This week, the Second Circuit Court of Appeals in New York, in a case captioned Forest Park Pictures v. Universal Television Network, Inc., united with the Ninth Circuit in California by holding that breach of implied contract claims based on “theft of ideas” are not preempted by the Copyright Act. In doing so, the decision narrowly avoided a circuit split among the two entertainment/media hub jurisdictions, and it also resolved a split within the Southern District of New York in Manhattan. The core question in these types of “idea theft” cases is whether plaintiffs who bring lawsuits alleging theft of ideas under state law theories are barred from pursuing their claims on the ground that the appropriate cause of action is, instead, one for copyright infringement under federal law. The Second Circuit held in Forest Park that such plaintiffs are not necessarily prevented from bringing the “idea theft” claim.
The Forest Park case involved a dispute over a television show concept. The plaintiffs, Tove and Hayden Christensen, alleged to have submitted (“pitched”) an idea and a series treatment to USA Network for a TV show about a “concierge” doctor making house calls to the rich and famous in Malibu, California. USA later went on to produce and air a show called “Royal Pains,” which largely followed the same concept, without compensating the plaintiffs. The plaintiffs alleged that USA breached an implied contract to compensate them if the network used their idea.
On a motion to dismiss the complaint, the district court had ruled that the plaintiffs’ “idea theft” claim (i.e., breach of implied contract) was barred due to a rule in section 301 of the Copyright Act. That rule provides that state and common law claims “that are equivalent to any of the exclusive rights within the general scope of copyright” are preempted.
To avoid dismissal, Plaintiffs in these cases generally argue that the Copyright Act does not preempt these types of claims because some “extra element” makes them non-equivalent to copyright claims. Because “idea theft” cases usually do not involve an express or written contract that might give basis for a breach of contract claim, plaintiffs primarily ground their claims in the argument that there exists an implied contract to pay for the idea. This generally leaves the court to determine whether there is non-equivalence between: (a) a claim of an implied promise to compensate the plaintiff for use of her idea, and (b) a claim that the defendant has used the plaintiff’s idea without authorization under copyright law. For the plaintiff, because ideas are not protected under copyright law, the preemption doctrine in Section 301 usually means that the plaintiff is left with no claim at all, unless he or she can establish unlawful appropriation of the plaintiff’s copyrightable expression.
Until the Second Circuit handed down the decision, the status of the law suggested that plaintiffs would have an easier time establishing the “extra element” under the law of the Ninth Circuit rather than in the Second Circuit. Last year, on rehearing en banc, the Ninth Circuit in Montz v. Pilgrim Films, 649 F.3d 975 (9th Cir. 2011), had followed and expanded on a decision issued six years prior (Grosso v. Miramax Film Corp., 400 F.3d 658 (9th Cir. 2005)) to hold that where a plaintiff alleges that he revealed his concept to the defendants reasonably expecting to be compensated if that concept was used, such an allegation is sufficient to show the extra element and thereby plead a state law idea theft claim. The district courts in the Second Circuit, on the other hand, were more favorable to defendants. Although decisions in those districts conflicted (compare Architectronics v. Control Systems, 935 F. Supp. 425 (S.D.N.Y. 1996), with American Movie Classics v. Turner Entertainment, 922 F. Supp. 926 (S.D.N.Y. 1996)), the majority of such cases had held that the mere existence of a contract does not constitute an extra element, and that the implied right to be compensated for the use of an idea is indistinguishable from those rights reserved under copyright law.
In parting with the majority of its district courts to reverse the district court’s ruling against the Christensens, the Forest Park decision brings the Second Circuit into line with the Ninth Circuit’s ruling in Montz. In the Second Circuit, as in others, it is clear that breach of implied contract claims based on idea submissions are not preempted when the plaintiff has sufficiently alleged the implied right to payment for the use of her idea. The question for district courts in the Second Circuit is now, as it will be for the district court on remand in the Forest Park case, whether the plaintiffs’ allegations of breach of implied contract are sufficient to set forth a contract claim.
The effect of this decision may have some significant ramifications for the entertainment and media industries, particularly those on the East Coast. Plaintiffs that cannot prevail on a copyright infringement claim because their works or the elements taken are uncopyrightable, may – so long as they allege the elements of an enforceable contract – have a second chance to bring a claim based on breach of an implied contract. To the extent the implied contract claim can be alleged, the upshot may be more expensive litigation costs due to the discovery involved in resolving the attendant factual questions relating to the claim. Copyright claims, in contrast, can often be resolved very early on in the case by merely comparing the two works for similarity of expression. Moreover, while studios and publishers generally maintain strict submission policies (for the very reason that a plaintiff can open a lawsuit by alleging that a motion picture happens to have a similar concept to an idea the plaintiff claimed to have submitted) such policies may tighten even further as a result of the Forest Park decision. The consequence could be fewer opportunities for a writer or other creator to have her idea considered, optioned and distributed.