AXANAR LAWSUIT discovery ruling – what does it all mean? (Part 3)

Before we jump back into the legal battle of Axanar, I strongly recommend you read Part 1 and Part 2 of this blog analysis if you haven’t already.  There’s a LOT that happened last week involving the Axanar copyright infringement lawsuit, including a 2-hour long court hearing and a ruling by Magistrate Judge Charles Eick of the Federal 9th Circuit Central District.

The judge’s ruling gave the defense (Axanar) nearly everything it wanted from the plaintiffs (CBS and Paramount) that the studios were refusing to turn over during the discovery phase.  Discovery is when both sides in a lawsuit get to ask the other side to show them all the cards in their hand (or, in this case, documents, e-mails, and answers to questions during witness depositions).  The idea is that neither the plaintiff nor the defense should be bringing out some surprise piece of evidence during trial that the other side never saw coming.  Yeah, I know it happens all the time on TV, but it’s not supposed to.  Both plaintiffs and defense should be allowed to prepare full arguments based on all the evidence that will be presented in court.  If one side doesn’t see the evidence, how can they put together a proper rebuttal?

So what happened over the summer is that both sides agreed on what they wanted from each other and would turn over.  Axanar turned over pretty much everything the plaintiffs wanted…31,000 pages of e-mails and documents.  And that was probably enough to make the studios happy, as they did not request any additional documentation beyond something known as a privilege log.

On the other hand, the studios provided a LOT less than requested, much of it so highly redacted as to be all but useless.  Indeed, Paramount did not turn over even a single e-mail!  So the defense filed a Motion to Compel Discovery, asking the judge to order the plaintiffs to provide certain documents and e-mails and to answer certain questions.  The defense asked for a LOT (to be honest), and I’m sure they never expected to get it all.

That said, less than four hours after the completion of a more than 2-hour long hearing, Magistrate Judge Eick announced his ruling…and the defense was VERY happy.  They got a surprisingly large percentage of what they asked for, and the studios have only until this coming Friday to produce it all and deliver it to the defense.  Discovery ends the following Wednesday (November 2), so the defense will have about five days to figure out if the plaintiffs are still holding out (or classifying something as privileged when it shouldn’t be) and once again ask the court to step in.

There is no appeal on this ruling for the plaintiffs.  It is binding, and the studios now have less than a week to turn over a massive amount of documentation to the defense, some of which could prove to be very valuable to Team Axanar during trial (assuming the case makes it that far–more on that tomorrow).

Now, it should be stated that there were indeed some things the defense asked for a did not get.  But as I mentioned briefly in Part 1, these items were mostly small pieces on the chessboard, intended to be easily sacrificed so that other, more valuable pieces could remain in the game.

During discovery proceedings, judges sometimes like to try to find compromises where each side wins a little and also loses a little.  It seems only fair that neither side get everything while the other side gets nothing (although that sometimes happens, too).  So had the defense asked only for things they absolutely, positively had to have, some of those items might have wound up on the cutting room floor, denied to the defense in order to try to reach a fairer compromise by the judge.

So it’s not surprising that the defense asked for everything including the kitchen sink in their discovery requests.  That way, if the judge denied them the kitchen sink, they’d still get a whole slew of other useful appliances that they wanted.

But let’s go back to our first metaphor and look at some of these sacrificial pawns that were denied…

All Documents that refer or relate to Star Wars fan films, including but not limited to (a) all Documents that refer, relate to, or constitute Lucasfilm’s guidelines and/or attitudes regarding fan films, and (b) all Documents relating to any meetings or other Correspondence between You and any other person or entity, including at Lucasfilm, regarding this subject.

When I first read this one in the original Joint Stipulati0n document, I wondered if I’d just read a typo.  Star WARS???  They’ve gotta be kidding!  And I suspect they might have been.  This was so obviously a “red shirt” on the discovery landing party (and there’s a THIRD metaphor: pawns, kitchen appliances, and Starfleet security!) that I think even the most fervent Axanar supporters knew that the defense team wouldn’t be getting this one from the judge.  Definitely a chess piece intended for early sacrifice.

Next to be denied were the general take-down policies for the studios dealing with all of their properties and the concept of when to apply fair use.  This pawn wasn’t completely sacrificed, however.  Take-down policy is still being ordered by the judge…only on a much more limited scope narrowed to only Star Trek fan films and specifically Axanar.  Fan films about The Good Wife or NCIS won’t be included….and nothing specifically about fair use.

No biggie.  In fact, Axanar attorney Erin Ranahan even said as much last Friday in court (when I get the transcript, I’ll post it).  The defense really didn’t care about all studio properties…only Star Trek specifically.  The judge agreed that the rest was out of scope, and he obviously took all that under advisement when he made his ruling.

So if there were a pawn here to be sacrificed, it was done so willingly and preemptively in court to preserve the rest of the information requested about take-down policy…specifically as it applies to Star Trek itself.  Essentially, here’s what the defense really wanted to know regarding take-down policy: why didn’t CBS and/or Paramount ask YouTube to take down Prelude to Axanar and/or the “Vulcan Scene”?  Why haven’t the studios taken down other fan films?  And of course, the answer they’re fishing for (and might now actually get) is that the studios actually think fan films might be beneficial to the Star Trek franchise.  And if they get that, it becomes much harder to prove damages from Axanar.

And finally…the holy grail (and the thing that could potentially end this case before it goes to trial): Star Trek‘s financials.  The defense asked for the whole magilla: ALL financials of everything Star Trek dating back to 1966!  How much did Janice Rand’s wig cost?  How much did the gaffer who worked on season three of TOS make?  What did Paramount pay the craft services people when they filmed each Star Trek movie?  How much have the studios made from licensing everything from Hallmark ornaments to stuffed tribbles?

Let’s face it, the defense team was never gonna get all that.  You knew it, I knew it, and I suspect even Alec Peters and his lawyers knew it.

What they did get, however, was this:

Documents and Communications sufficient to show [the studios’] profitability, revenue, ticket sales, and product sales related to [their] Works from 2009 to present…

although…

…limited to the works allegedly infringed and also limited to documents (which may be summary documents) sufficient to show revenues and profitability).

And that’s only 8 years and not 50.  So is that a defeat or a victory for the defense?  It turns out it is very much a victory.  How so, you ask?

Well, first, let’s look at which Star Trek properties this covers.  Actually, it pretty much covers all of them:

• TOS is obviously covered since Garth of Izar appeared in “Whom Gods Destroy” which is part of the TOS catalog.
• The animated series is covered since the Vulcan city of Shi’Kahr appeared in “Yesteryear.”
• Mt. Seleya appears in Star Trek III and IV, so those movies are covered.
• The Klingon language is spoken in the first, third, fifth, and sixth Star Trek films, and Chang was a character in the sixth movie, as well.  So they’re covered.
• Klingon was also spoken extensively on TNG and DS9.  We also saw the Klingon home world on both series.  So they’re covered.
• Tuvok was Vulcan, and so Vulcan heritage and pointy ears played a part of Voyager.  So that property is arguably covered, too.
• Ambassador Soval was a character from Enterprise, to add that series to the mix.
• Captain Robau was a character from the 2009 J.J. Abrams Star Trek movie, which came out in 2009.  So add at least one of the three reboot blockbuster films to the mix.
• And we might was to add in Star Trek: Discovery if the studio is planning to argue for future revenue harm from derivative works still to come.

That’s a LOT of TV series and movies to produce a summary of ticket sales and product sales sufficient to show revenues and profitability!  But really, it all comes down to one word: Netflix.  That streaming service just signed an international package deal for all 727 episodes of the existing five TV series plus non-U.S. rights for the new series.  How much do you think that deal was worth?  $10 million?  $50 million?  $200 million?

Well, in just under a week, Alec Peters will know…not that he’ll be allowed to actually tell anyone (as documents exchanged during discovery are to be kept completely confidential).  But during trial?  Then it’s fair game.

If the defense is trying to prove that Star Trek is such a profitable property, that even with Axanar up on YouTube, they still inked a multi-hundred-million dollar deal with Netflix…then how the heck will CBS counter that argument?  “Well, Netflix would have given us $352 million if it weren’t for Axanar.”  Um, yeah.  Any damages Axanar might cause the studios are barely a rounding error.  And if the studios try to claim otherwise, they’d better have an e-mail from Netflix stating specifically that they’re paying less because Axanar exists.  Otherwise, any claim they make for damages is going to sound like a fish story.

So the biggest potential problem for the studios is that sharing their financials–even just those for the past eight years–pretty much screws up the argument that Axanar is a serious financial threat to them.  And that will minimize the amount of damages they can be awarded if the studios opt for a judgement based on damages plus profits (see Part 2 of this blog series).  And heck, even if they opt for statutory damages, those must take into account the seriousness of infringement.  And if Star Trek has astronomical profits, how serious can a 22-minute fan film truly be?

The other problem with releasing financials is that STUDIOS HATE TO RELEASE THEIR FINANCIALS!  Paramount particularly has a sour taste in its mouth from what happened back in 1990 when it was successfully sued by writer and humorist Art Buchwald for stealing the idea for the 1988 Eddie Murphy movie Coming To America.  In the interests of not making this blog too long, here’s a link to a summary of the case.  Long story short, Paramount has to reveal their “Hollywood accounting” practices and lost big because of it when the judge ruled their accounting practices “unconscionable” and therefore invalid.

Studios do NOT like showing what’s behind the curtain and how the sausage is made.  But now they’ll have to.

Or will they???

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Come back tomorrow for the thrilling conclusion of this blogging saga.  What happens next?  Does it now look like there will be a winner or a loser in this case?  Will either side want to settle this lawsuit before the trial actually begins?  Why?  And just how much more can Jonathan possibly type before his keyboard explodes????