9th Circuit Rejects Copyright Preemption of California Breach of Implied Contract/Breach of Confidence Claims; Reaffirms State Law Protections for Writers Submitting Material to Producers

9th Circuit Rejects Copyright Preemption of California Breach of Implied Contract/Breach of Confidence Claims; Reaffirms State Law Protections for Writers Submitting Material to Producers

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:

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.

The district court held that federal copyright law preempted both claims, and a three-judge panel affirmed. However, the 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 O'Scannlain:

Montz 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:

The 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.

(citations omitted)

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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