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A 'Supernatural' Profits Fight, and the AT&T-TW Merger Issue That Few Are Discussing


Warner Bros. has been battling the creator of one of the longest-running television shows in an arbitration that addresses the fairness of media consolidation and the very mechanism to resolve disputes with those who feel shortchanged.

Since AT&T announced in October 2016 that it would be acquiring Time Warner for $85 billion, there has been hardly any talk about how the deal will impact creative talent. When the issue of vertical integration comes up, it's often a discussion on whether distributors including Comcast, Dish and Verizon will get fair terms to license networks like HBO or TBS, or whether AT&T might try to unfairly compete for telecom customers by holding exclusives on a would-be owned show like Game of Thrones or a franchise like that of Batman. AT&T executives insist this would make no business sense, that receiving money for content is the name of the game and that antitrust history prevents government officials blocking a merger between a supplier and a distributor. But virtually ignored is how this deal will impact those who create, write, star and direct in popular entertainment.

If the question hasn't provoked more examination, there could be a reason for that beyond the complexity of the topic. Almost all contracts in entertainment include arbitration provisions. As a result, most of the disputes that arise from vertical integration are kept hushed. But The Hollywood Reporter has learned about one pending fight in arbitration — and it's a battle that not only involves Warner Bros. and the very lawyer now tasked with fighting the Justice Department, but it also addresses the fairness of media consolidation and the mechanism to resolve disputes from those who feel shortchanged by studios selling to their affiliated distributors.

The arbitration is over The CW's Supernatural, a show that is now in its thirteenth season. It's obviously a successful program, given its longevity, but few appreciate the economics underpinning the series. According to a 2013 profit participation statement sent out by Warners, the total gross receipts for the show's first eight seasons amounted to $570 million. But after expenses, distribution fees, interest payments and money to the talent agency that packaged the series, Warners reported that Supernatural had a deficit of nearly $23 million, meaning nothing in the pool for those entitled to a percentage of net profits.

Eric Kripke, the creator of the fantasy horror series as well as a profit participant, objects to the studio's accounting. In particular, he points to what Warners has been booking in license fees from its affiliated broadcast network. (In fairness to Warners, it must be noted that The CW is only half-owned by the studio, with the other half enjoyed by CBS, which presumably had a say, too.)

"The show is one of The CW's most successful series," states an audit claim. "It is customary in the television industry for studios to obtain license fees from networks that, starting in Season 5, equal or exceed the cost of producing the show. ... If Warners had merely received a full cost license fee from The CW for Season 5 through 8, the gross receipts would be increased by $104,005,323."

This is what actually occurred:

Kripke, through his loan-out, also raises other issues including transactions with affiliated on-demand services and insufficient documentation to determine whether the license fees from Netflix and Hulu represent fair market value.

In response, Warners has invoked arbitration by filing a demand at JAMS, a leading arbitration forum.

Represented by a team at O'Melveny & Myers which includes Daniel Petrocelli (recently tapped by AT&T to defend that Time Warner merger, in case the government sues to block it), the studio retorts, "Under the parties' agreements, Kripke granted WBTV absolute discretion and control over how and whether to distribute and exploit the Series, including by authorizing WBTV to license the show to an affiliated company."

Warners knocks at Supernatural in its arbitration demand letter and says Kripke has gotten the benefit of the bargain with millions of dollars in fixed fees. The studio says the reduction in license fees was necessary. According to its lawyers, "As a result of these deals, Kripke has continued to obtain greater total compensation, because the Series, which otherwise would have been cancelled during its early years based on its performance, has remained on the air."

Now that the case is in arbitration, Kripke's attorney is mounting what might best be characterized as a fight priming the bigger fight. It's something that Warners probably didn't expect.

Kripke is represented by Ron Nessim, an attorney at Bird, Marella, who recently sued AMC on behalf of various Walking Dead executive producers including Robert Kirkman and Gale Anne Hurd. Along with the Frank Darabont litigation, the Walking Dead profits cases represent more exploration over the issue of whether creatives are being treated fairly when studios producing content share a parent company with the outlet distributing the content.

Nessim is also the author of a 2015 article in the UCLA Entertainment Law Review titled "Mandatory Arbitration Provisions Involving Talent and Studios and Proposed Areas for Improvement." In that article, Nessim makes the argument that studios may be advantaged in arbitration thanks to a phenonomenon that critics call "repeat player bias." Meaning, if an arbitration vendor like JAMS wishes to maximize its revenue, that vendor may have financial motives — unconscious or otherwise — to favor parties who arbitrate repeatedly.

Nessim's concerns have now impacted how he's handling the Supernatural case.

After Warners submitted its demand for arbitration, the parties began volleying letters to each other and to a case manager at JAMS. Correspondence began last month and has continued through this week.

Among other things, Nessim is demanding information about financial and professional relationships between JAMS and those involved in the present case. He also is insisting upon disclosures about potential arbitrators. He wants to know all about Warner Bros.' prior and pending cases, the amount of the claims, the prevailing parties and so forth. Last and not least, Nessim is pushing JAMS to classify this clash as a "consumer arbitration," which would mean that JAMS would have to publish information about this Supernatural case on its website.

Warners has attacked Kripke's endeavor as a "sideshow," while Nessim writes in his most recent letter, "[I]n a 'company town' like Los Angeles, we believe that members of the talent community are justifiably concerned about the danger of arbitration providers and their neutrals being influenced in favor of the entertainment conglomerates that draft the contracts that direct the business to them."

The matter remains unresolved.

If the Justice Department does move forward with a courtroom effort to stop AT&T's $85 billion acquisition, the issues faced by creatives might not be overtly discussed in a complaint spelling out the competitive harms of vertical integration. But as the government's case continues, it just well might.

In an important speech Thursday before the American Bar Association, the Justice Department's antitrust chief Makan Delrahim addressed vertical mergers. He expressed skepticism of behavioral remedies or divestitures that may only partially remedy the harms of consolidation of suppliers and distributors. He also said, "If a merger is illegal, we should only accept a clean and complete solution, but if the merger is legal we should not impose behavioral conditions just because we can do so to expand our power and because the merging parties are willing to agree to get their merger through."

Led by Petrocelli, AT&T may probe any undue influence that CNN-hating President Donald Trump has had on the Justice Department, which is supposed to operate independently. At the same time, there's potential skeletons in Hollywood's closet to probe and put before a judge if prosecutors dare. After all, if any problems from a merger of this type aren't dealt with on the front end, how many creatives in Hollywood have confidence such issues will be fairly resolved later on in private forums?


Irving Azoff Song Licensing Outfit Gains Edge in Antitrust Battle With Radio Stations


A magistrate judge potentially deals a blow to some 10,000 radio stations fighting licensing demands over songs by Bruce Springsteen, Prince, and Bruno Mars, among other superstars.

Thanks to a magistrate judge's recommendation on Wednesday, a key legal battle that could determine the future of songs on the radio may be headed away from Pennsylvania in what would represent an initial victory for Irving Azoff's Global Music Rights, which is attempting to boost licensing income for Bruce Springsteen, Bruno Mars, Pharrell Williams and other superstars.

Global Music Rights is an upstart that competes with ASCAP and BMI, two performance rights organizations that, thanks to consent decrees with the U.S. government, must issue blanket licenses to radio stations upon request. GMR has a more free hand to negotiate the public performance of song compositions, at least for the time being. That's because GMR is fighting antitrust claims made by the Radio Music License Committee, which represents some 10,000 radio stations throughout the nation.

RMLC sued GMR in Pennsylvania, while GMR sued RMLC in California.

It's the contention of the radio stations that GMR is an "unlawful monopolist" demanding "supra-competitive" prices for licenses to works by John Lennon, Prince, Jon Bon Jovi and others. GMR responds that its repertory only includes 74 songwriters and that it has "a single-digit share of radio spins." In other words, GMR may have an illustrious clientele, but it doesn't believe it is a monopolist. However, if it does win, other musicians may choose to bolt ASCAP and BMI, which continues to fight the government over those consent decrees. And if GMR beats the antitrust claims, it would have the power to take its songs off of radio unless those 10,000 radio stations agreed to fork over more money.

The location where the battle will be fought between GMR and RMLC is important largely because a few years ago, an East Coast judge looked at another small performance rights organization called SESAC and issued an injunction upon a finding that there were no substitutes for a SESAC blanket license. Eventually, SESAC had to pay TV stations a $58.5 million settlement to resolve antitrust claims. Thus, RMLC sees advantage to fighting the case in Pennsylvania.

As the parties squared off over the forum, the situation became heated.

GMR offered the radio stations an interim license for rights to perform hit songs with the caveat that if Pennsylvania radio stations accepted, this couldn't be used as evidence to show that the case belonged in Pennsylvania. RMLC demanded the interim license be on "non-discriminatory terms" and asked the judge for an injunction, lest radio stations suddenly found themselves without the ability to perform songs authored by Don Henley, Eddie Vedder and Ira Gershwin, to name three more GMR clients. Fighting this demand was O'Melveny attorney Daniel Petrocelli, whose other big antitrust case at the moment is representing AT&T against the government over the Time Warner merger.

With that background comes the recommendation yesterday by U.S. Magistrate Judge Lynn Sitarski, who had to consider whether GMR had sufficient contact with Pennsylvania to establish jurisdiction over the licensing outfit.

RMLC asserted that GMR had national contacts, and that was enough for an antitrust defendant.

But Sitarski writes that "GMR’s contacts with states other than Pennsylvania cannot be aggregated in order to obtain personal jurisdiction over GMR in this forum."

The judge then points out that GMR resides in California, not Pennsylvania, and that the negotiations over a licensing agreement took place outside the Keystone State.

"GMR has no jurisdictionally significant contacts, ties, or relations with Pennsylvania," she writes. "The Amended Complaint does not allege — and the record does not contain any evidence of — a single affirmative act through which GMR purposefully directed any of its activities at the forum state, or purposefully availed itself of the privilege of conducting activities within the forum state. GMR has not invoked the benefits and protections of Pennsylvania’s laws. Accordingly, there is no need to consider the other two factors for evaluating specific personal jurisdiction — whether RMLC’s claims arise out of or relate to at least one of GMR’s activities in the forum and whether an exercise of jurisdiction over GMR would otherwise comport with fair play and substantial justice."

Sitarski later adds in her report (read here) that RMLC's assertions about the injuries experienced by the Pennsylvania radio stations aren't enough to establish contact with the state, and even if there was harm, RMLC has not demonstrated that GMR "expressly aimed" conduct at the state.

Sitarski recommends dismissing the case, which would allow the California lawsuit to proceed after a stay is lifted. The district court judge has to sign off on the recommendation, which comes as Cumulus Media, the nation's second largest radio company, filed for bankruptcy.

Eriq Gardner

David Jackson Mueller Testifies In Taylor Swift Trial

The second day in court and the first day of testimony in former KYGO/DENVER host DAVID "JACKSON" MUELLER's lawsuit against TAYLOR SWIFT for accusing him of groping her, which led to his firing by KYGO, included MUELLER testifying that he may have touched SWIFT's ribs and saying that audio of his post-incident meeting with station management was destroyed by an accidental coffee spill on his computer keyboard while he sent the files to SWIFT's lawyers.
MUELLER has steadfastly denied inappropriately touching the singer at the 2013 pre-concert meet-and-greet, and repeated his denial on the stand, admitting that he may have touched her ribs with a closed hand while trying to reach around her posing for a photo.

On the audio files, MUELLER said he recorded a meeting with then-PD/host EDDIE HASKELL (HERSHEL COOMER) and VP/Market Manager BOB CALL but, after sending 19 clips to SWIFT's lawyers (who said they got only 11 of them), the coffee spill and a water spill on a second computer prevented further clips from being sent. Further testimony involved MUELLER's assertion that HASKELL told him that SWIFT had jumped into his arms and he held her with his hands on her butt, which MUELLER dismissed as "one of his stories," but he did not explain under cross-examination why he did not inform CALL about the story.

Disney, VidAngel Weigh Family-Friendly Filtering Against Copyright Protection in the 9th Circuit

"In the absence of the Family Movie Act, you've got these works that are encrypted and you use what appears to be illegal software ... to decrypt them," said one judge of VidAngel's service.

"I think this one’s a lot easier," whispered 9th Circuit judge Carlos T. Bea to his colleague Andrew D. Hurwitz, comparing the unlicensed family-friendly streaming dispute between Disney and VidAngel to previous items on their calendar while the attorneys were setting up for their oral arguments on Thursday.

It's unclear whether those in the room could hear, but the statement was plainly audible in a live stream on the court's website. "I do, too," responded Hurwitz with a laugh.

The dispute itself is no laughing matter, however, and has potentially wide-ranging implications for the entertainment industry in regard to fair use. It centers on whether VidAngel's service that allows users to set filters and stream content infringes upon copyrights held by Hollywood studios in those films. Disney, 20th Century Fox and Warner Bros. argue the service threatens the legitimate streaming market, while VidAngel paints the lawsuit as part of a war on family-friendly content.

The panel, comprised of Bea, Hurwitz and district judge Leslie E. Kobayashi, is currently reviewing whether the district court erred in issuing an injunction that paused VidAngel's service. "The statute clearly requires that a performance or transmission of filtered content must come from an 'authorized copy' of the motion picture," wrote U.S. District judge Andre Birotte in that decision. "The digital content that VidAngel streams to its customers is not from an authorized copy."

The appellate arguments were the last on the panel's Thursday calendar — and the apparent perception that two of the three judges consider this a straightforward case bodes well for the studios.

During the oral arguments, VidAngel attorney Peter Stris told the panel that the case boils down to two key questions: "Does the Family Movie Act authorize VidAngel's copying and streaming and, if so ... should the DMCA be interpreted to gut not only the Family Movie Act but also other well-recognized exemptions to copyright infringement?"

DVDs and Blu-rays contain technological measures that prevent unauthorized copying, and the Digital Millennium Copyright Act lays out specific situations in which circumventing those measures would be legal. Those exemptions are re-evaluated every three years. In 2015, for example, the exemption that allowed documentary filmmakers to lawfully access DVD content pursuant to fair use was expanded to include Blu-rays for the first time.

The Family Entertainment and Copyright Act of 2005, meanwhile, creates a different exemption. It allows "the making imperceptible ... limited portions of audio or video content of a motion picture ... from an authorized copy of the motion picture."

So, as Birotte noted, whether VidAngel's service filters from authorized or unauthorized copies is key here.

"In the absence of the Family Movie Act, you've got these works that are encrypted and you use what appears to be illegal software ... to decrypt them," said Hurwitz. "Isn't that exactly what the DMCA is about?"

Stris said "absolutely not" and argued that, by buying the discs, VidAngel was given permission to access the content and therefore the family movie exemption applies. "You don't pay $20 for a disc unless you're going to have the right to watch it," he said, adding that, in order to watch it, your DVD player has to bypass the access controls. He argues that, after buying a disc, he should be allowed to rip it and filter it without worry of legal consequences. "It's very dangerous if our interpretation is rejected ... I don't think Mr. Verrilli will be able to explain how, under their interpretation of the Family Movie Act, anyone can ever filter through streaming without the studio's permission."

Hurwitz seemed skeptical. "The central issue for me is ... you’re not transmitting from the one that you actually bought from them," he said. "You're transmitting from a copy that you've ripped. ... Why is that 'from an authorized copy' language not fatal to your claim?"

VidAngel's interpretation of the statute is that you can make a fixed copy of the original work if it enables filtering, and Stris argued that "Congress didn't care about the technology and whether it made an intermediate copy as long as it met the other conditions in the provision."

Donald Verrilli, attorney for the studios, argued that Birotte issued the injunction because he saw the service for what it is. "It's an unlicensed on-demand streaming service that lacks any legal justification and is totally unfair to us and to licensed streaming services," Verrilli said. "The only way you gain access lawfully under the DMCA is by using the means that the copyright owner has authorized for gaining access."

Verrilli argued the 9th Circuit has already "unambiguously" held in MDY v. Blizzard that consumers can't circumvent access control measures to view a DVD on a competing platform just because they purchased it.

"You cannot invoke the Family Movie Act to excuse conduct that would be a violation of the DMCA on the ground that you're violating the DMCA so that you can do what the Family Movie Act would otherwise authorize," said Verrilli, paraphrasing Sen. Orrin Hatch, who sponsored the bill. "What they're essentially saying is 'if we filter, we can stream without a license.'"

Further, Verrilli argued that the studios aren't inherently against filtering, only illegal filtering. "I think it speaks volumes that the filtering company out there that’s trying to do this in a way that's consistent with the copyright laws and DMCA, ClearPlay, has filed an amicus brief on our side," he said. "I think that tells you all you need to know about whether we're trying to kill off filtering or not."

Led Zeppelin Asks Appeals Court to Award Fees for "Stairway" Trial Win

"Skidmore continues to advance frivolous arguments and misstate the law," writes the band's attorney in the brief.

The "Stairway to Heaven" legal fight has become an even more formidable climb for the 9th Circuit, as Led Zeppelin's legal team has filed a cross-appeal asking it to consider whose glittering gold should be used to pay for the litigation.

Last summer, a jury found guitarist Jimmy Page did not copy the song's iconic riff from a 1968 instrumental piece by Spirit called "Taurus."

Michael Skidmore, the trustee who sued the band on behalf of late Spirit songwriter Randy Wolfe's estate, wasn't content to accept the loss. His attorney Francis Malofiy filed a 90-page appeal brief in March, arguing that the jury did not believe the songs were substantially similar because it wasn't allowed to hear the "Taurus" sound recording. At the time Wolfe created the composition, sheet music was protected by federal copyright law but sound recordings weren't.

The jury did find, however, that Page had access to the song — and that's the cornerstone of Malofiy's second major argument on appeal. He says the jury wasn't adequately informed about the inverse ratio rule, which essentially lowers the bar for substantial similarity when a high degree of access has been proven.

Led Zeppelin attorney Peter Anderson filed an even more voluminous reply on Friday, arguing that "substantial evidence supports the jury's verdict and Skidmore's appeal has absolutely no merit."

Specifically, Anderson says the argument about jury instructions regarding the inverse ratio rule is moot because Skidmore "did not prove the high degree of access required to trigger that rule" and "no amount of access will establish copyright infringement if, as the jury found here, there is no substantial similarity in protectable expression."

As to the sound recording issue, Anderson argues, "Skidmore misreads statutes and cases to advocate against black-letter copyright law that the copyright registered in a work protects only the copyrighted work and that federal copyright does not extend to sound recordings created prior to February 15, 1972."

In addition to replying to Skidmore's appellate arguments, Anderson is cross-appealing. He's asking the 9th Circuit to affirm the judgment, but reverse U.S. District Court judge R. Gary Klausner's order regarding fees. Anderson also represents publisher Warner/Chappell Music, which bore nearly all of the legal costs and fees for the defense — and he wants the appellate court to make Wolfe's estate pick up the tab.

Klausner in August denied Warner/Chappell's request for an award of $800,000 in fees and costs, finding that Skidmore's lawsuit was not frivolous or objectively unreasonable — despite litigation misconduct by his attorney.

Anderson says Klausner erred in treating that misconduct with equal weight as the Fogerty factors, a set of standards that were established for evaluating fee awards in copyright cases in a 1994 U.S. Supreme Court case involving singer John Fogerty.

"The District Court — without considering whether its ruling furthered the purposes of the Copyright Act — identified the following Fogerty factors: '(1) "the degree of success obtained on the claim"; (2) "frivolousness"; (3) "motivation"; (4) "objective reasonableness of factual and legal arguments"; and (5) "need for compensation and deterrence,"'" writes Anderson. "However, the District Court erred on the law and the record, and all of the Fogerty factors favor awarding attorneys’ fees."

Anderson argues that it was unreasonable for Skidmore to sue based on "the shared presence of five pitches of the chromatic scale" when it's fundamentally true that "no one owns musical scales."

Further, Anderson argues that "motivation" should have been a strike against Skidmore because Wolfe in his lifetime did not sue Led Zeppelin, and neither did any of his heirs until a 2014 Supreme Court case eliminated the defense of laches in copyright claims. That case, Petrella v. Metro-Goldwyn-Mayer, opened the floodgates for damages claims that were previously time-barred as long as they were filed within the three-year statute of limitations. Here, Led Zeppelin became a target by releasing a remastered version of the band's album IV containing "Stairway" in 2014.

Finally, Anderson argues that treating litigation misconduct as an unofficial sixth Fogerty factor dilutes the severity of the act.

"Defendants respectfully submit that the District Court’s Judgment and Amended Judgment should be affirmed and that the District Court’s Order denying Warner/Chappell’s motions for attorneys’ fees and additional costs should be reversed with instructions to grant those motions," writes Anderson. "In addition, and including because Skidmore continues to advance frivolous arguments and misstate the law ... defendants should recover their costs and attorneys’ fees on appeal."

Judge Explores Boundaries of Authorship With Nods to 'Star Wars,' Spike Lee and 'Love Actually'


Modded video games get likened to movies in a tour de force of legal writing.

Move over Get Out, The Handmaid's Tale and Kendrick Lamar. A California federal judge has just thrown his hat into the ring for one of the most thought-provocative pieces of authorship this year. The topic of U.S. District Court judge Charles Breyer's latest decision is itself authorship, and with a crazy number of pop culture references, he explores a situation wherein game players become creative gods and the attendant implications.

What follows is a summary, although the full opinion is a highly recommended read.

Fifteen years ago, Blizzard Entertainment came out with a computer strategy game titled Warcraft III: Reign of Chaos, full of humans, orcs, elves, and zombies fighting for dominance. What made this game even more popular for fantasy fans was the fact that Blizzard enabled players to create "mods," featuring new settings, characters, storylines, and rules. At the time, Blizzard didn't require players via an end user license agreement to assign rights back to the company. Blizzard only prohibited the commercial distribution of mods on a stand-alone basis.

"Some mods proved more contagious than others," writes Breyer. "A high-school student named Kyle Sommer, operating under... his online moniker 'Eul,' was Patient Zero for one of the most infectious: Defense of the Ancients a/k/a 'DotA.' His mod pitted two teams of heroes against one another, each trying to destroy the other’s 'central structure' while defending one’s own."

After working on DotA for two years, Eul went to college and with other things to do, he declared on a community web forum that from that point forward, DotA would be open source. All the teenager requested was some credit.

Thus came new strains of DotA, including DotA Allstars, developed by players who called themselves "Meian" and "Madcow." In turn, came other contributors including "Neichus," "Syl-la-ble," "Zetta," "Terrorblaze," and "Guinsoo."

Then, there was Abdul Ismail, a.k.a. "Icefrog," who took a leadership role on the development of this universe and was hired in 2009 by Valve Corporation after it began work on Defense of the Ancients 2. Eul also took a job with Valve and for what the judge calls a "handsome price," both assigned rights to their creations to Valve.

Over time, the gaming market shifted.

"As any millennial could tell you, players no longer need a computer or console to enjoy video games," writes Breyer. "The market for video games built specially for smart phones has exploded in recent years."

Two companies — uCool and Lilith Games — came in. They are the defendants in this case because in February 2014, Lilith released a smart-phone game called DotA Legends while uCool released its own game titled Heroes Charge.

Blizzard and Valve are now suing for copyright infringement of DotA 2 with uCool challenging whether the plaintiffs really own rights.

That's the background — but it's Breyer's discussion of the legal issues that's equally sure to become a classic.

"With literally hundreds of versions of DotA and DotA Allstars floating around in the ether, the Court confronts quite the copyright conundrum," he writes. "To sort through things, it must first determine just what, exactly, is the work(s) at issue here. Second, it must determine who is the relevant author(s). Third and finally, the Court will consider just what result(s) flows from the answers to those questions."

In figuring out the first part, Breyer considers whether versions of the game are a unitary work or a collective work. An example of a unitary work is a movie. There may be "inseparable and interdependent parts" like direction, acting performances, cinematography, and costume design, but all of that is merged into a whole. In contrast, an example of a collective work is a magazine. A publisher might have the privilege of reproducing and distributing the collected contributions, but the authors of each article can retain independent copyrights to their respective works.

uCool argued that DotA Allstars was a collective work, pointing to the many players who took the most popular heroes from DotA to arrange them for a new game.

"But by that logic Star Wars: The Force Awakens (Walt Disney Studios 2015) would be a collective work because it arranged the most popular Star Wars heroes, settings, and one-liners into a new movie," counters Breyer. "The same might be said of Love Actually (Universal Pictures 2003), given its all-star cast and web of different storylines. But Castaway (20th Century Fox 2000), with its solitary protagonist and even more solitary plot, would presumably be a unitary work. None of this can be right, and the Copyright Act does not suggest otherwise."

Breyer adds that DotA Allstars is nothing like The New Yorker, The Beatles Anthology or Encyclopedia Britannica.

"Heroes do battle in teams on fictional battlefields—together," he notes. "They do not stand alone in self-contained bubbles. So like Star Wars: The Force Awakens and Love Actually, each version of DotA Allstars is no collective work. To the contrary, each version is a unitary derivative work based on earlier versions DotA and DotA Allstars."

Next question: Who are the authors?

For the answer, Breyer turns to a rather famous (at least in legal circles) opinion concerning Malcolm X. When that 1992 film came out, an individual named Jefri Aalmuhammed came forward to say that he was an expert on the 1960s Civil Rights hero and that he was hired by Spike Lee for input. Aalmuhammed claimed to have rewritten several passages of dialogue that appeared in the film. Thus, he claimed Malcolm X was a "joint work" and that he was a co-author entitled to a portion of the copyright.

The 9th Circuit Court of Appeals disagreed with Aalmuhammed because joint works are "intended by everyone involved with it to be a unitary whole," and in the case of Malcolm X, Spike Lee wasn't bound to accept his suggestions. It was the director who was deemed the ultimate mastermind.

"The record contains ample evidence that Eul, Guinsoo, and Icefrog were the masterminds behind their respective versions of DotA and DotA Allstars," writes the judge. "uCool concedes as much with respect to Eul... Guinsoo and Icefrog are no different, legally speaking. They, like Spike Lee, took suggestions from others—some elaborate, some less so—and decided which ones made the cut. So just as Spike Lee was the author of the work at issue in Aalmuhammed, a reasonable jury could (and perhaps must) conclude that Eul, Guinsoo, and Icefrog are the authors of the various works at issue here."

Breyer then puts this together by saying that as long as Valve validly acquired rights from player-creator "masterminds" like Eul and Icefrog, it is entitled to own the work that was allegedly copied by uCool in its smart phone version of the game. But what about all the other players who made contributions? uCool attempts to argue that Valve must demonstrate ownership of particular heroes and other visual elements, but the judge disagrees and turns again to the Malcolm X case to explain why it's not necessary to "chop up" copyrights in this fashion.

Actually, Breyer comes up with this scenario.

"Spike Lee assigns his copyright in Malcolm X to, let’s say, Warner Brothers," the judge imagines. "Disney comes along and makes a cartoon version of the movie called Malcolm ABC. Warner Brothers sues, claiming Malcolm ABC infringes its copyright in Malcolm X. Disney responds that Aalmuhammed, not Spike Lee, wrote the scene chronicling the protagonist’s Hajj pilgrimage, which appears in both Malcolm X and Malcolm ABC. And under Aalmuhammed and Effects Associates, Inc. v. Cohen, Aalmuhammed owned a copyright in that scene. Warner Brothers, the argument goes, does not own the Hajj scene, and so cannot recover for Disney’s copying of that piece of Malcolm X (nor for its copying of any scene, character, or other cinematic element dreamed up by anyone not named Spike Lee)."

"Winning argument?" the judge asks. "No, and it was a loser even before Garcia v. Google," writes Breyer, referencing the Innocence of Muslims case where an actress' attempt to own her performance was ultimately rejected. "The whole point of Aalmuhammed’s contributions was to integrate them into Malcolm X, and so they must be understood as parts of the movie to protect copyright in the movie. Copyright in movies, comic books, and video games would be worthless otherwise."

So then the question becomes whether Valve validly acquired Eul's and Icefrog's copyrights given that Blizzard originally put limitations on commercial distribution of mods. Breyer seems intrigued here, but for whatever reason, uCool didn't argue it. The judge deems the argument thus waived. Too bad.

But how about the possibility that Eul abandoned his copyrights when he made his version "open source"? Drumroll, please... That question appears to be going to a jury.

Here's how Breyer sums everything up:

"At bottom, uCool asks why Valve should get to capitalize on others’ 'free work.'The answer is because Valve, if it prevails, will have proved that it acquired copyrights from people who spent years creating, growing, and (yes) masterminding much of the DotA universe. Help along the way does not drain those efforts of their considerable value. If helpers feel cheated, they may come to court. But theirs is not uCool’s case to make."

Eriq Gardner:

C-Murder Ordered to Pay More Than $1 Million to Slain Teen's Family


A judge in Louisiana has ordered Corey Miller, the one-time No Limit rapper known as C-Murder who is serving a life sentence for killing a teenager at a nightclub, to pay the victim's family more than $1.1 million.

The New Orleans Advocate reports Jefferson Parish Judge Glenn Ansardi of the 24th Judicial District Court found Miller -- younger brother of No Limit founder Master P - liable in a 2013 civil proceeding for the killing of 16-year-old Steve Thomas. On Wednesday (May 10), he ordered Miller to pay $500,000 to each of Thomas' parents and $150,000 to account for the victim's suffering.

Authorities in Louisiana believe rapper C-Murder recorded and released a rap song while in prison.

The Advocate reports that the rapper, whose real name is Corey Miller, released a video for a new single, "Dear Supreme Court," last week.

The rapper is serving a life sentence at Louisiana State Penitentiary at Angola for killing a 16-year-old in a nightclub in 2002.

2 Chainz Reacts to C-Murder's '2 Stainz' Diss Record

The video for "Dear Supreme Court/Under Pressure" features an actor in a red baseball cap and sunglasses playing Miller in partial close-ups. Other than a quick exterior of a penitentiary, the setting is a cell, though it's actually just a set.

The Louisiana Department of Corrections began looking into how Miller managed to record material from behind bars in January, when reports of a new album first surfaced, spokeswoman Pam Laborde said Tuesday.

Miller was questioned by prison officials and claimed not to have recorded anything while at Angola. He insisted that any material released by his record company was recorded before he was incarcerated, Laborde said.

In the lyrics and video for "Dear Supreme Court" Miller professes his innocence and asks the state's high court to release him, alleging that his trials were rigged and jurors were paid off. At one point, he imagines that if he were released, he could persuade inner-city criminals to lay down their guns.

Rapper C-Murder's Conviction, Sentence Upheld

The video includes shots of people holding signs in front of the state Supreme Court building that say "Justice" and "Free C. Miller."

Miller has a formal request for a new trial pending before the Supreme Court. That request, which alleges a juror was pressured to vote to convict him and says two new witnesses will testify that Miller wasn't involved in the killing, was denied by a state appeals court in late 2015.

Miller was convicted in 2003 for shooting 16-year-old Steve Thomas during a brawl at a Harvey nightclub, but a state district judge ruled prosecutors withheld information about the criminal background of a witness and granted Miller a new trial. He was convicted again by a 10-2 jury verdict in 2009.

The studio can't escape Incarcerated Entertainment's lawsuit that claims the film was marketed as a true story when it isn't one.

Cast and crew saying or implying that War Dogs is a "true story" is enough to keep a false advertisement lawsuit against Warner Bros. alive, a Florida federal judge ruled Wednesday.

Efraim Diveroli, a former arms dealer portrayed by Jonah Hill in the 2016 film, is suing Warners for false advertising and unfair competition, among other claims.

Instead of optioning Diveroli's manuscript, Once a Gun Runner, Warner Bros. enlisted Guy Lawson, a Rolling Stone writer who had interviewed him in prison and written a magazine feature that was expanded into a book. The ex-con takes issue with how he was portrayed and how the film was promoted.

"The gravamen of the Amended Complaint is that Warner grossed more than $85 million by promoting War Dogs as Diveroli’s 'true story' when it was not the true story," writes U.S. District Judge Mary Scriven. "The Amended Complaint identifies a number of allegedly false advertisements, including statements in movie trailers, social media posts, and promotional interviews with War Dogs’ director, Todd Phillips, screenwriter Stephen Chin, and stars Jonah Hill, Miles Teller, and Bradley Cooper."

Warners, meanwhile, argued that the statements regarding the truth of the story aren't actionable because they're protected by the First Amendment.

Scriven found that Diveroli plausibly alleged in his amended complaint that the comments are "commercial speech" and therefore subject to the Lanham Act, which prohibits false advertising in connection with commercial advertising or promotion. The judge found that the statements were promotional, referred to a specific product and that Warners had an economic motivation for making them.

"Warner knew that representing the story as 'true' would induce consumers to see War Dogs," writes Scriven. "Although movies are works of artistic expression and must be protected, 'they are also sold in the commercial marketplace like other more utilitarian products, making the danger of consumer deception a legitimate concern that warrants some government regulation.'"

The studio also argued that Diveroli failed to allege facts necessary to state a false advertising claim, but Scriven disagrees, noting that, while Warner Bros. is right to insist the statements be considered in their full context, the argument is not well-suited to a motion to dismiss.

"[A]part from advancing that argument, Warner neglects to address the relevant question: whether the statements, read in their full context, falsely or misleadingly portray War Dogs as a true story," writes Scriven. "Warner implies that they do not, but that conclusion calls for a fact-intensive inquiry and that the Court draw inferences in Warner’s favor, neither of which is appropriate on a motion to dismiss."

The decision isn't a total loss for the studio, though. The judge found that allegations involving the War Dogs website and Facebook page and comments Lawson made while promoting his own book "are not, in and of themselves, actionable."
(The full order is posted below.)

were false or misleading, the accuracy of the movie is not relevant to the issue of materiality.
3. Zone of interests and proximate causation

Warner next argues that the Amended Complaint omits the necessary allegations of injury and causation. (Dkt. 89 at 22-23) In Lexmark International, Inc. v. Static Control Components, Inc., the Supreme Court held that, in order to state a false-advertising claim under the Lanham Act, a plaintiff “ordinarily must show economic or reputational injury flowing directly from the deception wrought by the defendant’s advertising . . . .” 134 S. Ct. 1377, 1391 (2014).

With respect to injury, the Amended Complaint alleges that Warner’s advertising has caused “loss of goodwill” and “loss of sales.” (Dkt. 78 at ¶ 113) Those allegations are similar to the allegations in Lexmark, and Warner cites no authority to support its contention that Plaintiff must allege in “detail” how its goodwill was damaged or how its sales declined. (Dkt. 89 at 22); Lexmark, 134 S. Ct. at 1393 (explaining that the counterclaimant’s “alleged injuries – lost sales and damage to its business reputation – are injuries to precisely the sorts of commercial interests the [Lanham] Act protects”). Warner may instead seek discovery on the nature and extent of Plaintiff’s damages. With respect to causation, Lexmark instructs that the necessary showing is present when “deception of consumers causes them to withhold trade from the plaintiff.” Lexmark, 134 S. Ct. at 1391. In contrast to the facts at issue in Lexmark, which involved a claim by a downstream supplier, Plaintiff alleges that it is a direct victim of Warner’s advertising because
War Dogs

diverted book sales from Plaintiff. In particular, the Amended Complaint alleges that “consumers who desire to learn the true story are most likely to purchase a ticket to the movie, after being bombarded with promotional material, rather

Case 8:16-cv-01302-MSS-AAS Document 117 Filed 05/10/17 Page 16 of 19 PageID 2528

than purchasing Diveroli’s memoir.” (Dkt. 78 at ¶ 75) Accordingly, Plaintiff plausibly alleges that its injuries “flow[ ] directly” from Warner’s advertising. Lexmark, 134 S. Ct. at 1393. Again, whether Plaintiff will actually be able to prove its theory is a separate question that is not appropriate for resolution on a motion to dismiss.
C. Florida’s Anti-SLAPP Statute
At the conclusion of the motion to dismiss, Warner asserts that Plaintiff’s complaint falls within Florida’s anti-SLAPP (Strategic Lawsuits Against Public Participation) statute, Fla. Stat. § 768.295. (Dkt. 89 at 24-25) As a result, Warner contends that “if and when” the Court grants its motion to dismiss, Warner will file a motion for an award of fees and costs. (Id. at 25); see Fla. Stat. § 768.295(4) (“The court shall award the prevailing party reasonable attorney fees and costs incurred in connection with a claim that an action was filed in violation of this section.”). Currently, Warner does not appear to ask for any relief under the anti-SLAPP statute. For instance, Warner does not contend that resolution of this motion is evaluated under a summary-judgment standard and it does not request an expedited hearing. See Fla. Stat. § 768.295(4) (providing that a defendant may file a motion for summary judgment seeking a determination that the anti-SLAPP statute has been violated). The Court therefore declines to address the application of Fla. Stat. § 768.295 at this juncture. Compare Royalty Network, Inc. v. Harris, 756 F.3d 1351, 1357-62 (11th Cir. 2014) (holding that verification requirement imposed by Georgia’s anti-SLAPP statute did not apply in a diversity case), and Abbas v. Foreign Policy Grp., LLC, 783 F.3d 1328, 1337 n.5 (D.C. Cir. 2015) (holding that attorney’s fees were not available under Washington D.C.’s anti-SLAPP statute), with Edward Lewis Tobinick, MD, 848 F.3d at 944-45 & n.8

Case 8:16-cv-01302-MSS-AAS Document 117 Filed 05/10/17 Page 17 of 19 PageID 2529

(applying California’s anti-SLAPP statute, which allowed a special motion to strike, where the appellants waived their challenge to its application in the district court), and Adelson v. Harris, 774 F.3d 803, 809 (2d Cir. 2014) (holding that mandatory fee shifting provision in Nevada’s anti-SLAPP scheme applied in federal court).
D. Consideration of Exhibits
Warner filed a separate request for the Court to consider twenty-two exhibits in support of its motion to dismiss, which are designated as Exhibits A through V. (Dkts. 90, 91) After the parties conferred, Warner withdrew its request as to Exhibits F through H, and Plaintiff stipulated to the Court’s consideration of Exhibits A and N through V (Dkt. 96), which are referred to, excerpted in, or attached to the Amended Complaint or original complaint, and which are central to Plaintiff’s claims. (Dkt. 91 at ¶¶ 4, 17-25; Dkt. 78 at ¶¶ 29-30, 55, 60, 62-67, 70); see Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005) (holding that documents may be considered on a Rule 12(b)(6) motion if they are undisputed and central to the plaintiff’s claims). The remaining exhibits—Exhibits B through E and I through M—include documents from Diveroli’s criminal and civil cases, a U.S. Congressional committee report about Diveroli’s company, and a related news article. (See Dkt. 91 at ¶¶ 5-8, 12-16) Although Warner asserts that these exhibits are relevant to Diveroli’s “misconduct and notoriety” (Dkt. 90 at 5), the Court declines to consider the documents because Diveroli’s misconduct and notoriety are not relevant to the motion to dismiss. For its part, Plaintiff submits screenshots from four websites that offer movies on-demand and in which
War Dogs
is described as a “true story.” (Dkt. 98) Plaintiff contends that these descriptions were “located after filing the Amended Complaint,” and that they

Case 8:16-cv-01302-MSS-AAS Document 117 Filed 05/10/17 Page 18 of 19 PageID 2530

Writers Guild Strike Authorization Meetings Continue With Beverly Hills Confab


The Wednesday night meeting was Guild members' last chance to vote in person, but online voting continues through midday Monday.
Another day, another meeting or two — and at least one more traffic jam, this one in Beverly Hills as writers flooded into the Beverly Hilton in Los Angeles Wednesday night for the third of three in-person meetings to vote on a strike authorization.

By 7 p.m., the meeting's scheduled start time, the hotel's self-parking garage was filled to capacity, forcing drivers into a valet parking scrum. But for those who didn't brave the get-togethers — one in Universal City Tuesday, the Beverly Hills meeting today and a New York meeting that ended several hours ago — online voting was available and will be through midday Monday.

The result of all this will surely be a strike authorization for the Guild, which it will symbolically bring to the table when now-suspended negotiations with the studio alliance resume Tuesday.

Whether those talks will result in a deal before the current contract's scheduled expiration on May 1 is very much uncertain. The bargaining parties were $350 million apart when the matter was last assayed, and although both sides are understood to have moved since, it seems likely that a gulf of as much as $300 million separates their respective positions.

That large divide, if accurate, will complicate efforts to reach an agreement in the five business days between resumption of talks and contract expiration. In the absence of a successor agreement, the Guild has said that it will immediately go on strike. For that reason industry participants and even investors await the results of the strike authorization vote and subsequent negotiations with nervous anticipation.

NBCUniversal Sued by 'Brooklyn Nine-Nine' Extra Who Says He Was Taunted by Caterer


The actor says he wasn't served because of his race.

A Brooklyn Nine-Nine extra says a caterer refused to serve him an omelet on-set and taunted him because he's Asian, according to a complaint filed Tuesday in L.A. County Superior Court.

Kwon Kang says he was dressed in costume as a police officer when he tried to order breakfast on-set in January 2016, and a Limelight Catering employee told him he "refuses to serve food to police officers because his brother was killed by a police officer."

He says he thought the man was kidding, so he asked again. That's when Kang says other chefs and crew members started laughing at him, leaving him humiliated.

"Soon thereafter the crew members stopped laughing and Limelight's employee told the plaintiff he will serve him food now," writes attorney Jamie Jiyoon Kim in the complaint. "Despite the oppressive and discriminative behavior by Limelight's employee, Plaintiff was thankful and he expressed his gratitude." But, Kang says, he still wasn't served and became even more embarrassed.

According to the complaint, the employee served other background actors who were wearing the same police uniform, and Kang was the only Asian among them.

He is suing Limelight for assault, racial discrimination and negligent infliction of emotional distress, and NBC for failure to maintain a harassment-free environment. He's seeking $500,000 in punitive damages plus lost earnings.

A letter from NBC to Kang is attached to the suit. It says the company investigated the incident after the actor brought it to the attention of SAG-AFTRA and was unable to substantiate his allegations of verbal harassment or inappropriate conduct but it used the complaint as an opportunity to remind crew members of policies prohibiting discrimination.

NBC and Limelight did not comment on the suit, which is posted in full below.


Ashley Cullins

Blake Shelton Settles Defamation Fight With In Touch Weekly

Blake Shelton Settles Defamation Fight With In Touch Weekly


The deal resolves a dispute over a 2015 cover that said the singer had hit rock bottom.

Country singer Blake Shelton and In Touch Weekly have reached a settlement in the defamation fight over a Sept. 28, 2015, cover story headlined "The Real Story: REHAB for Blake."

Details of the settlement have not been released, but Shelton’s attorney Larry Stein confirmed Thursday that the singer and magazine have resolved the situation amicably.

Shelton cleared a tough legal hurdle last April, when the court found the magazine's claims weren't protected speech. Attorneys for In Touch had argued that Shelton's suit was barred by California's anti-SLAPP statute, which aims to bring an early end to lawsuits that arise from constitutionally protected activity like free speech.

California federal judge Christina A. Snyder found the headline alone supported a claim for libel per se. "A reasonable person viewing the In Touch headlines and sub-headlines –– which were located 30 pages away from the Article –– might well have concluded that Shelton had, in fact, entered 'REHAB' after 'his friends begged him to stop joking about drinking & get help,'" Snyder wrote.

As a public figure, Shelton faced an uphill battle because he would have to prove the magazine published the story with "actual malice" in order to succeed on his defamation claim — and In Touch argued his drunken tweets made him libel-proof in this instance.

But beating the anti-SLAPP motion was a strong sign that the court believed Shelton could prove In Touch either knew the claims were false or acted with reckless disregard of the truth. In fact, Snyder, in denying the motion to strike the complaint, found it was undisputed that the magazine ran the headline without believing the singer was actually in rehab.

Ashley Cullins

Roman Polanski's Attorney Skewers L.A. Justice System in New Filing

"Mr. Polanski was as justified in fleeing this Court's illegal conduct as he was to flee the Germans who invaded Poland," writes Harland Braun.


Director Roman Polanski isn't giving up on his attempt to find out if U.S. prosecutors intend to put him behind bars if he were to return to the States — and his lawyer isn't mincing his words.

The 83-year-old Oscar winner asked the court to force prosecutors to state on the record whether they believe he has served his time for the 1977 rape of a 13-year-old girl. Polanski contends that he fled decades ago because he got word that the late Judge Laurence Rittenband was going to increase his sentence from three months of psychiatric evaluation to five decades behind bars. L.A. Superior Court Judge Scott Gordon earlier this month denied this request, finding that Polanski isn't entitled to have his demands heard by the court while he stands in contempt of it.

In a motion to reconsider filed Friday, attorney Harland Braun called the order "morally incoherent, legally illogical, and factually deceptive."

"Rather than the 90 days promised Mr. Polanski, this Court threatened Mr. Polanski with up to 50 years in state prison and deportation," writes Braun. "If a defendant flees because of an illegal judicial threat, that threat should be removed before the defendant is expected to return to court."

The attorney argues that Gordon failed to mention in his decision the reason Polanski fled because it eviscerates his theory for applying the doctrine of fugitive disentitlement, which holds that a fugitive from justice can't seek relief from the judicial system whose authority he or she is evading.

"The Court should consider why Mr. Polanski was not charged with unlawful flight by either the State or federal authorities," writes Braun. "Mr. Polanski was as justified in fleeing this Court's illegal conduct as he was to flee the Germans who invaded Poland."

Braun argues that the only question before the court is a simple one: What was Polanski promised 40 years ago? He says declarations of defense counsel, the victim's lawyer and former Deputy District Attorney Roger Gunson all show Polanski's 43 days of psychiatric evaluation were intended to have satisfied his total custody time. Gunson's sworn testimony is currently sealed, and Braun has filed a motion to make that public.

"Once the promise is established, this case solves itself," writes Braun — noting that, while 43 days had been deemed sufficient, Polanski later served more than nine months in Swiss custody while authorities were deciding whether or not to extradite him. "The Court has no legal alternative but to give Mr. Polanski credit for his total custody time in California and Switzerland."

Should that happen, Braun argues that "simple math" shows Polanski has already served more time than the 90 days he was promised. (Read the motion in full below.) He also says that judges asking prosecutors, "What is the people's position?" is a commonplace occurrence in criminal courtrooms, and there is nothing strange or unprecedented about Polanski wanting that question answered in his case.

"What if the People represented to the Court that Mr. Polanski owes no more custody time?" asks Braun. "Does that not simplify this proceeding?"

A hearing on the motion to unseal Gunson's testimony is currently set for April 25, which will likely also be the date the motion to reconsider is heard.

Sylvester Stallone Suing Warner Bros. for Fraud and "Dishonesty"

The actor claims that the studio intentionally concealed 'Demolition Man' profits and is seeking to "end" bad accounting practices on Warners' part "for all talent."

In the 1993 science-fiction film Demolition Man, Sylvester Stallone's character is brought out of a decades-long state of cryopreservation to pursue a nemesis. The actor himself has now wakened from a slumber of a different kind to take on Warner Bros. over its accounting of profits on the film.

On Wednesday, through his loan-out company Rogue Marble, Stallone filed contract and fraud claims against the studio. In a complaint lodged in Los Angeles Superior Court, he alleges that the participation statement doesn't make sense while demanding a fuller accounting on Demolition Man, which also starred Wesley Snipes and Sandra Bullock. The film made about $58 million upon its theatrical release and much more in home video sales.

In taking on Warner Bros., Stallone is fighting the same studio that distributed 2015's Creed, which earned him an Oscar nomination. But the 70-year-old actor believes the time is right and is making a stab at doing something about "Hollywood Accounting" with the stated intention of helping others in the creative community.

"The motion picture studios are notoriously greedy," states the complaint. "This one involves outright and obviously intentional dishonesty perpetrated against an international iconic talent. Here, WB decided it just wasn't going to account to Rogue Marble on the Film. WB just sat on the money owed to Rogue Marble for years and told itself, without any justification, that Rogue Marble was not owed any profits. When a representative of Rogue Marble asked for an accounting, WB balked and then sent a bogus letter asserting the Film was $66,926,628 unrecouped. When challenged about this false accounting, it made a double-talk excuse, then prepared an actual profit participation statement for the same reporting period, and sent a check for $2,820,000 because the Film had in fact recouped its deficit."

According to the lawsuit, Stallone got 15 percent of defined gross once the picture earned $125 million. When Demolition Man earned more than $200 million, his take would escalate to 17.5 percent, and when it surpassed $250 million, his profit participation would climb to 20 percent.

Demolition Man, states the complaint, achieved at least $125 million, so Stallone asserts he's entitled to at least 15 percent.

Stallone says that after 1997, he got no profit participation statements until his agent reached out to Warners in 2014 to inquire.

In January 2015, he received a short summary which noted an alleged deficit for the film and stated that no payment was due. Stallone's company then questioned the validity of numbers "because they did not make any sense." Soon, a second statement came along with a $2.8 million check. It was only one page. There wasn't much detail.

"Rogue Marble alleges on information and belief that it is owed additional contingent compensation on the Film," states the complaint.

The actor is seeking an unknown amount of restitution for the alleged contractual breach and also targeting much greater damages with a fraud claim. Stallone will be attempting to support the fraud claim by showing that the studio misrepresented and intentionally concealed facts. However, as the case moves forward, he'll likely need to demonstrate why such a claim isn't duplicative of the asserted contract breach.

Somewhat unusually, Stallone is also bringing a cause of action that alleges Warner Bros. has engaged in unfair business practices. The complaint characterizes the studio's conduct as "unscrupulous, unethical and offensive, and causes substantial injury to consumers" and "threatens or harms competition because other studios (that compete with WB) have their own agreements with profit participants and account using their own accounting methods. ... WB attempts to keep its accounting methods hidden from competitors and the public at large because revealing such methods will have an impact on competition."

Besides money, the actor wants injunctive relief. The complaint states, "Mr. Stallone is entitled to, among other things, a full accounting, an explanation of how this practice came to be, interest, damages, and an end to this practice for all talent who expect to be paid by WB for the fruits of their labor."

We've uploaded a full copy of the complaint. Stallone is represented by attorney Neville Johnson.

Warner Bros. had no comment.