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the chain-of-title for most, if not all, of the EBD film titles.
Even a cursory review of available information as of December 11,
1996, would have demonstrated these gaps. Moreover, CLIS’s
contribution of the film rights to SMHC and the transfers leading
up to that contribution do not establish specifically what rights
SMHC obtained in the EBD film titles. In the Court’s view, a
hypothetical willing buyer either would have demanded some
reasonable assurance of SMHC’s rights in the EBD film titles or
would have required a substantial discount to account for the
gaps in the chain-of-title and possible liabilities for illegal
distribution.150
At trial, John Peters of Epic Productions testified
regarding the nature and the condition of the EBD film titles
that CLIS contributed to SMHC. Mr. Peters was charged with
selecting the EBD film titles for CLIS’s contribution to SMHC; he
was instructed to select film titles that would not affect the
overall value of the CDR library. He selected films that had
very little value, films with distribution rights that were set
150 Bahman Naraghi, who has considerable experience in the
filmed entertainment business, testified that a company’s rights
in its motion pictures play a critical part in the filmed
entertainment business, because “That’s what is valued.” He
testified that chain-of-title confirms the validity of those
rights and provides the basis for proper copyright filing and
protection of copyrights. He testified that copyrights secure
the fundamental rights on any given film title in the form of
intellectual property in all jurisdictions of the world that
observe copyright laws and, therefore, guarantee the right to
receive income derived from the exploitation of film rights.
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