May 20, 2014 Melanie A. Miller "irect Phoe 215-665-2#1$ "irect Fax 215-#01-2$1$ !!iller%coze.co! VIA E-MAIL VIA OVERNIGHT EXPRESS
The Honorable Jeffrey L. Schmehl United States District Court for the Eastern District of Pennsylvania The Madison Building, Suite 401 400 Washington Street Reading, PA 19601 Re: Disney Enterprises, Inc., et al. v. Entertainment Theatre Group, et al. Civil Action No. 5:13-cv-05570(JLS) Our Ref.: ETGP-L1 (343034.000) Dear Judge Schmehl: Defendants in the above-referenced matter, namely, Entertainment Theatre Group d/b/a American Music Theatre, James D. Martin, Frederick W. Steudler, Jr. and Dwight H. Brubaker (the AMT Defendants), take this opportunity to alert the Court to the Supreme Courts recent decision in Petrella v. Metro-Goldwyn-Mayer, Inc. et al., No. 12-1315, 572 U.S. ___ (2014), which has direct bearing on Plaintiffs arguments in support of their Motion to Dismiss, which Motion is currently pending before the Court and was argued on May 15, 2014. Please find attached a copy of the opinion for your convenience. In support of their Motion, Plaintiffs argue, inter alia, that AMT Defendants counterclaims and affirmative defenses are time-barred because SLMI and AMT knew or should have known as early as 1998 (or earlier) that Marvel effectively claimed ownership in the Spider-Man copyright based on Marvels open and notorious use thereof for years and, because SLMI allegedly failed to timely assert its ownership claim, its current claims-and AMTs by extension are time-barred by the Copyright Acts statute of limitations. See, e.g., Plaintiffs Memorandum in Support of Motion at 17-19. However, the Supreme Court in Petrella makes plain that there is a separate-accrual rule [that] attends the copyright statute of limitations, slip op. at 5, and that the Copyright Acts statute of limitation runs separately from each violation. Id. Thus, Section 507(b) of the Copyright Act allows plaintiffs . . . to gain retrospective relief running only three years back from the date the complaint was filed. Id. at 6-7. Thus, the Supreme Court reversed the Ninth Circuit and found that laches could not act as a bar to Petrellas claim for infringement when Petrella filed her infringement claim over 15 years after learning about MGMs alleged infringing actions. Id. at 8; 11-14. Similarly, the Petrella decision supports the argument that AMT Defendants counterclaims and affirmative defenses should not be deemed to be time-barred under the The Honorable Jeffrey L. Schmehl May 20, 2014 Page 2 ______________________________________
circumstances. 17 U.S.C. 507(b) provides that [n]o civil action shall be maintained under the provisions of this title unless it is commenced within three years after the claim accrued. Here, AMT Defendants counterclaims and affirmative defenses did not accrue until the Plaintiffs brought suit against AMT Defendants or at least when there was an imminent threat of suit, as AMT Defendants counterclaims and affirmative defenses are brought in direct response to Plaintiffs claims for copyright infringement. These claims were therefore brought well within the three year statute of limitations set forth in 17 U.S.C. 507(b). Applying the reasoning set forth in Petrella, it is evident that AMT Defendants counterclaims and affirmative defenses must therefore be deemed timelyeven if AMT and/or SLMI knew or should have known of Plaintiffs alleged open and notorious use of the Spider- Man copyright for many years before the initiation of this suit. By suing the AMT Defendants, Plaintiffs effectively opened the door for SLMI and AMT to argue ownership of the Spider-Man copyright. After all, [t]o the extent that an infringement suit seeks relief solely for conduct occurring within the limitations period courts are not at liberty to jettison Congress judgment on the timeliness of suit. Slip op. at 1. Thus, just as laches was held not to preclude adjudication of a damages claim brought within the three-year statute of limitations window, id., here, too AMT Defendants counterclaims and affirmative defenses should not be time-barred as they were plainly brought within three years of accruing. We trust that you will find the Petrella decision informative. Thank you for your time and consideration with respect to this matter. Sincerely, COZEN O'CONNOR By: Melanie A. Miller cc: All Counsel of Record