## Facts

- Subafilms, Ltd. and The Hearst Corporation jointly produced the animated film *Yellow Submarine*.
- Hearst negotiated a 1967 agreement with United Artists Corporation (UA) concerning financing and distribution.
- With the rise of home video, UA and successor entities authorized videocassette exploitation of the film, including worldwide distribution through Warner-affiliated home-video companies.
- Subafilms and Hearst alleged that the defendants exceeded their contractual rights and infringed copyrights through home-video exploitation in the United States and in foreign countries.
- A key theory was that authorizations made within the United States rendered defendants liable under U.S. copyright law for copying and distribution that occurred entirely abroad.
- After findings for plaintiffs (including damages, fees, and an injunction) and an initial appellate affirmance, the Ninth Circuit reheard the case en banc to address whether domestic authorization alone supports a federal copyright claim for purely foreign acts.

## Issues

1. Whether a plaintiff states a claim under the Copyright Act when the only domestic conduct alleged is authorization within the United States of reproduction and distribution occurring entirely outside U.S. territory.
2. Whether 17 U.S.C. § 106’s grant of exclusive rights “to do and to authorize” creates a freestanding basis for liability for authorization, independent of actionable domestic infringement.

## Decision

- The en banc Ninth Circuit reversed the portion of the judgment imposing Copyright Act liability based solely on authorization in the United States of acts occurring entirely abroad.
- The court held that allegations of domestic authorization of wholly foreign acts do not state a claim for relief under U.S. copyright law.
- The case was remanded for further proceedings, including consideration of non-copyright theories such as contract claims.

## Legal Principles

- The Copyright Act has no extraterritorial application; infringement claims are cognizable only for acts of infringement occurring within the United States.
- The presumption against extraterritoriality applies absent clear congressional intent to the contrary.
- Section 106’s phrase “to do and to authorize” does not create liability for authorization alone when the allegedly infringing acts occur entirely abroad.
- “To authorize” in § 106 functions to capture secondary liability concepts (such as contributory infringement) tied to underlying infringements that are themselves actionable within the statute’s territorial scope.
- Interpreting domestic authorization as sufficient for liability for foreign acts would risk conflicts with foreign copyright regimes and disrupt the country-by-country allocation of protection.

## Conclusion

The en banc court limited federal copyright liability to domestic acts of infringement, rejecting the theory that a U.S.-based authorization, without any actionable U.S.-territory infringement, can support damages or injunctive relief for copying and distribution that occur entirely outside the United States.


Subafilms, Ltd. v. MGM-Pathe Commc'ns Co., 24 F.3d 1088 (9th Cir. 1994) (en banc)