IP Law Daily, COPYRIGHT—Cal. App.: Court of appeals may be the final frontier for copyright claim over space-based show, (Oct 24, 2022)

By Matthew Hersh, J.D.

The court found that an arbitration panel, as well as a trial court below, correctly found that the copyright claim was submitted too late.

A California arbitration panel correctly declined to consider a late-filed copyright infringement claim filed by a TV production company, a court of appeals in the Golden State has held. The court, in an unpublished decision affirming the arbitration award, found that a California statute requiring arbitrators to decide all questions submitted to them did not mean that the panel was obligated to rule on all claims regardless of what stage of the proceedings they were filed (Funrise Inc. v. Space Race, LLC, October 20, 2022, Baker, L.).

The dispute arises out of an animated TV show entitled “Space Racers,” which according to its producer features “spaceships with distinct personalities” and “employ[s] educational themes to teach basic scientific concepts.” After the show finished its run, its production company, Space Race, LLC, sought a partner to manufacture and market Space Racers toys. In July 2017, the production company executed a license agreement with Funrise, Inc., a manufacturer and marketing company, for that purpose.

Relations between the two companies eventually broke down, and the marketing company never manufactured any toys. The production company instituted arbitration proceedings under their agreement, asserting claims for breach of contract, breach of the duty of good faith and fair dealing, and fraud. The arbitration panel ruled against the production company on all claims and set a hearing to consider attorney fees and costs. At this point, the production company for the first time added a copyright claim, alleging that the marketing company had played a promotional video featuring Space Racers characters on a loop in its lobby.

The arbitration panel refused to hear the claim and the trial court confirmed, leading to this appeal.

Copyright claim. The court of appeals affirmed the decision not to consider the copyright claim. The production company argued that under California law, an arbitration award “shall include a determination of all the questions submitted to the arbitrators the decision of which is necessary in order to determine the controversy.” But that did not help the production company here, the court of appeals held. The statute could not be read, the court found, to require arbitrators to simply consider any issue no matter when in the proceedings it was raised. “The arbitration panel recognized Space Race’s copyright claim for what it was—a last-ditch attempt to avoid liability for Funrise’s fees and costs—and ruled accordingly,” the court concluded.

The Case is No. 19STCP04878.

Attorneys: Daniel Rozansky (Stubbs, Alderton & Markiles) for Funrise Inc. Joseph E. Floren (Morgan, Lewis & Bockius) for Space Race, LLC.

Companies: Funrise Inc.; Space Race, LLC

Cases: Copyright CaliforniaNews