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Studios’ resort vid rental suit ends

The final chapter has been written in a 10-year legal feud between eight Hollywood studios and a Palm Springs resort that began when the hotel started renting videos to its guests.

On Monday, the U.S. Supreme Court reaffirmed an earlier 9th Circuit Court of Appeals decision that had found the studios had not violated antitrust laws when they sued Professional Real Estate Investors, owners of the La Mancha Private Club and Villas.

The studios’ suit had originally charged that the rental service constituted unlawful public performances of copyrighted movies. In 1986, a Los Angeles federal judge threw out the studios’ copyright suit as being unsubstantiated and the decision was re-affirmed in 1989 by the U.S. 9th Circuit Court of Appeals.

The studios that filed the copyright lawsuit were: Sony Corp.’s Columbia Pictures Industries unit; Embassy Pictures, a partnership since dissolved; Paramount Communications Inc.’s Paramount Pictures unit; News Corp.’s Twentieth Century Fox Film unit; Matsushita Electric Industrial Co.’s Universal City Studios unit; Walt Disney Co.; Time-Warner Inc.’s Warner Bros. unit; and CBS Inc.

In the interim, La Mancha’s owners filed an antitrust counterclaim against the studios, charging that the studios had colluded in violation of federal antitrust law to undermine the resort’s movie service. They claimed that the studios’ suit was a sham filed with anti-competitive intent.

While that counterclaim was dismissed by both the 5th Circuit and 9th Circuit courts, their rulings were reached on radically different principles.

“The 5th Circuit found that no matter how meritorious a suit might be, it could still give rise to antitrust violations if there was an anti-competitive intent in filing the suit,” said Stephen Kroft, an attorney with McDermott, Will & Emery, who repped the studios.

“In essence, the 9th Circuit Court said that no matter what the motives, the rights of a meritorious suit are protected, which we believe is an enormously important decision.”

Pat Coin, the attorney who represented PREI, could not be reached for comment.

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