Anne of Green Gables (1985 Film) - Lawsuits

Lawsuits

In 1908 LM Montgomery signed a contract with the LC Page Co. in Boston that permitted them to publish all of her books for 5 years on the same terms: the main terms were a 10% royalty and world rights to all of the author's books; it also included the right to publish all of her future works. The relationship with Page actually spanned nearly ten years and resulted in the publication of nine novels and collections of short stories. However Montgomery became aggravated with the Page Co. When she contracted with a Canadian publisher (McClelland, Goodchild and Stewart) The Page Co claimed that they had the exclusive rights to her new books and threatened to sue her. Montgomery instead took the Page Co. to court to recover withheld royalties.

The lawsuit resulted in a settlement in 1919 whereby Page bought out all of Montgomery's rights to all of her novels published by them. The settlement excluded any reversionary rights that might become due for the benefit of either her or her heirs if such rights were to become enacted. The settlement paid Montgomery a flat sum of $18,000; at the time an amount she would have expected to see earned from her works during her lifetime.

Sullivan purchased dramatic rights from the Montgomery's heirs in 1984, believing that they owned reversionary rights that had come into place as a result of changes to the copyright act subsequent to Montgomery's death.

After Sullivan's films were successful around the world and brought legions of tourists to Prince Edward Island the Montgomery heirs established an Anne of Green Gables Licensing Authority with the Province of Prince Edward Island to control trademarks to preserve Montgomery's works, through the mechanism of official trademarks. The heirs and the AGGLA became successful at asserting control over the booming Anne -themed tourist industry that the province enjoyed, because of the lack of clarity about the different protections afforded by copyright, trademark and official marks in Canada.

AGGLA and the heirs tried to assert control over trademarks Sullivan had established to their various Anne movies (Anne of Green Gables, Anne of Avonlea, Anne of Green Gables - the Continuing Story) and Road to Avonlea properties both in Canada, the US and Japan.

A Japanese court then determined that the heirs were not entitled to the reversionary rights that they claimed they had sold to Sullivan and that the AGGLA was set up for pursuing private interests and not for serving public interests such as maintaining or managing the value, fame or reputation of the literary work, the author or even the main character of Anne. The Court determined that the AGGLA was the heirs' private profit-seeking enterprise as far as its activities were concerned.

Sullivan and the heirs came into further conflict during the 1990's. Sullivan was sued by the heirs . Their contractual agreement with Sullivan said that he would pay them a flat $425,000 (CAD) fee for the right to adapt the first book (and another $100,000 to do the second movie, Anne of Avonlea), plus 10% of the profits of Anne 1 and 5% of the profits of Anne 2. The contract also gave them the right to examine Sullivan Entertainment's financial records. However, when Sullivan claimed that neither of the movies had earned a net profit and (the heirs assert) refused to allow them to audit his books, they served a claim against him. Sullivan argued that the heirs and the AGGLA had enjoined the films by usurping the Sullivan trademarks and drastically reduced the profitability of the ventures. The heirs staged a press conference in 1998 at exactly the time when Sullivan was about to close a public offering to take his company public, to force Sullivan to pay them further receipts. The offering however was pulled by the underwriters and Sullivan counter-sued for libel, insisting that the heirs should pay damages of $55 million to all parties involved. A Superior Court of Ontario judge dismissed his suit on January 19, 2004. The Montgomery heirs subsequently dropped their claim for Sullivan to pay them any royalties however a settlement between Sullivan, the Montgomery heirs and the AGGLA was reached in 2006 to deal with all of their outstanding disagreements. Although Kevin Sullivan's works were initially based upon the works of LM Montgomery, Sullivan developed most of his successful Anne-related film properties (Anne of Avonlea, Anne -the Continuing Story, Anne - A New Beginning and Road to Avonlea) based on original material, not directly adapted from Montgomery's books. Many questions have been raised in court as to the author’s heirs’ rights in her copyright. The heirs have tried to extend the copyright in Montgomery's unpublished works until 2017 but lost that opportunity in 2004 when the Canadian Parliament rejected the provision they had pursued so ardently for the unpublished works of dead authors. In a Japanese court decision which addressed the heir’s challenge to the validity of Sullivan’s ownership of Japanese trademark’s in the movie property, the Japanese High Court commented on the heirs' entitlement to reversionary copyright which formed the basis of the rights that the family claimed to have sold to Sullivan. The Court stated that the heirs' reversionary copyright was non-existent and that there was no need for Sullivan or any other entity to account to the heirs for the use of the trademark in Japan.

The Court stated: "It is not clear from a legal point of view why permission from the heirs of the author or its related entity the Anne of Green Gables Licensing (AGGLA) authority was necessary."

The Japanese Court also extensively scrutinized whether the copyright in the book “Anne of Green Gables” had ever devolved to the heirs and called for extensive filing of evidence on this point. Sullivan filed an original 1919 agreement between Montgomery and L.C. Page & Co. which specifically excluded the heirs’ reversionary claims. Montgomery sold all of her publishing and copyright to her series of novels, in perpetuity, to her original American publisher in 1919, to the exclusion of her heirs.

The Court further questioned whether the heirs' licensing authority was engaged in activities of sufficient public interest as to qualify as a controlling body of LMM's works. The Court stated: " ....the possibility cannot be denied that the Anne of Green Gables Licensing Authority is the heirs' private profit-seeking enterprise as far as the activities with which the heirs of the subject case are involved are concerned. It is not proved from the evidence submitted in the subject case that the Anne of Green Gables Licensing Authority is involved in activities of public interest that are sufficient for the Anne of Green Gables Licensing Authority to be qualified as the owner of the registration of the subject mark as a controlling body of the subject literary work."

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