In the so-called "Ghost Hunters" case before the 9th Circuit, plaintiffs Larry Montz and Daena Smoller are living to fight another day. Parapsychologist Montz and producer/publicist Smoller had met with a number of TV execs including some from NBC and the SciFi Channel (now SyFy) from 1996 to 2003 to pitch Mr. Montz's idea for "a team of paranormal investigators conducting field investigations" equipped with technology who would track ghosts in all kinds of venues. No execs turned out to be interested. But in 2004, what should appear but "Ghost Hunters," the hit show on SciFi. Mr. Montz and Ms. Smoller sued the "Ghost Hunters" studio, NBC Universal, and the principals on the show, on the theory that they had used the Montz/Smoller idea without paying for it as they had promised to do pursuant to "standard custom and practice in the industry with respect to the exchange of creative ideas" subject to certain principles, laid out in the plaintiffs' complaint.
Eventually, a district court entered judgment for the defendants (after some procedural backing-and-forthing), accepting their argument that federal copyright law pre-empted the state law claims advanced by the plaintiffs. But the 9th Circuit has disagreed. It points to a 50-year-old California Supreme Court case, Desny v. Wilder (decided 1956) which first laid out the rules for an implied-in-fact contract. The Court says,
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.”
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.
In recent years, litigation has, not surprisingly, moved to the federal courts where defendants have hoped for greater success in pressing for copyright preemption. See Glen L. Kulik, Copyright Preemption: Is This the End of Desny v. Wilder?, 21 Loy. L.A. Ent. L.Rev. 1, 14 (2000) (“[B]ecause idea submission cases are now regularly removed to federal court, it is unlikely state courts will address the issue.” (footnote omitted)). Defendants were initially quite successful in federal court. See, e.g., Selby v. New Line Cinema Corp., 96 F.Supp.2d 1053, 1061–62 (C.D.Cal.2000); Endermol Entm't v. Twentieth Television Inc., 48 U.S.P.Q.2d 1524, 1528 (C.D.Cal.1998); Worth v. Universal Pictures, Inc., 5 F.Supp.2d 816, 822 (C.D.Cal.1997) (“Movie screenplays, the subject matter at issue, are encompassed within the federal copyright law. Therefore, Plaintiffs' cause of action for breach of implied contract is preempted.”).
In a later case, however, a district court held that an implied-in-fact contract claim survived Copyright Act preemption because it was substantively different from a copyright claim: “[T]he whole purpose of the contract was to protect Plaintiff's rights to his ideas beyond those already protected by the Copyright Act․” Groubert v. Spyglass Entm't Group, No. CV 02–01803, 2002 WL 2031271, at *4 (C.D.Cal. July 23, 2002). Nimmer expressly approved this decision. See Nimmer § 19D.03[c][2]. We agreed with this assessment when we decided in Grosso that copyright law does not preempt an implied contractual claim to compensation for use of a submitted idea. We reaffirm that rule today.
This approach not only accords with the Copyright Act's preemption guidelines, but it also recognizes the gap that would otherwise exist between state contract law and copyright law in the entertainment industry. The Desny innovation serves to give some protection for those who wish to find an outlet for creative concepts and ideas but with the understanding that they are not being given away for free. Without such legal protection, potentially valuable creative sources would be left with very little protection in a dog-eat-dog business. See Woody Allen, CRIMES AND MISDEMEANORS (Orion Pictures 1989) (“Show business is worse than dog-eat-dog. It's dog-d oesn't-return-other-dog's-phone-calls.”). Thus we were correct when we observed that “[c]ontract law, whether through express or implied-in-fact contracts, is the most significant remaining state-law protection for literary or artistic ideas.” Benay, 607 F.3d at 629. The dissent misses the point when it tries to limit protection to those who seek payment, and exclude the plaintiffs who want a piece of the action and contractual agreement on the terms of the defendant's use.
Plaintiffs' claim for breach of confidence also survives copyright preemption. The claim protects the duty of trust or confidential relationship between the parties, an extra element that makes it qualitatively different from a copyright claim. See Computer Assocs. Int'l, Inc. v. Altai, Inc., 982 F.2d 693, 717 (2d Cir.1992); Fischer v. Viacom Int'l, Inc., 115 F.Supp.2d 535, 542 (D.Md.2000); Berkla v. Corel Corp., 66 F.Supp.2d 1129, 1150–51 (E.D.Cal.1999); Nimmer at § 19D.03[C][1].
Thus, here the claims that the plaintiffs make are claims to protect their ideas for the show that are other than copyright claims--other than those that would be protected by copyright. The Court ordered the lawsuit back to the District Court to be heard on these claims, claims that rely on the plaintiffs' assumptions that should the defendants actually create a show based on the plaintiffs' ideas, the plaintiffs' should be cut in for "a piece of the action."
The case is Montz v. Pilgrim Films & Television, 623 F.3d. 912 (9th Circ. 2011). While Judge Schroeder wrote the opinion, Judge Alex Kozinski (that judge/magician himself) was on the panel. Commentary from the San Francisco Chronicle here.
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