Variety (Aug 1939)

4 VARIETY PICTURES Wednesday, August 2, 1939 Historic Appeak Court Decision Cuts Down letty Lpton Damage Award from $532,153 to SItOOi) The Circuit Court of Appeals irv yet it woiilil be a rnir'.ake. to deny all N Y., consisting ol Judges Learned weight to thein. A court is justified Hand, Harrie Chase and Robert Pal-, in basing its decrees upon practices terson, on Friday c28) reversed a common in other human affans. decision ol Federal Judge Vincent L.: 'We Will discard the agreed price ; Leibell made Jan. 6. 1939, and re- a<! to the" picture rights to the play duced the award of $532,153 to l$30.000 was the agreed price with Edward Sheldon and Maryarct Ayer She deal being cancelled because the Barnes for the plagiarism of their Hays olTico refused t<t OK the play], plav, 'Dishonored Lady,' in the The Expert testimony of the pro- Metro film, 'Leliy Lvnton,' to one- Queers and exhibitors said that the fifth the total net profits, or approxi- percentage of the ^gross receipts, mately $106 000 properly apportlonable to the play This now historic case has been in ran between 5-12% Very generally the-hands of the courts since-JUine . |l>cy P.'-ofe?"^ to believe the con- 24.1932. when the plaintiffs filed trolling factor m the success of a their action for an accounting of P"''/ ^''''' .u-^ * ^'''j'' profits of the picture against Loew's. ""I "?is case, the two leads Inc., Metro Pictures Co.. Inc., Metro-i Jo»"> Crawford and ^Robert) Goldwyn-Mayer ' Distributing Co., I Montgomery, had stood very high in Inc.. and Culver Export Corp. P"'^'":, S-^eem in 1932. They . , . cgrccd that :n the case of a very The suit was originally heard by ^^^,1 known book or play, the story Federal Judge John M. Woolsey and^ ,„ight contribute more, but that the dismissed April 23, 1933. The cir-: p,aj„t;fl[s. pigy that class. Stadio Contracts Hollywoo<l, Aug. 1. Paramount signed Susannah Fos- ter, moppet, Metro handed Sara Haden new pliiyer contract. - - Warners dropped Janet Chapman from contract list. Donald Barry inkod^ three-year acting deal at Republic. Rita Johnson was handed hew player pact by Metro. RKO picked up Eddie Stevenson, fashion designer, for one year. cuit court reversed the dismissal. Feb. 5, I93I3, found that a plagiarism; existed, and ordered the proceeding' sent to a master for iieariiig and de- Allowances for Stars, Etc. "They thought the other chief factors were the skill and reputation Of the producer and director, the termination of damages. The master, | scenery, costumes, extent of adver- Gordon Aucliincloss, after extensive; tising, and the reputation of the pro- hearings awarded the ' entire net! ducing company Itself, profits, in accordance with what he; 'We must. consider two things believed to be the circuit court de- ^ peculiar to this case. First, all wit- «o-en/'' "«ses' estimates were based upon- $581,604. . ,. ' the contribution of the entire play, Some time thereafter. Judge Lie-, ,hat is, as though it was completely ben reduced the award by approxi-' the work of the plaintiffs. As we mately $50,000. However, the judge kno^ that was not the case, as the declaved that his belief was that a piaintift worked over old material, sum of $133,000 was tops that the^ fPlay, 'Dishonored Lady' was taken plaintiffs should . receive. But the from the trial of Madeleine Smith in circuit court having decided that the Scotland in 1857, and facts are in the plaintinrs should be entitled to. full pirt5jic domain]. The general skele- net profits, prevented him from so' ton was already in the public reducing the allowance. i domain. That consideration must Both sides appealed, with the de- therefore count toward the reducing fendanls seeking to apportion the' of the percentages of the profits re- profits. Metro's newest special coun-, coverable. On the cither hand, the sel, John W. Davis, contended that! defendants miay not count the effect $50,000 should be the maximum al- of their standing and reputation in lowed, while Ihe plaintiffs sought the. the industry, probably the most im- rcturn to the full sum allowed by' portant factor of all, after the stars, the master. ! 'They were not innocent offenders. Tbe Opinion '. They deliberately lifted the play. It The Circuit Court in reversing the follows that they can be credited Federal Judge declared: 'This case'only with such factors as they comes before us again, this time on - bought and Paid 'or, the actors,, the a final decree which awards to the scenery, the producers, the directors, plaintiffs all the profits made by the ""d the general overhead. Indeed, defendants from the exhibition of one who consciously misappropriates the picture 'Letty Lynton', and the ' Property of another is often re- principal question is whether this is'*"*^d allowance even of his active correct. The defendants insist that ^''P^"^"- ^""^ although this harsh the profits Should have been appor-i "^"^^ ^ would charge the de- tioned, and the record contains evi-1 dence by which that can be done.: f ^"P*^''^^^ P'^S'"" Their reasoning is that the recovery; l^?/ "^J'l^f for his labor in _oLthe„aulii.Q.r of _a_coEyrighted work: ^^P^PJ^fi;."f J^"?^!j'«„''2f,„*fj^t"- ought to be limited to those profits RKO TRIO GOING, 6 READYING; UNITSETOP Hollywood, Aug. 1. AU-timc production peak at RKO Is slated for early fall, with three 'A' pictures already in work and six more waiting to go. In production are 'Hunchback of Notre Dame.' 'Al- legheny Frontier' and 'The Flying Deuces.' •Abe Lincoln In Illinois' is set to start Aug. 7, to be followed by 'Vigil in the Night,' 'You're Right, 'Y'ou're Wrong,' 'Swiss Family Robinson,' 'Meet Dr. Christian' and an Orson Welles starrer. Les Goodwins draws the directing assignment on Lee Tracy's next starrer, 'Headline Holiday,' slated to roll Aug. 14. Producer is Cliff Reid. 7 VniU RKO, with its revamped unit sys- tem of production, is beginning to rival the uniF production setup at United Artists. RKO has distributing and financ- ing deals with seven units: Stephens- Lang, Towne-Baker. Boris Morros. Max Gordon-Harry M. Goetz. Leslie Howard-Walter Futter, Herbert Wil- cox and Sol Lesser (latter also with UA). Added pictures from other of its own regular producers^ and an additional quota of .single films, are due from Harold Lloyd, March of i Time, Orson Welles and Jesse L. I Lasky. We are resolved to avoid the on6 certainly unjust cour.se of giving the David Butler Joins RKO As Producer-Director Hollywood, Aug. 1. . David Butler signed to produce and direct 'That's Right, You're Wrong' for RKO, with an option to produce one picture a year for three years." New pact does not interfere with his commitment to make one Edgar Bergen and one Bing Crosby for Universal. which result fi-om its exploitation; "-"^^iVi' ""J"" b'\"'k in. and that since the v'aluo of the pics every hing because the de- lure here depended only in very ^^"''^1.**. ^'^'^ small measure on those parts which P".'' .u '<!ti.;otiw onj .u "'s not our best guess that must of diVentLt?^i h ^ J t';-°^'*'" Prevail, but a figure which will ?L '-vcA^"f "fnv I" V Ihe plaintiff in every reason- nmfiu -n-om l ^v^^ The . ^ble chance of error. With this in mis o„ h^^^^^ mind, we fix their share of the net mv hP.,^f. ^ -^^^ playgoers profits at one-fifth.' ?hem J.h iv, ^"V"" .^"'■"•^ The three Circuit Court jurists Th^TeninLi^^i Tu''- '"^"^"'''"'•.then went into the accounting Jf iu fTtCr „A " ""^ T'" ">«=thods employed in arriving at the ^ mnnv fLP. "^ fu^' " """^^ "P "^t piofits. They first took up the ^Lw Jr^^" "f".""' tl^e .complaints Of the defendant.,, work of the producer and director,! „ j.n the story, the scenery and costumes.' <"''er Moaiflcatlons 'The attraction and the hope wh^ch' M ^' .«hey reversed the Special first, draws them are princTpaUy ^^f,'*^'" """^'"6 the defend- ?:pu?:;io^v^^ri^^ ' ^'^^ ^"J^^-'^ Zrof" rV-r„':i",Jv!'. ^"^ in arriving at the proper distribution cost by dividing the total number of pictures released in 1932. They decided that the defendants should be taxed on profits made on the picture outside of the U. S. They assessed the defendants on the profits made by Loew subsidiaries. They okayed the Master in using the cokI of production to arrive at a proper allocation of overhead ex- penses, rather than by the number of produced films, as the defendants requested; "They ordered' the la<:s on continui- ties to be included in the net profits, and did not allow Loew's to sub- tract a large loan to Metro Pictures Co. from their yearly profits. On the plaintifl's' side of the fence, the master was reversed in allowing the defendants to deduct income tax ^Continued on page S5) therefore incbmmensurr.ble Apporlionment 'The difficulties of separation have generally prevented infringers from attempting any apportionment, and Ihey have contented themselves with getting down the net profits as low «s possible. •The lower court held that an in- fringer, at least if he is a deliberate plagiarist, must surrender his entire profits, regardless of the relative im- portance of the copyrighted and un- copyrighted material he has used. 'However, it is nearly as unfair to assess the infringer for all the profits, as it would be to deny the author any recovery whatever, be- cause he couid not separate his con- tribution, The percentages of experts cannot be used to solve a problem in Which there is no commoa measure, Taurog Directs 'Melody/ Powell-Astaire tops Hollywood, Aug. 1. Norman Taurog will direct Metro's 'Broadway Melody of 1940,' starring Eleanor Powell and Fred Astaire. Film is skeded to start this month. Picture marks' Astaire's first ap- pearance on the lot since he did a bit in 'Dancing Lady' with Joan Crawford in 1933. Legal Angles-And Costs John W. Davis who last argued the 'Lynton' appeal lor Metro—imrt wa.s 80% successful. Judging by the big lop-off—is figured a.<: surely having gotten $100,000 for his fee. The costly array of special Loew- Metro counsel started with a $50,000 stipend to the late Nathan Burkan, and has included former N. Y. Governor Nathan L. Miller. Jiv ciiti- niiited that the legal bill is around $250,000. Figuring the present $100,000 award stands, although both sides are appealing, plus the costs, it's around $400,000—certainly not much of a saving under the $532,000 originally awarded Sheldon and Mrs. Barne;:. However, there are more pertinent aspects entailed in that the pic- ture industry at large is of the same opinion as Metro, that the value .of the stars, the quality of production, the super-merchandising out- lets in distributing the film, must be taken into consideration in the event of any adverse damage awards on plaglarisrn charge.<;. In this ease the Circuit Court of Appeals seemingly concurred with thiit thought, giving} Joan Crawford and Robert Montgomery con?ide'.':<l)le marquee credit, plus other element's. Legal purists, however, argite that if the U. S. Supreme Court ulti- mately confirms, it means that picture companies could even boldly lift story ideas, and-then decide to pay off on the residue, after the courts knock off so much percentage for stellar draw; so much for production ~ quaiityv 6ic; ' : "" ~~" ";■ ■■' v ■ ■ . It's for this, reason that the monetary element isri't as important as the legal premise established. It's Hiqied Hat the Trade Practice Code Wifl Go Into Effect by Aug. 15 The trade practice code, with an arbitration system that has beerr modified to meet the complaint of numeroas exhibitor associations and individuals who believed^ it should be changed before complete accord of theatre operators could be ex- pected, may go into effect by Aug. 15. Before that time it will be ready for acceptance and incorporation into contracts on the 1939-40 prod- uct, with provisions to be made for the organization of arbitration boards in the various key centers where they will function. The setup of the boards, selection of panels of arbitrators in the branch points where they will serve, and the certification of film con- tracts lo cover code and arbitration will immediately follow the ratifica- tion of the ultimate form of pro- cedure to govern the disputes- which arise between buyer and seller. There is every possibility that the disti-ibutor committee proffering the code will be in a position lo begin organizing the arbitration boards in the next, two weeks or sooner. This is a procedure that may come, re- EDWARD SMALL READIES TAGO' AS 1939-40 FIRST Hollywood, Aug. 1. 'South of Pago-Pago' is slated to roll next week as the opening gun of Edward Small's proposed cam- paign of uninterrupted production for 1939t40, via United Artists. In preparation are 'My Son, My Son' and 'Two Years Before the Mast.' Waiting to go into the writ- ing mill are 'The Life of Valentino," •Christopher Columbus' and 'House of Monte Cristo.' Loew Slows UA Pix Schwartzwald's 16 at U. Milton Schwartzwald, who has devoted most of his time in recent years to producing musical shorts in the east, has been set by Universal to produce 16 'B': feature films for 1939-40. Schwartzwald will turn them out on the Soast. Blackmer as T. R. Hollywood, Aug. 1. Sidney Blackmer will characterize Theodore Roosevelt in 'Teddy Roose- velt and. His Rough Riders' at War- ners. Actor just' completed the Roose- velt role In "The Monroe Doctrine,' another 'WB short. DITNLAP'S BIG KILLER Hollywood, Aug. 1. Monogram's top-budget special, 'Murder in the Big House,' will be handled personally by Scott R. Dun- lap, v.p. in charge of production. Shooting starts Aug, 9. Hollywood. Aug. I. David L. Loew will not make any picture.-; for United Artists release until the 1940-41 season, according to reports. Although committed to make two productions annually for next two years, Loew Is slowing his films because of inadequate story preparations. It is understood he will not set up an organization untH early 4h 1940. WB Gets Jump on 20th Hollywooi}, Aug. 1, Warners gets the jump on 20th- Fox in the film campaign of New York's old 69th Regiment. Burbank plant is deferring the start of 'Four Wives' so that Pris- cilla Lane will be ready to appear in 'The Fighting 69th,' skedded to get under way Aug. 15. LESSER MOVES TO S-I Hollywood, Aug. 1. Sol Lesser has rented office and stage space at the Selznick-Interna- tional studio. Lesser previously rented space at RKO. Producer's first picture, 'Our Town,' for United Artists release, will be made at SrL gardless of any delay by . exhibitor associations to give their stamp of approval to the code, since in any particular exchange zone if a sufTi- cieiht number of exhibitors are ready to deal under the code, it could be forced into rapid effect. William F. Rodgers, general .sales manager of Metro and whcelhor.se for the distributors on the code pourparlers, held a meeting yester- day afternoon (Tues.) with the sales mahagers and attorneys of the inajors and stated that indications were the new arbili-alion machinery should be ready in 'a couple of days.' The provisions are modified so far as clearance is concerned, one of the major features of arbitration and probably the one that concerns ex- hibitors more than any other. This clause, lengthy in lis original form, has been revised to give what is declared to be as even a balance on arbitration boards as can be fi.(!ure(l out. Reports are that where clearance disputes affect three parjie.';—a di.s- tributor, an independent theatre and an affilated .(chain) theatre—the dis- tributor will not demand represen- tation on boards except where be is vitally, concerned by the outcome. Thu.s, if two theatres are fiiehling over clearance where it docn't make any difference to the dis- tributor in rentals or run. then it would be a two-party dispute. There have been no meetinss-,wilh National Theatres over accounts that this chain, party owned by 20lh-Fox and partly by the Chase National Bank, wanted to have its position clear before signing up under the code, insisting it was an unaffiliated (independent) chain. There is no other impression in the trade but that National is a major chain, and thus would fall into the affiliated branch. Even if it isn't owned wholly by 20th-Fox, it .<ilill is affiliated and in the U. S. .^uit ■ 20th-Fox-is named because of . this, string of theatres, hence divorce- ment is being sought According to distribution informa- tion, distribs and affiliated Iheotres are in step on the code and Ihe modified arbitration plan covering clearance. No trouble thus Is looked for there, and all that will be re- quired for adoption of . the code will be the willingness of the indle.s to go along under it While it may be true that some of the circuits, which are part of the producer-distributor organizations, are bringing up ques- tions as to how the code will work when they are pitted against iff- dependents in various towns where perhaps they enjoy advantages, all the distributors controlling such theatres (partnerships. ' pools, e't.), have certified that they are 'sipntd up.' No further meetings are sched- uled to date with Allied Theatre Owners of New York, whose Max. A. Cohen and a special committee " met with, the distributors during Ihe past in a preliminary parley to dis- ttiss continuing negotiations for adoption of the code, contrary to the action of the parent organization. Allied States Assn., which flatly re- jected it six weeks ago in Minne- apolis, It is expected on inside that ' Allied of N. Y. will approve the code and revised arbitration.