Court Ban of ‘Platoon’ Video Sales Is Extended

A federal appeals court has extended a ban on video cassette distribution of the Oscar-winning movie “Platoon,” permitting a trial judge to decide whether distributors warring over lucrative video rights to the film can seek help under federal copyright law.

In a brief order made public Monday, the U.S. 9th Circuit Court of Appeals extended until Nov. 2 an earlier distribution ban that has held up release of the film and another movie involved in the dispute, “Hoosiers.”

The decision allows the two companies caught up in a contract dispute over rights to the film to argue the case instead as a potential copyright violation--a ruling that already has sent shock waves through the entertainment industry.

Decision Unprecedented

“It’s an unprecedented decision. No (federal) court has ever assumed jurisdiction over a claim between competing licensees of the same licensor, because it raises only a contract issue that is normally settled in state courts,” said Marc Rappel, a lawyer for Home Box Office Inc.

HBO has 357,000 copies of “Platoon” waiting for distribution at a record $99.95 apiece in what had been expected to be one of the largest-grossing video releases ever until the court order blocked sales in advance of the lucrative Christmas season.

“Hoosiers” was already on the shelves at video outlets before the appeals court issued its original distribution ban Oct. 9.

The original video rights for the two films were acquired as part of a preproduction contract by Vestron Inc. from Hemdale Film Corp.

But shortly after release of the titles, Hemdale claimed Vestron had missed a payment and re-opened bidding on the video rights. HBO acquired the rights at what lawyers in the case agree was a substantially higher premium. Industry sources have put the figure as high as $15 million.

Vestron immediately cried foul, arguing that Hemdale had no right to rescind the contract, especially since Vestron had offered immediately to pay the disputed back payment.

But the company failed to win injunctions blocking release of the videos in state court and filed a new action in U.S. District Court in Los Angeles claiming that HBO had violated the copyright Vestron held on the movie titles.

Both Hemdale and HBO claimed that the issue was a contract dispute, not a copyright issue, and U.S. District Judge David V. Kenyon agreed in early August, declaring that there was no federal issue in the case and therefore no federal court jurisdiction.

Resolution of Issue

The appeals court on Oct. 9 issued an injunction blocking distribution of the films pending a resolution of the issue, and the court in its extension order Monday declared that the federal courts do, in fact, have jurisdiction over potential copyright issues in the case.

The court remanded the case back to Kenyon for a full hearing to determine whether the injunction should be extended beyond Nov. 2 and indicated that it would issue a full opinion outlining reasons for the decision later.

“It’s called punting,” HBO Vice President David Pritchard said. “We’re not happy about the fact that all of this is happening in the 12th and 13th hour because there are clearly hardships that are growing the longer this thing stays in this kind of hold position.”

HBO, he said, has already launched a full-scale advertising campaign for “Platoon,” winner of last year’s Academy Award for best picture, and is in the position of being unable to fulfill commitments to deliver the film.

Buying Season

Moreover, the approach of the Christmas buying season and the planned cable television release of the film early next year threatens to cut heavily into video profits--whoever winds up with them, Pritchard said.

“What we’re really saying in all this is we’re all missing an opportunity,” he said. “The injunction is creating a lose-lose situation because nobody’s going to make any money. The demand will slip.”

The director of legal affairs for Vestron, David Bergman, said of the court’s ruling, “We’re very pleased that the court reinstated our federal claim to continue the injunction, and we plan to continue to enforce our rights as aggressively as possible, as we have all along.”

Vestron attorneys predict that the courts will eventually decide that copyright law does provide protection for companies that have acquired distribution rights.

Exclusive Rights

“The federal copyright act provides that there is injunctive relief to stop an infringement of any exclusive rights in works of authorship, such as a movie,” said Vestron’s attorney, Robert Jossen.

But Rappel said copyright provisions are designed primarily as a safeguard against video piracy, not to provide an alternative forum to argue contract disputes.

The court’s decision, he said, “raises many problems.”

“It first and foremost raises a serious potential for inconsistent resolutions of the same issue by state and federal courts, which is exactly what has happened here. . . . It changes the ground rules on which parties are operating,” he said.