Columbia Pictures Prevails in Charlie's Angels Royalty Case

Case: Wagner v. Columbia Pictures Indus. Inc., No. B184523 (Cal. 2d App. Dist. January 8, 2007)

The One Sentence Summary: The California Court of Appeal affirmed summary judgment in favor of Columbia Pictures holding that Robert Wagner was not entitled to net profits from the Charlie's Angels movies under an earlier agreement relating to the Charlie's Angels television series.

What They Were Fighting About: Robert Wagner individually and as a trustee of his children's trusts sued Columbia Pictures claiming that he and the trusts were entitled to share in the net profits from the Charlie's Angels movies under an agreement with Spelling-Goldberg Productions ("SGP") relating to the 1970's Charlie's Angels television series. Under the agreement with SGP, Wagner and Natalie Wood (his then wife) were entitled to 50 percent of the net profits SGP received as consideration "for the right to exhibit photoplays of the [Charlie's Angels] series and from the exploitation of all ancillary, music and subsidiary rights in connection therewith." Wagner contended that the phrase "in connection therewith" meant he was to share in ancillary or subsidiary rights which bore any connection to the television series, not just "photoplays of the series." Columbia, who purchased the rights to the television series from SGP and separately purchased the motion picture rights to the series from the heirs of the show's writers, took the position that the phrase "in connection therewith" modified "the right to exhibit photoplays of the series" such that only the net profits received by exercising SGP's rights to exhibit photoplays of the series were included in the agreement with Wagner. The trial court agreed with Columbia and granted summary judgment in its favor concluding that the agreement did not entitle Wagner and the trusts to share in the profits from the movies. Wagner appealed.

Appellate Court Holdings:

• The California Court of Appeal affirmed summary judgment in favor of Columbia Pictures concluding that the agreement between Wagner and SGP was unambiguous in describing the (limited) circumstances under which Wagner was entitled to share in the net profits from the motion pictures.
• Wagner made several arguments in support of his position that the "subsidiary rights" provision in the contract with SGP for the television series entitled him to 50 percent of the net profits from the two Charlie's Angels movies produced and distributed by Columbia Pictures. First, he introduced evidence of the history underlying the negotiations of the contract for the Charlie's Angels television series to show he was entitled to share in net profits derived from the exploitation of ancillary or subsidiary rights which bore any connection to the television series.
• Prior to the development of the Charlie's Angels television series, Wagner and his wife Natalie Wood ("Wagners") entered into an agreement with SGP to star in a television movie-of-the-week, "Love Song." During the course of the negotiations of that agreement, the Wagners pushed for language in the contract that made clear they were to participate in "all revenues from all sources" relating to "Love Song." Various rounds of negotiations ensued over the precise definition of net profits, with SGP's counsel acknowledging at one point that the Wagners were to receive "income from any and all sources" and assuring them that the (then draft) agreement "so states." In the final "Love Song" contract net profits were defined as the net of "all monies received by Producer as consideration for the right to exhibit the Photoplay, and exploitation of all ancillary, music and subsidiary rights in connection therewith." This language was identical to the definition of net profits in the subsequent Charlie's Angels contract. Because the "Love Song" agreement was intended to give the Wagners a one-half share in the net profits received by SGP "from all sources" without limitation and the Charlie's Angels contract was based on that agreement and defined net profits in identical language, Wagner argued that the Charlie's Angels contract should be interpreted as providing the Wagners with a 50 percent share in SGP's income "from all sources" including the Charlie's Angels motion pictures produced by Columbia.
• Not so, explained the Court. "The problem with Wagner's extrinsic evidence is that it does not explain the contract language, it contradicts it." The Court noted that under the Parol Evidence Rule, extrinsic evidence is not admissible to contradict express (i.e. unambiguous) terms in a written contract. The Court remarked that even if the parties to the Charlie's Angels contract may have intended for the Wagners to share in the net profits from all sources, the parties simply "did not say so in their contract."
• Wagner next argued that he and the trusts were entitled to share in the profits from the movies because SGP acquired the motion picture rights to Charlie's Angels by exploiting its rights as producer to exhibit photoplays of the series. Again, the Court disagreed.
• Under copyright law, the script for the television series pilot was a "work made for hire" giving SGP absolute rights to exploit the series in other media, except as otherwise provided by contract. A provision of the writers’ contract with SGP incorporated a collective bargaining agreement between the producers and the Writers Guild. Under the “separated rights” provision of the Writers Guild collective bargaining agreement, the writers of the Charlie's Angels television series retained the right to exploit the material for certain purposes, including making a motion picture. While SGP owned the copyright to Charlie's Angels and held the exclusive film television rights in the literary material (i.e. the right to exhibit photoplays of the series), it held the separate right to generate motion pictures based on the series in trust for the writers. Had the writers offered the movie rights for sale within five years from the date they delivered the teleplay for the series to SGP, the producer (SGP) would have had a right of first refusal. Columbia produced sufficient evidence to convince the Court that SGP never acquired the motion picture rights from the writers. (Had that occurred, Wagner would have had a possible claim based on the “subsidiary rights” language of the agreement with SGP.) Because Columbia purchased the film rights on the open market from the heirs of the writers of the television series (after SGP's right of first refusal expired), the film rights were not acquired by SGP by exploiting its right to exhibit photoplays of the series and thus were not "ancillary" to the television series.