see how a court deals with the legal issues involved.
1 Cussler et al. v. Crusader Entertainment LLC et al., Superior Court of the State of California for the County of Los Angeles, Case No. BC309114 (Complaint filed January 15, 2004)