A hint of the device was found in MGM's petition. In many cases, petitions of U.S. lawsuits are not very much organized. MGM's petitions were one of those kinds. All claims which you can think of were listed up and assertions based on evidence were made. One of the items was "Communication between and among plaintiff, Toho and Kurosawa side with respect to the judgement by Japanese court on the lawsuit between Kurosawa side and Toho". The correspondences between the plaintiff, MGM, and Toho which were included in the Communication were very interesting.
In Chapter VI "Pursuit by MGM", I mentioned that MGM had sent a letter to Toho's lawyer in Los Angeles, and it was not the first time they sent such a letter. Copies of these letters were attached to MGM's petition. According to those copies, a total of seven letters were dispatched from July 29, 1987 through May 5, 1988 between MGM and Toho or between their respective lawyers. In these letters, MGM described itself as the successor of Alciona and stated that the remake right of "The Seven Samurai" was rendered to the script writers including Akira Kurosawa as a result of the Tokyo District Court judgement, and the right granted to Alciona by Toho became doubtful. On the contrary, Toho stated that they were making contacts with Akira Kurosawa and others in order to solve this problem although they were doubtful about the Tokyo District Court judgement's binding power on the U.S. court. Since settlement negotiations between Toho and Kurosawa started at the end of 1987 and closed the agreement on February 1, 1990, the correspondence exchanges between MGM and Toho cover almost the same period as the first half of the settlement negotiations. The first time lawyer M disclosed the problem of "The Seven Samurai" to me was on October 11, 1989, and recalling what Lawyer M was saying at that time "Toho is currently under an unstable condition where Alciona may claim Toho's responsibility for the breach of contract at any time" was a matter of reality if you replace the word Alciona with MGM. Both of me and Kurosawa Production did not know anything about that fact at that time and all we worried about was a doubtfully-existing company named Alciona.
Upon entering into a settlement agreement, Toho was aware of a fact whereas Kurosawa Production was not. The fact means that Toho was being pursued of the responsibility of transfer without permission and that they might be sued for failure to fulfill their duties if ratification is not given by Akira Kurosawa and others. At a later date, when the lawsuit began, Toho asserted that it is normal that quantity of knowledge each party has differs each other and its failure to convey to Kurosawa Production about MGM's request was nothing unfaithful. I predicted the possibility of such opinion so I tried to study the matter carefully.
Here again, the interpretation of Article 2 of that agreement related to "The Seven Samurai" has the conclusive role. If the terms of that Article are interpreted as ratification, there is no misunderstanding between Kurosawa side and Toho and no one had been cheated. In other words, if ratification is made, Alciona and its successor would obtain a perfect remake right and Akira Kurosawa and other script writers would lose the remake right completely. Regardless of why Toho wished to obtain the ratification, Kurosawa side cannot raise complaints if they get to know the true reason afterwards as long as they had already received the compensation for ratification. You may understand this logic by the following example. Suppose you met a person in the middle of a desert and sold him a glass of water for 200 yen. Afterwards you heard that the person had been wandering around the desert for five days without a drink of water, and you regret that you should have sold him the glass of water for a higher price. But that is merely your complaint and the person wandered around the desert had no obligation to tell you that fact. As you can see, ratification is somewhat similar to selling and buying of things and a price of product being sold or bought is determined by supply or demand. Supply and demand cannot be completely objective. Acting is effective when you really want it so bad but pretend as if you do not care about it at all. Such acting is accepted as a transaction technique.
The Article 2 in question did not, however, provide for ratification. Article 2 did not approve transfer of the right from Toho to Alciona. It provided that Kurosawa Production would cover various problems which may arise as a result of invalidity of the remake right transfer and keep Toho harmless. This relationship cannot be compared with transfer of a physical thing. In this case, the following example might be appropriate. You are asked to stay at home by a person and you are staying overnight at that house. The owner of the house, knew that a bandit would attack his house that night and he was trying to evacuate the house with his valuables. The person did not let you know such kind of danger was sneaking up to you while he expected that he might be lucky enough to have you protect the house. And he just left. You had no idea of his thoughts and got attacked by the bandit in the midnight and terribly hurt. If you survived the bandit's attack, you would probably get furiously angry against the house owner.
As mentioned above, you can see there is a difference of the importance of reasons between selling a glass of water and asking for staying at home. It is because the things that you have to offer in exchange of a certain amount of money would be different. In case of a glass of water, you would lose only a glass of water regardless of why the other party wishes to obtain it. On the contrary, in case of staying at home, what you would lose ranges from just one night's freedom to your own life. In normal case, you wouldn't consider the possibility of losing your life by just staying at someone's home. If staying at home may end up losing your life, you must have demanded a very high compensation for that. If you are asked to stay at home at an inexpensive compensation without being told the danger of being attacked by a bandit, you would naturally think that you have been deceived. The position of Kurosawa Production is the same as that case. That is, there is a possibility that either of Alciona or its successor who hade received transfer without permission would claim for damages against Toho. The danger of such possibility, however, largely differs depending on each definite condition. If right has not been moved from Alciona and Alciona has ceased to exist, a practical risk would be low even if the right is succeeded to a third party following legal procedures. On the other hand, if there is a person who asserts himself as Alciona's successor who intends to exercise its rights, the risk would most likely be very high. The compensation would be determined depending on the degree of the risk, a higher compensation should be required in the latter case compared to the former. In addition, Toho was the very person who made the reason for claim from MGM. If there had not been transfer to Alciona without permission, there would not have been a possibility of MGM raising a claim. To put it in the example of the bandit, this may look like a case where the person who asked him to stay at home had stolen the bandit's treasure like Ali Baba's brother.
Let me add for the honor of Toho, I believe that Toho had never intended to commit a fraud. What Toho always wanted to pursue was to get ratification on transfer without permission and Toho did not have to explain about what kind of urgent problems it had. Since transfer without permission means disposal of third party's assets without permission, it is only natural that ratification is sought regardless of whether there is actual possibility of being asked for liability by the transferee. What Toho, who had always wanted to obtain ratification, had actually obtained was, however, not ratification. It was a device cleverly made similar to ratification, but legally speaking, it was similar to but not same as ratification. Toho and Lawyer M believed and never doubted what they have obtained was ratification both during the settlement negotiations and after the execution of the settlement agreement. But once a problem occurred it became clear that the device lacked the most important fact of ratification; the remake right was still owned by the script writers including Akira Kurosawa.
At a later date, Toho stated that the settlement agreement was executed after the negotiations by both parties' lawyers. It means that there is no room for a fraud. It is rare that someone would commit a fraud during contract negotiations by lawyers. In addition, there is almost no possibility that a large reputable company like Toho would commit a fraud. But there was a rare exception right here. By just misinterpreting the meaning of one contract condition, Toho was facing a disgraceful lawsuit raised against it. This misunderstanding was, however, not so obvious at first glance, but was something like a ball that annoys the judge to determine it as strike or ball. As I invited some young lawyers to make a team for this lawsuit I asked one of them if he thinks the condition in question was ratification or not. He said that it was substantially ratification, and the word made me confused. After he had read it thoroughly, he concluded that it was different from ratification. But even a young and excellent lawyer may be deceived by such tricky terms.