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Case 3:11-cv-01819-DRD Document 1

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO CÓDIGO PUBLISHING, CÓDIGO MUSIC, LLC Plaintiffs, Vs. ANTHONY FELTON ANTHONY COMPANY COMPANY CINEMAS BREACH OF CONTRACT AND FELTON ENTERPRISES; COPYRIGHT INFRINGEMENT ENTERTAINMENT, INC.; FELTON, INSURANCE “XZY”, INSURANCE “ABC”, AND CARIBBEAN Defendants COMPLAINT TO THE HONORABLE COURT: COME NOW plaintiffs Código Publishing, LLC and Código Music, LLC (“Código”), through the undersigned attorneys, and LLC AND CIVIL NUM.:

respectfully state and pray as follows: I. Nature of the Action 1. This is an action requesting resolution of an

agreement for breach of contract and damages under the laws of the Commonwealth of Puerto Rico, 31 L.P.R.A. §§ 3018, 3023,

3024, 3052, 3373, 3496 and 5141, and for direct and contributory infringement under the Copyright Act of 1976, 17 U.S.C §§ 101 et seq. (the “Copyright Act”) against Anthony Felton Enterprises; Felton Entertainment, Inc., Anthony Felton (individually and

collectively referred to as “Felton”), Insurance Company “XYZ” (“XYZ”) and Caribbean Cinemas (“Caribbean”).
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2.

The plaintiffs terminated a contract executed between

the plaintiffs and Felton (“Agreement”) as a result of Felton’s breach of the Agreement. The Agreement was for the licensing

and use of several musical compositions and recordings owned by the plaintiffs (“Work”). 3. Therefore, plaintiffs seek damages suffered as a

direct consequence of Felton’s breach of contract. 4. In addition, plaintiffs seek to restrain the

defendants from continuing using and infringing the Work in an illegal and unauthorized manner. 5. As set forth below, Felton breached the material

provisions of the Agreement and thus the defendants have been and continue to illegally infringe the plaintiffs’ copyrights upon the unauthorized exploitation of the Work. II. 1. This Jurisdiction and Venue Honorable this Court action has for original copyright and exclusive

jurisdiction

over

infringement

pursuant to 28 U.S.C. §§1331 and 1338(a). 2. In addition, this Honorable Court has diversity

jurisdiction under 28 U.S.C. §§1332(a)(1) since the matter in controversy exceeds the sum or value of $75,000.00, excluding interests and costs, and the parties are citizens of different states. The plaintiffs’ principal place of business is located

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in Florida and the defendants’ residences and principal places of business are located in Puerto Rico. 3. §§1391(b); Venue is proper and in this court under 28 U.S.C. are

1391(c)

1400(a)

because

the

defendants

residents of this district and because a substantial part of the events giving rise to the claims occurred in this district. III. The Parties 4. Código Publishing, LLC is a Florida limited liability

company with its principal place of business at 5400 NE 4th Ct., Miami, FL 33137. 5. Código Music, LLC is a Florida limited liability

company with its principal place of business at 5400 NE 4th Ct., Miami, FL 33137. 6. Upon is information a d/b/a for and belief, Felton Anthony and/or Felton Felton

Enterprises

Anthony

Entertainment, Inc. 7. Felton Entertainment, Inc. is a Puerto Rico

corporation with the registration number 149346 and with its principal place of business located at Cond. Marbella Oeste

5347, Suite 1002, Isla Verde, Puerto Rico 00979. 8. Anthony Inc. Felton and his is the president is Cond. of Felton Oeste

Entertainment,

address

Marbella

5347, Suite 1002, Isla Verde, Puerto Rico 00979.

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9. an

Upon information and belief, Insurance Company ABC is company at this time used to designate any

insurance

insurance company that may have available insurance coverage for Anthony Felton Enterprises as a d/b/a for Anthony Felton and/or Felton Entertainment, Inc., on any of the actions herein

presented.

Once a specific name for the insurance company is

known, it will be duly announced and the complaint amended. 10. an Upon information and belief, Insurance Company XYZ is company at this time used to designate any

insurance

insurance company that may have available insurance coverage for Caribbean Cinemas, on any of the actions herein presented. Once

a specific name for the insurance company is known, it will be duly announced and the complaint amended. 11. Upon information and belief, Caribbean Cinemas is

composed of various Puerto Rico corporations with registration numbers State 95485 and 111598 from the Puerto Rico Department of and its addresses are 1512 Fernández Juncos Ave.,

Santurce, Puerto Rico, 00909 and PO Box 19116, San Juan, Puerto Rico 00910-9116. IV. Factual Allegations 12. The plaintiffs are the rightful owners of all title to the Work. The Work includes various master

and interests

recordings and compositions, a list of which has been included as an exhibit herein. See Exhibit A.
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13.

The

Work

contains

wholly

original

materials

constituting copyrightable subject matter under the Copyright Act of 1976, 17 U.S.C. §§ 101 et seq. ( “Copyright Act”). 14. The plaintiffs have complied at all relevant times and

in all respects with the Copyright Act, and have a registered copyright for the master recordings and compositions included in the Work. 15. Since have the date of the copyright the registrations, Work in the

plaintiffs commerce. 16. agreed

customarily

licensed

interstate

On October 12, 2010 the plaintiffs and the defendants upon and and signed masters the use Agreement, licenses for regarding a film to the be

synchronization

produced by Felton titled “Lavoe: The Untold Story” (“Film”). See Exhibit B. 17. In essence, the plaintiffs licensed the Work according

to several “essential terms” included in the Agreement. A total license fee of $250,000.00, payable by Felton in four

installments was agreed upon (“Licensing Fee”). 18. The first payment would be a down payment in the

amount of $22,000.00, payable within the next five (5) days after executing the Agreement. This payment was the only payment satisfied by Felton.

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19.

The

second

payment

for

$28,000.00

was

due

40

days

after the initial down payment and it was to be followed by a third installment of $100,000.00 within 30 days of the Film’s theatrical release in the United States or no later than

November 30, 2011, whichever came first, by written warranties. 20. payable The within fourth 30 installment of the of $100,000.00 was due and in

days

Film’s

theatrical

release

Mexico and Latin America or no later than January 30, 2011, whichever came first. 21. Additionally, the Agreement included a clause that

stated that Código was to “receive seven percent (7%) of the Film’s gross profits, starting at the Film’s launch and

continuing through all the Film’s exploitation”. 22. Felton was “to personally guaranty payment” of the

Licensing Fee, in other words, of all the payments mentioned in paragraphs 16, 17, 18 and 19 of this Complaint. 23. On December 20, 2010, Código sent a letter to Felton

stating that the first two payments agreed upon had not been received and that Felton and Caribbean had continued to use and exploit the Work in trailers and advertisements for the Film. See Exhibit C. 24. Payment was demanded by the plaintiffs, who advised

Felton that if the Licensee Fee payments due were not received within five days of the aforementioned
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letter,

Felton

and

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Caribbean were to cease and desist from using the Work. Exhibit C. 25. Felton’s On January 10, 2011, a in second letter to was a sent

See

to

legal

representative,

response

previous

communication from Felton where the latter had admitted failure of payments due as set forth in the Agreement and had proposed a revised payment schedule due to a delay in the release of the Film. See Exhibit D. 26. not The plaintiffs responded by stating that Felton did the “right to rewrite the contractual payment

possess

schedule unilaterally”.

Evidence of copyright infringement was

provided through the letter by including a list of websites that continued to air and exploit the Work illicitly. 27. See Exhibit D.

Once again, Felton was required to immediately cease

and desist from using and exploiting the Work and was informed that it had no right to use Codigo’s masters and/or

compositions. 28.

See Exhibit D.

On February 3, 2011, Felton sent a letter stating that

the theatrical release of the Film was delayed until February 8, 2011, and that the balance on the Agreement Licensing Fee would be satisfied “on or before February 28, 2011”. again failed to comply with such promise. Felton once

See Exhibit E.

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29.

On March 8, 2011, a final letter was sent to Caribbean

requesting the immediate payment of all box office receipts in its possession. 30. As of See Exhibit F. this date, the plaintiffs have not received

payment for the amounts owed in royalties and the Licensing Fee provided for in the Agreement. 31. The Film was eventually released on February 14, 2011.

Since Felton did not make the corresponding payments, the Work was commercially exploited without authorization. 32. Upon information and belief, the Work continues to be

used throughout the Internet to promote the Film and continues to be reproduced, distributed, exhibited and used without

authorization V. FIRST CAUSE OF ACTION DECLARATORY JUDGMENT AS TO BREACH OF CONTRACT AND CONTRACT TERMINATION 33. The plaintiffs reallege and incorporate by reference

paragraphs 1 through 30 as if fully set forth herein. 34. As of today, Felton is in breach of contract and owes

the plaintiffs an amount of no less than $228,000.00 and seven percent (7%) of the gross profits earned from the Film. 35. amounts Although overdue, the as plaintiffs as gave Felton notice to of the the

well

ample

opportunity

cure

breach, Felton did not make the required payments.

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36. failed

Since Felton has materially breached the Agreement and to respond then the to plaintiffs’ must multiple be requests of

compliance,

Agreement

deemed

terminated

pursuant to Art. 1077 of the Puerto Rico Civil Code, 31 P.R. Laws Ann. § 3052. 37. The defendants have openly admitted and recognized

failure to make the agreed upon payments, thus acknowledging their breach of contract. 38. that the Thus, the plaintiffs request a declaratory judgment was terminated and as such request the

Agreement

resolution of the same. VI. SECOND CAUSE OF ACTION DAMAGES AND MONIES OWED 39. The plaintiffs reallege and incorporate by reference

paragraphs 1 through 36 as if fully set forth herein. 40. for the As previously stated, Felton failed to make payments remaining, and agreed upon, $228,000.00 as a total

Licensing Fee. 41. Furthermore, and pursuant to the Agreement, the

plaintiffs were also entitled to seven percent (7%) of the gross profits earned from the Film, amount which was not compensated to plaintiffs. 42. Code, 31 Pursuant P.R. to Article Ann. § 1077 3052, of and the as Puerto a Rico Civil the

Laws

result

of

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plaintiffs’ request for the resolution of the Agreement, the plaintiffs seek damages in an amount of $228,000.00 and seven

percent (7%) of the gross profits earned from the Film, plus interest, costs and attorneys’ fees. VII. THIRD CAUSE OF ACTION DIRECT AND/OR CONTRIBUTORY INFRINGMENT (17 U.S.C. §§ 101 ET SEQ.) 43. The plaintiffs reallege and incorporate by reference

paragraphs 1 through 40 as if fully set forth herein. 44. have the The plaintiffs are the sole owners of the Work and exclusive exploit included right and in to copy, prepare it. The are derivative works, and

distribute, compositions

transmit the

recordings original

Work

works,

copyrightable under Copyright Act. 45. At all times relevant herein, the plaintiffs have

complied with the Copyright Act and have secured the exclusive rights and privileges in and to the copyrights in the Work. 46. payments, Due to the defendants’ failure to make the required plaintiffs revoked their authorization and the

licensing privileges for the Work.

Therefore, as of the last

letter requesting payment of the Licensing Fee, dated December 20, 2010, defendant copyright Felton’s unauthorized See use of v. the LAMCO, Work 161

constitutes

infringement.

Peer

F.Supp.2d 38, 51-52 (“A material breach of a covenant will allow

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the licensor to rescind the license and hold the licensee liable for infringement for uses of the work thereafter”.) 47. The plaintiffs are informed, believe and based thereon

allege that the defendants have, knowingly and willfully and without authorization from the copyright owners as of December 25, 2010, distributed, disseminated and/or otherwise continued to exploit or facilitate the exploitation of the Work through Caribbean’s theatrical facilities and through the Internet. 48. The defendants’ acts constitute direct and/or

contributory infringements of the plaintiffs’ copyrights in the Work and constitute a clear violation of the Copyright Act. 49. The defendants’ infringements have been committed

willfully, and have been and are being engaged in with total disregard for the plaintiffs’ intellectual property rights. 50. The defendants’ direct and/or contributory copyright has caused, and will continue to cause, the

infringement

plaintiffs to suffer substantial injuries, losses, and damages to their rights in the Work. The plaintiffs have not received

the Licensing Fee nor any revenues from the defendants’ wrongful conduct and their distribution of the infringing Work. 51. In addition, the defendants have been unjustly

enriched by their exploitation of the Work. 52. By means have of the actions or complained of herein, the and

defendants’

directly

contributorily

infringed

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continue to infringe the plaintiffs’ copyrights in and relating to the Work, by reproducing, distributing, and placing upon the market artistic works or portions thereof from the plaintiffs’ copyrighted music and masters. 53. The plaintiffs are informed, believe and based thereon

allege that unless enjoined by this court, defendants intend to continue their course of conduct, and to wrongfully use,

infringe upon, sell, and otherwise profit from the plaintiffs’ Work. 54. In addition, as a result of the defendants’ actions,

the plaintiffs have suffered and will continue to suffer damages in an amount to be determined at trial. VIII. PRAYER FOR RELIEF WHEREFORE, the plaintiffs pray for judgment against the

defendants as follows: 1. That the court enter judgment in favor of the plaintiffs on all the claims for relief set forth herein; 2. That the court acknowledges the resolution of the

Agreement as correct due to the defendants’ willful breach of contract; 3. That judgment is entered for the plaintiffs against the defendants, for damages based upon the resolution of the

Agreement, due to the defendants’ breach of contract, estimated

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in

$228,000.00,

plus

seven

percent

of

the

gross

profits

generated by defendants; 4. That the defendants and or any of their representatives, agents or partners in active concert of privity or in

participation with them, be enjoined from directly or indirectly continuing to infringe upon the plaintiffs’ copyrights of the Work or continue to market, display, advertise, reproduce, or exploit the Work or to participate or assist in any such

activity; 5. That judgment is entered for the plaintiffs against the defendants for damages based upon defendants’ breach of

contract, losses amounting to seven percent of profits generated by defendant and statutory damages based upon the defendants’ willful infringement, pursuant to 17 U.S.C. § 504(c), of the Copyright Act, estimated in $2,628,500.00. 6. That the plaintiffs have judgment against the

defendants’ for costs and attorneys’ fees; 7. That the court grants such other and further relief as

the court deems just and proper. Respectfully submitted in San Juan, Puerto Rico, this 18th day of August, 2011. s/YOLANDA ÁLVAREZ USDC. No.223509 yalvarez@ferraiuoli.com

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s/MARISTELLA COLLAZO USDC. No.228606 mcollazo@ferraiuoli.com s/LAURA BELÉNDEZ-FERRERO USDC. No. 216301 lbelendez@ferraiuoli.com

FERRAIUOLI LLC 221 Ponce de León Ave., 4th Floor Hato Rey, Puerto Rico 00917 Tel. (787) 766-7000 Fax. (787) 766-7001

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