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Recently, the Ninth
Circuit upheld breach of implied contract (a/k/a a Desny claim) and breach of confidence
claims that were filed by plaintiffs, who had unsuccessfully pitched a ghost tracking
series to defendant NBC. NBC, despite passing on plaintiffs' idea, produced a
series entitled, Ghost Hunters. In
overruling the district court and a three-judge panel, the Ninth Circuit, sitting en banc, held
that the Copyright Act did not preempt plaintiffs' claims.
In Montz v. Pilgrim
Films & TV, et al., 2011 U.S. App. LEXIS 9099 (9th Cir. Cal. May 4,
2011) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law], plaintiff
Larry Montz, a parapsychologist, conceived of an idea for a paranormal investigatory
television show. NBC passed on the idea but later produced a show called, Ghost Hunters. Montz sued, asserting breach of implied
contract and breach of confidence claims. The complaint described the terms of the agreement as:
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:
that Plaintiffs' disclosure of their ideas and concepts was strictly
that the Defendants would not disclose, divulge or exploit the Plaintiffs'
ideas and concepts without compensation and without obtaining the Plaintiffs'
that, by accepting the Plaintiffs' disclosure of its concept, the Defendants
accepted and agreed to abide by the foregoing terms.
The district court held that federal
copyright law preempted both claims, and a three-judge panel affirmed. However,
Ninth Circuit, sitting en banc, came
to the opposite conclusion.
Focusing on 17
U.S.C. § 301(a)'s second preemption prong (whether the asserted state right
was equivalent to any of the exclusive rights within the general scope of
copyright), the Ninth Circuit reaffirmed the rule in Grosso v. Miramax Film Corp., 383 F.3d 965 (9th Cir. Cal. 2004) [enhanced version / unenhanced version]. Grosso
held that the copyright law does not preempt an implied contractual claim to
compensation for use of a submitted idea. Following Grosso, the Ninth Circuit held that:
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 [v. Wilder, 46 Cal. 2d 715 (Cal. 1956) [enhanced version]] 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.
Likewise, the Ninth Circuit held that the breach of
confidence claim survived copyright preemption.
The claim protected the duty of trust or confidential relationship
between the parties, an extra element that made it qualitatively different from
a copyright claim.
Writing for the dissent, Judge O'Scannlain underscored
the fact that Montz had not claimed to have sold his rights as a copyright
owner. To the contrary, Montz alleged that he had retained those rights and
that defendants implicitly promised not to use or to disclose his ideas without
his consent. Judge O'Scannlain noted that an action to enforce a promise not to
use or to disclose ideas embodied in copyrighted material without authorization
asserted rights equivalent to those protected by the Copyright Act.
Accordingly, the Copyright Act preempted Montz's claim. As stated by Judge
alleges that "by producing and broadcasting" Ghost Hunters,
"[t]he Defendants breached their implied agreement not to disclose,
divulge or exploit the Plaintiffs' ideas and concepts without the[ir] express
consent." In other words, Montz asserts that Pilgrim produced and
broadcast a television program derived from Montz's screenplays, video, and
other materials without authorization. These rights are equivalent to
the rights of copyright owners under section 106-namely, the exclusive rights to authorize
reproduction, distribution, and display of original works, and to authorize
preparation of derivative works.
Likewise, Judge O'Scannlain held that Montz's
breach-of-confidence claim asserted rights equivalent to the rights protected
by the Copyright Act. Judge O'Scannlain stated:
majority relies on two elements to distinguish the rights asserted in Montz's
breach-of-confidence claim from the rights protected by the Copyright Act.
First, the breach-of-confidence claim requires Montz to show that Pilgrim
disclosed confidential material (i.e., the ideas embodied in Montz's materials)
to third parties. But a copyright affords its owner the same right: the right
against unauthorized disclosure of copyrighted work. Second, the breach-of-confidence
claim requires that Montz show Pilgrim breached a confidential relationship or
entrustment. Yet a breach of a relationship of trust does not, by itself,
transform the nature of an action. The breach-of-confidence claim still asserts
rights protected by the Copyright Act; the only difference is that the rights
are asserted against a particular person (i.e., someone with whom the copyright
holder had a confidential relationship). But the right against unauthorized
disclosure of copyrighted work already applies against everyone, regardless of
whether one had a confidential relationship with the copyright holder.
For more information, read:
4-19D Nimmer on Copyright § 19D.03 Pre-emption of Various Theories to Protect Ideas (Non-subscribers
can purchase Nimmer on Copyright at
the LexisNexis Bookstore)
The preceding chapters of this
treatise have ventilated at length all the fundamental changes wrought to
copyright doctrine by the 1976 Act. 1 One of the most significant changes
concerned the types of works federal law would protect. Federal copyright law
traditionally protected only published works, whereas unpublished works were
protected, if at all, by ....
14-146 California Points & Authorities § 146.64 Opposing Contention That Implied-in-Fact
Contract Exists to Pay for Disclosure of Valuable Idea
(Non-subscribers can purchase California
Points & Authorities at the LexisNexis Bookstore)
A. Elements of Implied-in-Fact
Contract to Pay for Use or Disclosure of Idea. To establish an implied-in-fact
contract to pay for the use or disclosure of an idea, plaintiff must show that
(1) he or she clearly conditioned disclosure of the idea on defendant's
obligation to pay for it if defendant used the idea; (2) defendant, knowing the
condition before he or ....
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