## Facts

- In 1939, RKO Radio Pictures, Inc. and Mercury Productions, Inc. entered a production agreement for Orson Welles’s services to produce, direct, and write screenplays for two films.
- The agreement provided that RKO owned the “results and proceeds” of Welles’s services, but for any “original screenplay used as the basis” of a film, RKO received only “motion-picture and television rights,” while Mercury reserved “publication, radio, dramatic, and other rights.”
- *Citizen Kane* was produced from an original screenplay written by Orson Welles and fell within the agreement’s original-screenplay provision.
- Decades later, the film and related works were distributed through home-video formats (including VHS and DVD), but the agreement did not expressly address future media or home-video exploitation.
- Beatrice Welles, as successor to Orson Welles and Mercury’s interests, sued Turner Entertainment Co. and Entertainment Acquisition Co. (successors to RKO’s interests), asserting ownership of the screenplay’s copyright and the right to exploit the screenplay in home-video formats.
- The district court granted summary judgment for defendants on the *Citizen Kane* contract-allocation issues.
- Beatrice Welles appealed the summary judgment ruling as to *Citizen Kane*.

## Issues

1. Whether the 1939 production agreement unambiguously granted RKO (and successors) the right to exploit the *Citizen Kane* screenplay in home-video formats as part of “motion-picture” rights.
2. If the agreement is ambiguous as to home-video exploitation rights, whether summary judgment was improper and the dispute must be resolved using extrinsic evidence of the parties’ intent.

## Decision

- The Ninth Circuit reversed the grant of summary judgment in part and remanded for further proceedings.
- The court held the agreement was ambiguous regarding which party owned the right to exploit the *Citizen Kane* screenplay on home video.
- The court clarified it was not adopting a general presumption against applying grants of “motion picture” rights to new technologies; it was interpreting this contract’s language and structure.
- Because the ambiguity concerned a material allocation of rights, the dispute required consideration of extrinsic evidence and could not be resolved as a matter of law on summary judgment.

## Legal Principles

- Disputes over exploitation in later-developed media are resolved by applying ordinary contract-interpretation principles to the parties’ written agreement, rather than by applying a categorical presumption for or against coverage of new technologies.
- The breadth and structure of a rights grant matter: broad grants may cover later-developed media, while narrower grants paired with broad reserved rights may support competing reasonable interpretations.
- Where a contract’s allocation of exploitation rights admits of multiple reasonable interpretations on a material term, the contract is ambiguous and summary judgment is improper; extrinsic evidence may be required to determine intent.

## Conclusion

The Ninth Circuit held that the production agreement’s allocation of “motion-picture and television rights” to RKO and broad reserved rights to Mercury left home-video exploitation of the *Citizen Kane* screenplay reasonably disputable, requiring remand for factfinding based on extrinsic evidence rather than summary resolution.


Welles v. Turner Ent. Co., 503 F.3d 728 (9th Cir. 2007)