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July 11, 1984


The opinion of the court was delivered by: GREEN

 This matter is before the Court pursuant to plaintiff's amended and supplemental complaints seeking monetary solace, compensatory and punitive, for defendant's alleged copyright infringement, unfair competition and breach of contract. Tried to the Court over several days, and bifurcated as to liability and damages, the evidence is supported by both in-court and deposition testimony, stipulations, documentation, and numerous pretrial and posttrial submissions of the parties.

 Plaintiff, Barry M. Blackman, is a professional photographer who took nude photographs of Elizabeth Ray in September, 1972 at a time when Miss Ray was relatively unknown. Nineteen original color photographs and thirty-five original black and white photographs were created, reflecting originality by Blackman with respect to setting, composition, lighting, pose, expression and effect. *fn1" Miss Ray signed a model release giving the photographer all rights to use, publish and copyright the photographs.

 Approximately four years later, in June, 1976, widespread, virtually unrelenting national publicity focused on the relationship of an United States Congressman and Elizabeth Ray.

 Recognizing his potentially lucrative opportunity, Mr. Blackman published the photographs in June, 1976 with notice of his claim of copyright affixed thereto. Subsequent to this first publication, copies of each of these fifty-four photographs were filed with the United States Register of Copyrights, who thereupon issued Blackman the Certificate of Registration of a Claim to Copyright.

 It is undisputed that Mr. Blackman has been the sole proprietor of the copyright in the photographs and the sole owner of all right, title and interest in them, save as to those rights he yielded to others, by license or other means.

 Some of these photographs later appeared in three separate issues of the defendant publication: the September, 1976 issue of Hustler (nine photographs), "Best of Hustler #2" (republication of the same nine photographs), and the July, 1979 issue of Hustler Magazine (republication of one photograph). S-59-62; PX 19-21. Although Hustler Magazine, Inc. ("Hustler"), through its officers and agents, knew that Blackman had the copyright to these photographs, there was no identification on the photographs of the plaintiff as the copyright owner. Mr. Blackman did not benefit from any financial compensation from Hustler, returning Hustler's uncashed $ 1,000 check and refusing an additional $ 15,000 which had been wired to his bank account.

 The central dispute in this action revolves around the contractual defense asserted by Hustler which claims existence of a contract with Blackman through his agent, Tucker, for an authorized license to publish his Elizabeth Ray photographs in the defendant magazine.

 During the period of June 11-13, 1976, *fn2" Blackman requested William L. Tucker, a stock picture broker, to assist him in obtaining potential purchasers of the rights to publish his Ray photographs; Tucker agreed to do so. (S-9) Blackman and Tucker had worked together months before on the sale and marketing of photographs unrelated to this action and had signed a "Photographer-Stock Picture Broker Form Agreement". As the Ray developments exploded hourly, they discussed the value of the Ray photographs and arranged for duplication of the transparencies, i.e., five to ten sets of transparencies and color photocopies of the slides. For purposes of illustrating the substance of the slides (although anything other than the original is rarely used for reproduction in publication), samples were made, to be available by mail or directly through Tucker, to the publications expressing interest in the photographs. Because of their anticipated value, Blackman intended that the originals of the pictures, along with the original model release, be maintained in Tucker's safe deposit box.

 Other significant events transpired on June 15. On that morning Tucker entered into an agreement with George Barris, through Barris' agent, Thea Rosenbaum, for the foreign rights to the photographs. Ms. Rosenbaum was given duplicate Ray photographs. In foreign rights' transactions, it is not unusual to distribute duplicate photographs to the publisher. Tucker contends he acted under his original (March, 1976) agreement with Blackman, which provided him a certain commission and total authority to bind Blackman.

 Challenged with inconsistent testimony at trial and at his deposition concerning the date of his knowledge that Tucker had contracted with Barris and whether Tucker did or did not have authority to finalize that contract without Blackman's express approval, Blackman explained that whenever he heard about that contract (be it the 15th of June, or June 23rd or 24th), he gave Tucker the "benefit of the doubt" that in the frenzied atmosphere of that time (and since the new agreement had not yet been formalized in writing) Tucker thought he was operating under the written agreement (Tr. 41.) While Blackman's explanation is plausible under the circumstances, it remains difficult to reconcile all actions which followed. Nonetheless, the Court does not conclude, as Hustler does, that the subsequent events so parallel the incident in the Hustler/Tucker "contract" that they are indicative of Blackman's compulsive strategy to get the best deal at any cost. On June 29, at Blackman's direction, Greensfelder sent a telegram to Barris stating that their "agreement" had been contracted without Blackman's approval and would be voided unless certain modifications were executed. Those changes, which clarified murky details, did not affect the agreed sharing of proceeds. The contract was fulfilled subsequently when each party received $ 600.00 for the sale of the foreign rights to these photographs.

 After Tucker bound Blackman to the Barris agreement and after the televised press conference, Blackman and Tucker discussed terms of their proposed new agreement on June 15, recognizing that their previous arrangement had to be altered because of the "unique" nature of the Ray photographs. The essential negotiations would be conducted exclusively by Tucker, but Blackman had to give his approval to the negotiated agreement before it could be finalized.

 Through testimony so convincing that even the defendant accepted his credibility (closing argument, at p. 25), Thomas M. Schatz corroborated the evidence that special arrangements for the Ray pictures were mutually agreed to by Tucker and Blackman during his presence, but not then reduced to final written form or signature. Tucker would be the sole negotiator as the best arrangement was sought; Tucker could not, however, sign a binding agreement with the purchasing publication without Blackman's approval. A rough draft reflecting this discussion was typed. The Blackman/Tucker agreement was not executed on the 15th since Blackman wanted to discuss its terms the next day with his attorney, Edward Greensfelder, Jr. The agreement was finally signed on June 21.

 More excitement occurred on June 15. Albert Ahern, Jr., an attorney representing Elizabeth Ray, advised Blackman and Tucker not only that they were without rights to sell the photographs, but that litigation was imminent. As a result, Mr. Blackman retained Mr. Greensfelder to represent him in this matter.

 Daniel R. Montgomery entered into the picture on that same eventful day. He worked in the field of show business management. Although he had never concluded a contract for anyone he represented, he had had previous contacts with Hustler Magazine, Inc. and its publisher, Larry Flynt, concerning publication of photographs of "parallel" interest, unrelated to those of Elizabeth Ray. He sought to involve Hustler in the latter photographs and, accordingly, placed a long-distance telephone call to Larry Flynt. Flynt, who had been earlier unsuccessful in his direct application to Elizabeth Ray to have her pose for Hustler, was most interested in acquiring rights to publish Blackman's photographs; however, he wanted to first see them before committing Hustler to a contract of purchase. At Montgomery's behest, but with Flynt's express permission, Montgomery telephoned Tucker. He informed him that he was acting on behalf of Hustler and that Hustler was interested in rights to publish the Ray photographs. Tucker told Montgomery that he represented Blackman who was unavailable. Although Blackman left for New York only the next day, there is no doubt that Tucker was authorized to be sole negotiator and to secure the best deal. During the next hours, Montgomery and Tucker had several telephone conversations concerning the nature of the photographs, the model release and the sales price for the publication rights. Tucker asked for $ 25,000; Montgomery offered $ 16,000. Hustler's agent testified to his understanding that, while willing to pay $ 25,000, Flynt preferred to not exceed $ 20,000. *fn3" The $ 4,000 differential would represent Montgomery's commission, a commission to be realized only if the parties contracted for the right to the photographs.

 Expressed through deposition read at trial, Montgomery's testimony reflects not only his knowledge that Tucker hoped to get more than $ 16,000 but that "I got the impression that what he was going to want to do was to delay and take bids [from the magazines]." (Tr. 76.)

 Recognizing this was Tucker's first negotiation for these photographs and that his potential access to them might quickly evaporate in this climate, Montgomery ". . . thought, frankly, that my best way of securing the rights was, again, to move as quickly as I could." (Tr. 76-77.) Emphasizing that "I wanted to move as quickly as I could," he again telephoned Flynt to spur action. When Flynt mentioned he would be back to Ohio the next week, Montgomery applied further pressure: "I told him that I felt we shouldn't delay, and he [Flynt] told me that if I had to I could arrange to come out to Las Vegas or have Tucker come out to Las Vegas or Blackman come out to Las Vegas, and we'd conclude the business out there." (Tr. 75.)

 In light of other developments, Montgomery's testimony is unconvincing that "the end result, however, was that he [Tucker] agreed to sell the photographs for $ 16,000" before he departed for Las Vegas.

 Tucker (and Blackman) were also appreciating the urgency of timing: although there was no timetable of offer and acceptance, the newsworthy moment was now, while "quite a few" magazines had expressed interest in the photographs. As Blackman testified: "the phone literally was ringing off the hook on the 15th, the day after the press conference." (Tr. 8.) Blackman and Tucker wanted to "test the waters" and secure the best financial transaction. Montgomery's eagerness to consummate an arrangement cannot be denied. It was he who arranged for Tucker to fly that night, at Hustler's expense, to Las Vegas where Flynt was attending a convention. Tucker was told to bring samples of the photographs (transparencies and the Xerox color copies) and a copy of the model release to discuss Hustler's possible purchase of the rights to publication. Hustler was to decide if the photographs were worthy of publication and when they could be published. Later events will show, however, that, initially, Flynt approached the matter more casually, as for example, he made no effort to ascertain his production schedule during the time Tucker was enroute to Las Vegas. Mr. Tucker met for fifteen minutes with Larry Flynt on the 15th after his arrival in Las Vegas. Flynt thereupon examined some of the sample photographs demonstrated to him. The men met again, as prearranged, for approximately one hour at breakfast the next morning. Negotiations between Flynt and Tucker continued thereafter in Flynt's hotel suite.

 Tucker testified that he informed Flynt on approximately five occasions on June 16 that he lacked authority to conclude a binding contract and that Blackman had reserved the right of approval. Even though nothing was said to Flynt by Montgomery prior to June 16 concerning Tucker's authority to contract (in addition to negotiate), Flynt "just assumed, [that Tucker had authority to act on behalf of Blackman] because he had the photographs that [sic], the model release, that he was the agent." (Tr. 123.)

 It is important to consider the scene on June 16 in Flynt's Las Vegas hotel suite where most of the relevant events occurred. Mr. Flynt, a sophisticated publisher, negotiated over a period of hours with Tucker, described by Jimmy Flynt as ". . . some guy [appeared] that looked like Paul Newman in "The Sting" and had some photographs of Liz Ray. Had on straw hat and the whole bit, suspenders." (Tr. 91-92.) Tucker admitted he was "out of my class." During the negotiations the caterers were in and out of the suite; the bartender was at the bar. Althea Flynt had emerged from the bedroom and gone to the balcony. Jimmy Flynt, among others, entered and exited the suite. Tucker swirled from telephone to telephone in the suite "like a cat on a hot tin roof", talking to competitor publications about the purchase of these photographs, trying to raise the sales figure. He left the suite to make further telephone calls. Despite this continuous activity with others, Flynt testified he considered Tucker's actions as only a "negotiation technique". (Tr. 119.) Still, Flynt "became very skeptical when Mr. Tucker kept talking to the other magazines, and I wanted to make sure that we had exclusivity." (Tr. 160.) More conversation ensued. Clauses were added to a draft. When Tucker told Flynt he would have to take the typed draft of the Hustler/Tucker agreement to Blackman for his approval, Flynt became increasingly suspicious. He talked to Montgomery by telephone on more than one occasion that afternoon and evening, noting his extreme displeasure about Tucker's behavior and lack of authority to finalize the contract. Montgomery talked to Tucker who told him also that he lacked authority to complete the transaction. As Montgomery put it:

So that was one problem that had been covered. He had told Flynt he couldn't make the deal, wanted to talk to Blackman, and now he just told me, again, yes, he wanted to make the deal. [Tr. 230.]

 On clear notice that prudence was indicated in this business negotiation, Mr. Flynt observed, understandably, that

I didn't know Mr. Blackman, and this guy Tucker, I didn't feel that he was playing with a full deck. I'm sorry. I mean, I just felt that he was the one who was not trustworthy. [Tr. 174.]
. . . .
I found the guy to be the most unpredictable person that I had ever seen. I felt that he was trying to sell the photographs to several different magazines at once.

 While the negotiations continued and the contract was being typed, Tucker testified he once again told Flynt he lacked authority to conclude the agreement; Flynt used "harsh" language, complaining that he had thought the matter could be consummated in one day and "the whole process was taking so long since I had to go back to D.C. to get the photographer's approval." While Flynt denied this precise conversation, both Tucker and Flynt agreed that Flynt became so upset during that time of negotiations, that he told Tucker to "take your pictures and go" and "with the deal dissolved, I want to be reimbursed for the trip." (Tr. 179.) When Tucker offered to write a check for the amount, Flynt demanded cash; Tucker advised he did not have $ 1,000 cash with him. Tucker further contended, and Flynt denied, that Flynt told others in the room to stand near the door while negotiations continued.

 Prior to signing the document (PX-11) which defendant contends is the valid contract of publication rights, Tucker telephoned Greensfelder (Blackman's attorney). Greensfelder was aware that Tucker was in Las Vegas negotiating with Hustler's representatives since Blackman had spoken to him about the unsigned draft of the Blackman/Tucker contract. Mr. Greensfelder confirmed Tucker's testimony that Tucker told him he had notified Flynt that Blackman had the sole right to approve sale of the photographs.

 Yet, despite his heightened suspicions and acknowledgment that "the deal was dissolved" at least at one time during the negotiations, Mr. Flynt maintained at trial that he was "absolutely certain" that Tucker had never advised him that Blackman had to approve the contract. This trial testimony is not persuasive. It is further noteworthy that, at his deposition taken years earlier, "when my memory was less impaired", Flynt ...

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