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~ - ~ t t 1~ ~ C 0 V-512C NEW YORK SUPREME COURT APPELLATE DIVISION' : FIRST DEPARTMENT x » ROBERT BRIAN ASSOCIATES, INC., . Plaintiff-Respondents, . Index No. 6859/77 -against- : AFFIDAVIT OF NEAL JOHNSTON LOEWS THEATRES, INC., : Defendant-Appellant. . - - - - - - - - - - - - - - - - - - - - -x STATE OF NEW YORK : ss. COUNTY OF NEW YORK ) of this Court's order and opinion are annexed as Exhibits A and~B. NEAL JOHNSTON,, being duly sworn, deposes and says: 1. I am associated with the firm of Paul, Weiss, Rifkind, Wharton & Garrison, attorneys for defendant-appellant Loews Theatres, Inc. (hereafter generally referred to as "Lozillard"). I am fully familiar with the facts of this case and submit this affidavit in support of Lorillard's motion for reargument, or, in the alternative, for permission to appeal to the Court of Appeals pursuant to C.P.L.R. Sec- tion 5602, from this Court's order of July 10, 1979. (Copies

0 facts of record here and proper application of pertinent overlooked or misapprehended by this Court with regard to the that reargument should be granted~ because of the points INTRODUCTION 2. In our accompanying memorand=we demonstrate to that decision cannot logically be followed. The jury verdict was a general one, determining a single cause of the specific order which this Court entered to give effect decision of this Court to be accepted without further question, 3. In addition, we demonstrate that evemwere authorities to those facts. action embracing plaintiff's claim that Lorillard ran four separate sales promotions using four different Robert Brian individual claim whether the jury found liability at all. It would be indefensibly unfair to require Lorillard to respond in damages with respect to a sales promotion which the trial jury did not find to have emanated from one of plaintiff's suggestions, but there is no way of avoiding that risk unless the new jury reassesses the entire question of liability on an item-by-item basis. 4. In the alternative, if reargument is denied, I respectfully submit that Lorillard's motion for permission to jury based its verdict on all or less than all of those four separate claims, and therefore no way of knowing as to any suggestions. There is now no way to determine whether the

© appeal to the Court of Appeals should be granted because of the seriousness of the issues raised herein and the importance to the entire New York based advertising/sales promotion industry of certain substantial modifications of prior New York law implicit in this Court's decision. BASIS FOR RECONSIDERATION 5. Plaintiff brought suit under two separate causes of action, the first of which alleged that in the period 1972 through 1974 Lorillard ran four separate sales promotion campaigns which derived in some fashion fromiideas submitted to Lorillard by plaintiff. Plaintiff claimed a right to certain contractual benefits arising fr=such use and sought a recovery of $235,000 with regard to that claim. The trial jury returned a verdict for $90,000. On appeal to this Court Lorillard argued (1) that there was no competent evidence that Lorillard, in any legally cogizable sense, used plaintiff's ideas and (2) that, even if Lorillard did use any such ideas, they were not novel ideas as required by the contract in issue and by the law of New York. The Necessity of Novelty w 1 6. This Court held that there was sufficient a N N evidence before the jury with respect to each of the four W 0) promotions in question to sustaima finding that Lorillard's

0 promotion "emanated" fr=a Robert 8rian~proposal. This Court, however, apparently overlooked the independent ques- tion whether Lorillard's promotions involved any novel proposals by plaintiff. 7. At trial Robert Brian~ identified the novel aspects of each of its four suggestions. This Court had before it replicas of each of the four promotions that Lorillard actually ran. This Court could compare them directly with what plaintiff claimed to have suggested. It is obvious from the face of those materials that the Lorillard promotions did not contain any of the allegedly novel aspects of plaintiff's proposals. On the contrary, this documentary evidence shows the LoriLlard promotions to have been~ based on nothing more than~ conventional, familiar promotional ideas well within the public domain~ and indeed, familiar in the everyday experience of every regular super- market shopper including, we trust, the members of this Court. 8. If this Court silently concluded that novelty was not a requisite for liability, it did so in contradiction of clear New York case law to the contrary. Any such~ an alteration in the established law of intellectual property would have the most serious and unfortunate consequences for New York's advertisers and advertising agencies alike.

q 5 Without the requirement of novelty,-any merchant who retains an agency, like plaintiff, under the standard sort of retainer agreement here involved would risk being deprived free access to conventional promotional techniques within the public domain (and freely available to competitors) if the advertising agency ever proposes that its principal undertake any such conventional program. Such a doctrinal revision would not only rewrite the law of intellectual property to the clear detriment of the competitive process, but would also confer great benefits upon agencies like plaintiff for the mere reiteration of the conventions of' the trade. 9. By way of illustration, one of the four propo- sals at issue here, the Kent Gallery, allegedly emanated from a Robert Brian suggestion that Lorillard establish Green Stamp-like program wherein Kent smokers would receive "expen- sive and unique gifts with purchases of Kent." (R. Br., p. 24)~. There is no claim that Lorillard ever ran a Green Stamp-like program for Kent. Plaintiff never designated any specific "expensive unique gifts," nor even described what might be considered a "unique" gift. Plaintiff' claim is simply that in~ 1974 Lorillard' ran a:promotion wherein Kent smokers were permitted to:buy through Kent certain "expensive and unique gifts." If plaintiff's naked~ notion is protected under its contract, it then appears that Lorillard may never o' W ~ hereafter use any premium promotion where the premiums in O F+ N W . ~

question are expensive or unique without first making payment to plaintiff. A comparable absence of novelty in the three other proposals in issue is demonstrated in our accompanying memorandum. 10. We respectfully urge this Court to reconsider the necessity of novelty as a condition of liability and whether there is any evidence of such novelty on the record before it. We believe that once the question is addressed, it will be apparent that none of the four Lorillard promotions used any novel Robert Brian suggestion. For this reason we again contend the first cause of action should have been reversed, whether or not Lorillard's programs "emanated" from Robert Brian's suggestions. The Deficiencies of the Charge 11. In its brief decision~, this Court also omitted to address our objection to the sufficiency of the charge to the jury. The trial court never gave any assistance to the jury whatsoever as to the problem of originality, as to the legal conception of "emanation" or as to any other element of the breach here alleged. The trial court instead just told the jury that if Lorillard had~ breached its contract, it would be liable to plaintiff. It never explained the concept of breach~. These are not self-evident concepts and the jury

should not have been allowed to founder unassisted through the complex facts of this case. 12. Indeed, the trial court compound'ed its omis- sion by a wrongful affirmative suggestion that if Robert Brian were ready, willing and able to handle the execution of any Lorillard promotion, Lorillard was required to give Robert Brian the work -- whether or not the Lorillard promo- tion emanated from a Robert Brian suggestion and whether or not the program involved any novel Robert Brian elements. 13. On the basis of this instructional error alone, we respectfully renew the argument, overlooked below, that a retrial on liability is needed in order to be assured that the jury's findings are based upon proper legal principles. The Logical Impossibility of Limiting Retrial to the Damage Issue 14. A retrial on liability is also required in order that damages may properly be measured. Because the claims were stated in a single cause of action and because the trial court refused Lorillard's request for special jury verdicts designed to separate out the jury findings on liability as to each of the four separate and distinct claims, it is no longer possible to determine whether the jury based its verdict upona a finding of liability as to all of the claims or only some of them~. Since we can now only

guess what the original jury did in fact find, a second jury's assessment of damages as to any one promotion~can only be based~on speculation. 15. Due to the peculiar posture of this case, liability must be retried in order to measure damages accord- ing to the rule of law, even if retrial on liability were not required for other reasons. 16. In addition, if damages are to be retried, we respectfully suggest that plaintiff should not be permitted to prove damages on an alternate theory which it suggested but then utterly abandoned at trial. Plaintiff sought to recover profits it would have earned had Lorillard allowed it to execute production of the four promotions, but also inciden- tally alleged, for the first time at trial, that if Lorillard awarded production to some other agency, plaintiff was entitled' to 15% of the money paid that agency. This Court found that Robert Brian could have proceeded to prove its damages by reference to either approach, but that there was no quantified evidence whatsoever to support any damage award on the basis of the alleged 15% penalty provision. Indeed, plaintiff'not only introduced no such evidence at trial but it made no effort whatsoever in the discovery stage to learn what sums Lorillard had in fact expended in the execution of any of the four promotions. Instead~, plaintiff always

t insisted that if it had been allowed' to bid on production it would have been awarded production by Lorillard and that, therefore, it was entitled, not to the 15% commission, but to its lost profits. 17. We respectfully urge that at a new damage trial Robert Brian should not be allowed to change its own theory of the facts and now contend that it would not have been awarded production rights. The Absence of Proof to Sustain the Second Cause of Action 18. The second cause of actiomfor $10,000 relates to plaintiff's claim for a commission on certain work that plaintiff refused to perform. The parties' oral contract provided that Robert Brian would receive a 25% commission on all purchases it made on Lorillard's behalf, but Robert Brian has already received a 25% commission on all such expenses. In connection with the so-called Kent Castle contest, Robert Brian retained'an outside agency to judge the contest which Lorillard sponsored. Consistent with the contract, Robert Brian received a 25% commission on:the fees of the judging agency. Later, it developed that the contest needed to be rejudged but Robert Brian refused to involve itself in any way with the arrangements necessary for such rejudging, in- cluding negotiations with the judging agency concerning its

revised work. Since plaintiff retused to do this work, Lorillard had no choice but to do the work itself. Lorillard entered into the contract for rejudging directly and paid the agency directly. Plaintiff has thus far successfully claimed a 25% commission on the expenses Lorillard incurred in performing the work which plaintiff refused to perform. 19. This Court appears to have sustained the j~ury's judgment on the misapprehension that plaintiff merely sought a commission on its own expenses. The fact is that plaintiff seeks a commission on Lorillard's expenditures, though no contractual provision is even alleged which requires Lorillard to pay a commission on obligations which Lorillard incurred~directly. If anyone breached this part of the con- tract, it was plaintiff -- and it was Lorillard which had to make the best of plaintiff's breach. The judgment on the second cause of action should be reversed for want of any evidence to sustain it. The Improper Measure of Damages 20. However, even if liability on the second cause of action were assumed, plaintiff has only proven the gross amount which it would have received had it been paid the commission in q,uestion: $10,000. If plaintiff had~ performed any of the work associated with this commission~, its net W Q O N N ~ _ W