Pure Play Files $3M Lawsuit Against Private

Aug 12, 2013 12:45 PM PST

TORONTO — Pure Play Media has filed a $3 million lawsuit against Private Media Group, alleging the studio breached a deal over distribution rights in Canada.

Pure Play, in its claim filed at Ontario Superior Court in June, says that a long-running distribution deal, comprising Canadian video-on-demand and IPTV rights, was severed by Private without notice despite a contract that included provisions that it would automatically renew.

Pure Play alleges in the suit that it had the exclusive right to distribute Private products in Canada.

The lawsuit was filed after Private struck a deal with LFP Productions earlier this year for Canadian distribution that effectively limited the number of Private titles Pure Play could distribute.

Pure Play in the suit said that the company and its owner, Richard Arnold, had a relationship with Private for 15 years, and that an exclusive contract between the companies in 2004 spelled out the terms for the Canadian deal: a one-year contract, automatically renewing unless terminated in writing with six month's notice.  

The Canadian deal allowed Private to rake in 70 percent of revenue, while Pure Play received 30 percent.

The 2004 deal also included other provisions, including one where Private would distribute Pure Play products in Europe.

"The parties enjoyed a long and mutually beneficial contractual relationship both in Canada, as well in the U.S. and Europe," Pure Play's suit says.

But in January, Private contacted Arnold saying it was exploring a deal with LFP.

"[Pure Play] did not object to Private's proposed transaction with LFP as it only related to the U.S. and [Pure Play] did not have any exclusive rights to distribute [Private's] product in the U.S.," Pure Play said in the suit. "However, [Pure Play] did advise [Private] that, in the event that any transaction was entered into by [Private] with LFP, it must exclude Canada since [Pure Play] had the exclusive rights to distribute [Private's] products in Canada."

Private, in a response to Pure Play and Arnold, said it didn't agree with provisions of the Canadian deal but that it would supply five titles a month to Pure Play.

Pure Play responded with the lawsuit after Private ceased distributing any product to the distributor, alleging in court papers that the impetus of the LFP deal was additional revenue.

"[Pure Play] alleges that by entering into an arrangement or contract with LFP, which included granting LFP the right to distribute the product in Canada, [Private] had breached the terms of the contract and their duty of good faith owed to [Pure Play]," the suit says.

Pure Play, which said that Private should have given it six month's "reasonable notice" it was severing the Canadian deal, is seeking $2.5 million in damages, as well as another $500,000 in punitive damages and attorneys fees.

When reached by XBIZ, Arnold said that the kerfuffle over the Canadian deal is not trivial for him, particularly since he has had a long-running relationship with the studio.

"I find it sad that after 15-plus year relationship with Private, both personally and professionally, things between us have come to this," Arnold told XBIZ.

Private, meanwhile, rejected Pure Play's lawsuit on Monday, with its CEO, Charles Prast, saying "there are neither any grounds for this action nor are the amounts claimed in any way proportionate to any business ever conducted.” 

"This suit is frivolous, small minded and proof that in dealings with the plaintiff that no good deed goes unpunished," Prast told XBIZ. " In short, after years of helping the plaintiff try to establish a prosperous business this is the thanks we got."

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