COPYRIGHT VS. CONTRACT CLAIMS

Ivan Hoffman, B.A., J.D.


        Here is the situation:  you have “taken a meeting” to discuss your idea with a film or television producer (or other party in a position to use your idea) or even submitted a treatment for the same.  Nothing seems to have come from the meeting but later on, you claim that the producer or other party has used your idea and has not paid you for it.  Under what law can you sue?  Is this a claim in “contract,” under your state’s contract or other law or is this a claim covered by the United States copyright law?  [read also “Submitting Ideas.”]

        This issue is a very significant one since if the claim is “pre-empted” by the copyright law, you may not have a claim if you are not pitching a copyrightable work.  Ideas cannot be copyrighted.   Moreover, even if your treatment contains copyrightable elements, if the user has not used your copyrightable elements but has merely taken the “idea,” if the federal law governs, you may have no claim to pursue since there has been no infringement of your copyrightable elements.  Additionally, there may be varying statutes of limitation applicable under different state’s laws while the copyright law requires litigation to be filed within 3 years from any infringement.  Moreover, claims under state law can be filed in state court but copyright claims must be filed in federal court.  Damages may be very different under state vs. federal law.  And there may be other differences as well.

        In Montz V. Pilgrim Films Television Inc. et. al., the Ninth Circuit Court of Appeals had to rule on just such a question.  These were the facts as stated by the Court:

In 1981, Plaintiff Larry Montz, a parapsychologist, conceived of an idea for a television show that would follow a team of paranormal investigators conducting field investigations. As envisioned, each episode would follow the team to different real-world locations, where they would use magnetometers, infrared cameras, and other devices to investigate reports of paranormal activity. According to the complaint, from 1996 to 2003, Montz and Plaintiff Daena Smoller, a publicist and a producer, pitched Montz's idea to television studios, producers, and their representatives, including representatives of NBC and the Sci–Fi channel. A number of meetings and discussions took place, and Montz and Smoller presented screenplays, videos, and other materials relating to their proposed show. Ultimately, the studios indicated that they were not interested.

Three years later, in November 2006, Montz and Smoller filed a complaint against Pilgrim Films & Television, Inc., NBC Universal Inc., Craig Piligian, Jason Conrad Hawes, and ten unknown defendants in federal district court, alleging copyright infringement, breach of implied contract, breach of confidence, and several other causes of action. According to the complaint, after the meetings with Montz and Smoller, NBC partnered with Piligian and Pilgrim to produce a series on the Sci–Fi Channel based on the plaintiffs' materials. The show, called Ghost Hunters, starred Hawes as the leader of a team of investigators who travel across the country to study paranormal activity.

Plaintiffs' complaint specifically alleged that defendants breached an implied-in-fact contract. The complaint described the terms of the agreement:
Plaintiffs communicated their ideas and creative concepts for the “Ghost Hunters” Concept to the Defendants, pursuant to the standard custom and practice in the industry with respect to the exchange of creative ideas, under the following terms:

a. that Plaintiffs' disclosure of their ideas and concepts was strictly confidential;

b. that the Defendants would not disclose, divulge or exploit the Plaintiffs' ideas and concepts without compensation and without obtaining the Plaintiffs' consent; and

c. that, by accepting the Plaintiffs' disclosure of its concept, the Defendants accepted and agreed to abide by the foregoing terms.

Compl. at ¶ 46. The complaint further alleged that plaintiffs presented the concept on the express condition that they made the presentation as an offer to partner with the defendants and that plaintiffs justifiably expected to receive a share of the profits derived from any use of the idea:

The Plaintiffs presented their ideas for the “Ghost Hunter” Concept to the Defendants' [sic] in confidence, pursuant to the custom and practice of the entertainment industry, for the express purpose of offering to partner with the Defendants in the production, broadcast and distribution of the Concept. Accordingly, the Plaintiffs justifiably expected to receive a share of any profits and credit that might be derived from the exploitation of its ideas and concepts for the Concept.

Id. at ¶ 47. The dissent appears to overlook these clear allegations that compensation was expected in accord with industry practice.
Plaintiffs also alleged that defendants breached their confidential relationship “by taking Plaintiffs' novel ideas and concepts, exploiting those ideas and concepts, and profiting therefrom to the Plaintiffs' exclusion?” Id. at ¶ 59. The complaint therefore alleged a claim under California law of breach of confidence.

        The Court then went over custom in the film and television industry and cited the California Supreme Court case of Desny vs. Wilder from 1956 which established an “implied-in-fact” contract under these circumstances.
Writers in the Hollywood film industry often submit scripts to producers, or set up meetings with them, in the hope of selling them scripts and concepts for movies. The practice has carried over into television. Since the writer is looking for someone to turn the written work into an entertainment production, writers often pitch scripts or concepts to producers with the understanding that the writer will be paid if the material is used. Since an idea cannot be copyrighted, a concept for a film or television show cannot be protected by a copyright. 17 U.S.C. § 102. But the concept can still be stolen if the studio violates an implied contract to pay the writer for using it.

In Desny, the California Supreme Court recognized that a writer and producer form an implied contract under circumstances where both understand that the writer is disclosing his idea on the condition that he will be compensated if it is used. 299 P.2d at 270. There, defendant Billy Wilder, famed director of Sunset Boulevard and Witness for the Prosecution, allegedly entered into an implied contractual arrangement that was initiated when the plaintiff telephoned Wilder's office and pitched a movie idea to Wilder's secretary who, along with Wilder, understood Wilder was to pay if he used the story. Id. at 273–74. Wilder produced a film, Ace in the Hole, allegedly based on the idea plaintiff had pitched for a movie inspired by the “life story of Floyd Collins who was trapped [in a cave] and made sensational news for two weeks.” Id. at 262. Wilder allegedly failed to compensate the plaintiff, and the California Supreme Court held that, given the entertainment industry norms, the plaintiff had sufficiently pled the breach of an implied contract to pay for use of his idea. The issue here is whether copyright law now preempts such claims. [emphasis added]

        17 USC section 301 provides in part as follows:
§ 301. Preemption with respect to other laws

(a) On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.

(b) Nothing in this title annuls or limits any rights or remedies under the common law or statutes of any State with respect to —

    (1) subject matter that does not come within the subject matter of copyright as specified by sections 102 and 103, including works of authorship not fixed in any tangible medium of expression; or

        In regard to the above section (b) (1), the Court stated:
For preemption purposes, ideas and concepts that are fixed in a tangible medium fall within the scope of copyright. See Nimmer § 19D.03[A][3]. We agree with Nimmer that state-law protection for fixed ideas falls within the subject matter of copyright and thus satisfies the first prong of the statutory preemption test, despite the exclusion of fixed ideas from the scope of actual federal copyright protection. See 17 U.S.C. § 102 (“In no case does copyright protection for an original work of authorship extend to any idea ? [or] concept ? embodied in such work.”
        The Court went on to analyze the other section of the statute which states:
(3) activities violating legal or equitable rights that are not equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106;
        The Court stated:
Accordingly, the major focus of litigation has been on the second prong of the preemption test: whether the asserted state right is equivalent to any of the exclusive rights within the general scope of copyright. See Grosso, 368 F.3d at 968. To survive preemption, a state cause of action must assert rights that are qualitatively different from the rights protected by copyright. In Grosso, we held that the rights created under California law emanating from Desny were qualitatively different from the rights protected by federal copyright law because a Desny claim includes an added element: an agreement to pay for use of the disclosed ideas. Id. at 967, 968; Nimmer at § 19D.03 [C][2]. Contract claims generally survive preemption because they require proof of such an extra element. See Benay, 607 F.3d at 629. The extra element, the implied agreement of payment for use of a concept, is a personal one, between the parties.

The California Courts of Appeal have uniformly concluded that Desny claims are not preempted because they flow from agreements and understandings different from the monopoly protection of copyright law. See Rokos v. Peck, 182 Cal.App.3d 604, 617 (1986) (“[T]he rights flowing from such an agreement are qualitatively different from copyright protection, and their recognition creates no monopoly in the ideas involved.”); see also Durgom v. Janowiak, 74 Cal.App. 4th 178, 186–87 (1999). The California decisions focus on the personal nature of the relationship formed in idea submission cases: “The creation of an implied-in-fact contract between an author, on the one hand, and an agent, producer, or director, on the other hand, is of such a personal nature that it is effective only between the contracting parties.” Rokos, 182 Cal.App.3d at 617 (citing Chandler v. Roach, 156 Cal.App.2d 435, 441 (1957)). Thus, it is unlike a copyright that is a public monopoly. See also ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1454 (7th Cir.1996) (“A copyright is a right against the world. Contracts, by contrast, generally affect only their parties; strangers may do as they please, so contracts do not create ‘exclusive rights.’ ”). The rights protected under federal copyright law are not the same as the rights asserted in a Desny claim, and the California state courts have recognized this consistently over the decades.

        The Court concluded that the plaintiffs had sufficiently pleaded the requisite elements to allow the contract claim to proceed.
Defendants argue that the complaint fails to allege sufficient facts to make out a claim for breach of implied contract. They assert that it lacks any allegation (1) that Montz and Smoller disclosed their idea for sale, (2) that they expected to be reasonably compensated for the idea, and (3) that defendants knew the conditions on which it was offered. Yet the complaint makes all three allegations and closely tracks the complaint we found sufficient in Grosso.

Defendants similarly argue that Montz and Smoller failed to allege sufficient facts to make out their claim for breach of confidence. They argue that there is no allegation (1) that plaintiffs disclosed “confidential and novel information,” and (2) that defendants knew it was supposed to be kept confidential. See Entm't Research Grp., Inc. v. Genesis Creative Grp., Inc., 122 F.3d 1211, 1227 (9th Cir.1997). But the complaint clearly contains these allegations as well.

Conclusion

        If you are fortunate enough to have the opportunity to “take a meeting” with one of your projects, make certain that you have legally protected yourself.  Protecting your expression in the form of obtaining federal copyright protection can be another layer of such protection.  In all instances, consult an attorney with experience in these matters.

Copyright © 2011 Ivan Hoffman.  All Rights Reserved.

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This article is not legal advice and is not intended as legal advice.  This article is intended to provide only general, non-specific legal information.  This article is not intended to cover all the issues related to the topic discussed.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  This article is based on United States law.  You should consult with an attorney familiar with the issues and the laws of your country.  This article does not create any attorney client relationship and is not a solicitation.

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