Opinion ID: 699542
Heading Depth: 2
Heading Rank: 2

Heading: TOR Has Met the Standard

Text: 38 We believe that TOR has met the heightened standard of a clear or substantial showing of a likelihood of success. Saban argues that the term juvenile story books means only 8 X 8s. If that were correct, then the Agreement would allow Saban to license the Power Rangers to publishers other than TOR so long as: (i) Saban did not license an 8 X 8 book to TOR, thus giving TOR exclusive rights to the Power Rangers characters under Paragraphs 9(e) (with rider) and 21, or (ii) license an 8 X 8 to another publisher in violation of the Rider to Paragraph 16 requiring that TOR have a right of first refusal over 8 X 8s. Saban claims that it has not licensed an 8 X 8 to anyone and, therefore, has not breached the Agreement. 39 However, based on the language of the Agreement, the district court's finding that the term juvenile story books is not limited to 8 X 8s is virtually indisputable. Looking only within the four corners of the document, see W.W.W. Assocs. v. Giancontieri, 77 N.Y.2d 157, 565 N.Y.S.2d 440, 443, 566 N.E.2d 639, 642 (1990) (Evidence outside the four corners of the document as to what was really intended but unstated or misstated is generally inadmissible to add to or vary the writing.), it is clear that juvenile story books refers to more than 8 X 8s. Saban's position depends critically upon the proposition that juvenile story books is a term limited to the parties' contractual intentions regarding the first six titles to be published and that the use of the adjective additional just before that term emphasizes this limitation. However, the Agreement explicitly provides that the original six titles--the Work--could have been published in a format determined by [TOR] in its sole discretion (emphasis supplied), the only specific description of format being that the works would contain approximately 2,500 words. The use of additional thus means at best additional works in a format determined by TOR containing approximately 2,500 words. 40 Other provisions of the Agreement are inexplicable if it is indeed limited to the publication of only 8 X 8s. Under Paragraph 9(e), Saban agreed not to authorize ... the publication in any printed form of a novelization, adaptation or other version of either the Work or a work in another medium based on the Work. This was clearly intended to be a broad grant of exclusivity because a rider excepted from it comic books, coloring books and activity books, exceptions that are entirely superfluous if the exclusive rights are limited to 8 X 8s. However, there is no reason why such exclusive publishing rights would be granted, or even requested, if TOR's right to publish the six titles and right of first refusal regarding future works were limited to 8 X 8s. The use of popular children's characters in different formats is well established in the record, and Saban offers no explanation why exclusive rights to all but comic, coloring, or activity formats would be given to a publisher whose rights were limited to the publication of 8 X 8s. 41 Moreover, under New York law, extrinsic evidence is admissible only to resolve ambiguity in a contractual term, see Care Travel Co. v. Pan American World Airways, 944 F.2d 983, 987-88 (2d Cir.1991); United States Naval Inst. v. Charter Communications, 875 F.2d 1044, 1048 (2d Cir.1989), and we doubt that extrinsic evidence is admissible to show that the term juvenile story books is limited to 8 X 8 books. Extrinsic evidence is admissible only to resolve conflicting, plausible interpretations that straddle the ambiguity of a word, not interpretations that change the word's meaning. Extrinsic evidence would thus be properly considered to determine only whether books at the margin of the term juvenile story books fall within that term. In the present case, some of the Power Rangers books produced by other publishers may fall at or beyond the margin--issues not before us--either because they appeal to an audience older than juveniles or because the books do not tell any kind of story, either in pictures, in text, or in both. However, there is no apparent ambiguity regarding whether the term juvenile story books is limited to 8 X 8s, given TOR's explicit right to publish the Work ... in a format of its choice. 42 In any event, the extrinsic evidence considered by the district court is of little aid to Saban. The record strongly supports the court's finding that juvenile story books is not an industry term of art, much less one limited to 8 X 8s. Saban's own director of licensing testified that the term could be used broadly, and other witnesses knowledgeable in the industry concurred. 43 Finally, the extrinsic evidence regarding the intent of the parties is conflicting and ambiguous. Saban's circulation of a brochure with an 8 X 8 sample when it was first seeking a publisher is of less than marginal probative value as to the meaning of the later-negotiated Agreement. Whatever thoughts Josey may have had in substituting juvenile story books for juvenile picture books is irrelevant because those thoughts were not communicated to TOR's negotiators. Indeed, we would add that replacing juvenile picture books with juvenile story books--as Saban's Josey requested--broadens the available formats beyond those largely reliant on illustrations and having only a limited text. Saban implies that it would have been commercially irrational to enter into a contract that gave TOR such exclusive rights. We disagree. Before the Power Rangers, such a long-term relationship with a publisher was an attractive means of exploiting Saban's properties in a new medium. The exclusive rights were an inducement to TOR to publish more books. After the Power Rangers, Saban had no need for such a relationship or inducement. Indeed, Josey's memory of his intent when he substituted the term juvenile story books may have been enhanced by 20-20 hindsight. 44 Saban's extrinsic evidence is thus not compelling. TOR's evidence conflicts with that of Saban, and the extrinsic evidence, viewed as a whole, is thus ambiguous. Even if admissible, ambiguous extrinsic evidence does not trump plain language. 45 Finally, Saban argues that Doherty's delay in asserting the contractual rights TOR now insists upon indicates that she viewed the Agreement as restricted to 8 X 8s. Although the delay may bar TOR from interfering with some or all of Saban's existing licensing arrangements, we do not regard it as an admission by TOR sufficient to override the plain language of the Agreement. Doherty is not a lawyer, and the district judge, who heard her testimony and read her affidavit, found that she might simply have forgotten or failed to understand the terms of the Agreement. 46 In light of the above, and because Saban has licensed at least some books that are juvenile story books without offering TOR a right of first refusal, we conclude that TOR has shown a clear or substantial likelihood of success on the merits.