A Deposition for Emma Watson Hangs on an Interpretation of Copyright Law

Emma Watson -The Circle Paris Photocall -Getty-H 2017
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Depending on which side a judge believes, a somewhat peculiar intellectual property case against Disney, Fox and Paramount is worth more than a billion dollars or just tens of thousands of dollars. U.S. District Court Judge Jon Tigar may have to make up his mind sooner rather than later, as a deposition for Emma Watson and other big-name actors and directors could hang in the balance.

The lawsuit is brought by Rearden. The Silicon Valley company asserts ownership over visual effects technology that captures the facial performance of an actor wearing makeup and processes the data into computer-generated heads of odd-looking characters in films. Think about the Beast in Beauty and the Beast as one example. Rearden's lawsuit challenges the derivation of this CG character plus others in Avengers: Age of Ultron, Deadpool, Terminator: Genisys, Guardians of the Galaxy and Night at the Museum: Secret of the Tomb. The studios allegedly contracted with the VFX firm Digital Domain 3.0 to license technology for these movies, but in a previous case against a Chinese company that had bought DD3's assets, Rearden got a judge to agree that it was really the owner of the technology.

Now Disney, Fox and Paramount are facing follow-up litigation, which has resulted in some disruptive legal theories and eventually, Judge Tigar's decision last June allowing copyright and trademark claims to move forward.

Of course, that's not the end of the story. On Wednesday, the parties delivered a case management statement. (Read it in full here.)

"The only allegedly infringing act in issue is the loading, by third-party special-effects vendor Digital Domain 3.0, of MOVA Contour software into the RAM of computers that DD3 alone operated," writes Kelly Klaus, attorney for the defendants. "Rearden has no claim of copyright ownership to the output file or to anything that is done with the output file or the ultimate images that appear on screen. Rearden nevertheless takes the position that its sole allegation of infringement justifies 10 months of discovery concerning not only DD3's loading of the software into RAM, but everything that was done with any output file — as to which Rearden has no copyright interest — through to the production, marketing, and box-office and home-entertainment revenue for seven motion pictures."

Rearden wants ample discovery. The company is pushing for scores of depositions from non-parties involved in the creative movie-making process, including directors, performers and crew. Beauty and the Beast director Bill Condon is one such individual specifically mentioned as is Watson, who finds herself in the crosshairs of a potential examination under oath thanks to a hyperbolic comment she made at a press conference in Paris, France.

"I'm so pleased that we did it the way we did it because when you see Beast onscreen, there is something so human about him," she told reporters. The technology used "really captures the subtlety of Dan's facial expression and the performance that he gives. … I don't think the world has seen anything like it before. I think it's really unique to our film." 

But Rearden believes such testimony by Hollywood's creative community is necessary given how they were "witnesses to the infringements and publicly admitted the causal link between those infringements and defendants' profits."

The plaintiff looks to hold the studios liable for vicarious and contributory copyright infringement plus confusing the origin of its trademarks and argues it has a lot to explore in this case. For instance, did Guardians of the Galaxy really use the Contour software?

In response, the studios want the judge to first take up the question of whether Rearden can seek a cut of profits from its movies and wants discovery focused in that direction. This may be especially pressing after seeing Rearden tally up the profits for the six movies in question, the total of which exceeds $1.3 billion.

Sooner or later, there could be a big decision on the issue of damages in this case.

The studios doubt Rearden will elect statutory damages (which even for willful infringement adds up to no more than $150,000 per work). That leaves actual damages.

"As the targeted discovery the Studios propose will show, Rearden will not be able to make the factual showing required for it to have any claim to any part of the profits from those movies," writes Klaus, adding that the critical issue in the case "will be whether Rearden can carry its burden of showing a causal link between the act of MOVA Contour being loaded by DD3 into computer RAM and people paying to see the Studios' movies."

The studios' lawyer adds, "The bottom line is that the Studio Defendants' proposal is far more efficient than plunging into sprawling discovery. Once the parties know what movies are in issue and whether Rearden can raise a triable question, both sides can assess the relative value of this case and be in a position to resolve it — before proceeding to costly and burdensome discovery on the specific motion capture sessions, the elements of secondary copyright liability, financial information and the like."

Mark Carlson, attorney for Rearden, responds that the proposed "causal nexus" exploration is a "pipe dream," stemming from the false premise that the plaintiff is seeking to recover indirect profits. He argues that in cases in which the infringement is not separate from the product ultimately sold, the product profits may be direct.

"Here, defendants' infringements of the Contour copyright was part of the process of making the accused films," he writes. "It follows that at least some portion of the films' profits are directly attributable to defendants' infringements."

Even if it's indirect, Carlson adds, there is a causal nexus between the infringement and the profits generated for the film. He nods to Emma Watson's comment.