Tuesday, June 25, 2013

Copyright Law - Eighth Circuit - Does A Declaratory Judgment Action Trump an Arbitration?

Copyright Assignments, Contracts Involving Copyrights, Arbitration of Copyright Disputes, Motion for Stay of Proceedings

Art Etc. LLC v. Angel Gifts, Inc., 686 F.3d 654 (8th Cir. July 27, 2012).  Plaintiff buys library of art images from defendant in an asset purchase agreement.  Defendant signs promissory note for part of purchase price.  Promissory note has arbitration clause.    Plaintiff discovers belatedly that art images belong to third parties who are asserting copyright.  Plaintiff sues in federal district court seeking declaration that selling art images would violate the Copyright Act.  Defendant moves to stay proceedings pending arbitration.  District court denies stay, Plaintiff appeals and Eight Circuit affirms.  The asset purchase agreement had no arbitration agreement and reserved all litigation remedies.  The arbitration clause referred only to breaches of the promissory agreement or attempts to offset.  Accordingly, the action for declaration of infringement of the Copyright Act could proceed.

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