Turner Entertainment Co. v. DeGeto Film GmbH

Facts

The Defendant-Appellant, Degeto Film GmbH (the "Defendant"), is the exclusive agent for all the other defendants, German public broadcasters. These broadcasters form a cooperative referred to as ARD. ARD is funded by royalty fees and under German law, must provide the entire German population with programming. MGM/UA originally signed an agreement with the Defendant in 1984, but after a series of transactions, the Plaintiff-Appellee Turner, (the "Plaintiff"), now stands in MGM/UA's shoes. ARD paid $60 million to MGM/UA for an exclusive right to telecast certain licensed works to the German speaking public. The agreement allows ARD to telecast the licensed works "by all means and methods now or hereafter known including but not limited to … DBS [direct broadcasting satellite] and/or communication satellite for purposes of so-called home television reception." The works had to be broadcast in German and telecasted to the licensed audience, virtually all of German-speaking Europe. "Because the reception area, or 'footprint,' of satellite broadcasts does not easily conform to the political and cultural boundaries that comprise the licensed territory, the parties included an exception to the strict definition in the contract of the licensed territory." The exception is termed "overspill", and the agreement only includes "a contextual definition of overspill", nothing specific. Instead of broadcasting on a DBS satellite, ARD began broadcasting in April 1991 on the ASTRA 1B satellite, an FSS satellite. FSS satellite signals can be received much easier than DBS signals. The ASTRA 1B satellite has "a footprint over five times the size of the licensed territory; the footprint encompasses most of Europe." The agreements drafters did not foresee "such an easy method of reaching a pan-European audience would become a standard mode of broadcasting during the life of the Agreement." In March of 1993, the Plaintiff learned ARD wished to broadcast a program over the ASTRA 1B satellite in August 1993. The Plaintiff contended that "transmitting licensed works via ASTRA violates the Agreement." • Concurrent lawsuits were filed in Germany and the United States. The German court held "that because of its extensive range, ARD had no absolute right under the Agreement to broadcast via ASTRA." Irrespective of that holding, however, the court observed "the parties had not contemplated the current circumstances involving the new technology and [ ] ARD was compelled as a practical matter to broadcast outside the licensed territory in order to fulfill its legal obligation to bring its telecasts to the German public." Pursuant to this gap in the contract, the German Court felt compelled to apply "the doctrine of good faith dealing" to the dispute, and as such, "attempted a supplemental interpretation of the contract to determine a result that parties bargaining in good faith would have negotiated." Consequently, "[t]he German court determined that Turner should permit ARD to use the satellite in order to properly fulfill its legal obligations. However, the court determined that ARD would have to pay an increased fee for the privilege, to be determined by that court at a later date." The Northern District of Georgia granted the Plaintiff a preliminary injunction, but this injunction was stayed pending these proceedings.