Aug
26
2012

Just because you cannot copyright an idea, does not mean you cannot steal it

In Forest Park Pictures v. Universal Television Network, Inc., 683 F.3d 424, 2012 (2nd Cir. 2012), a television show developer filed a lawsuit against USA Network for using its television series idea without compensation.

In 2005, plaintiff Forest Park Pictures developed an idea for a television show called Housecall about a doctor who was expelled from his practice for treating patients who could not pay, moved to Malibu, California to become a concierge doctor to the wealthy.  Forest Park submitted their series treatment to USA Network which was followed up with a pitch meeting.  After the meeting, no further discussions occurred.  Four years later, however, USA Network aired a show called Royal Pains in which a doctor was expelled from his practice after treating patients who could not pay and moved to the Hamptons to treat the wealthy.

Forest Park thereafter filed a lawsuit for various claims including a breach of an implied contract to not use its series idea without compensation.

The district court dismissed Forest Park's breach of implied contact claim, holding that the claim was preempted by the Copyright Act.  Forest Park thereafter appealed.

In order to be preempted by the copyright act, a claim must (i) involve a work within the subject matter of copyright and (ii) seek to vindicate a legal or equitable right that is equivalent to one of the exclusive rights within the Copyright Act.

On appeal, the court found that Forest Park's series treatment was within the subject matter of copyright and therefore met the first prong of the preemption test.

The work at issue in this case is Forest Park's idea for "Housecall," manifested in the series treatment (comprising character biographies, themes, and storylines). This treatment and associated written materials are "works of authorship that are fixed in a tangible medium." 17 U.S.C. § 301(a). Although Forest Park's Complaint does not allege that USA Network took its actual scripts or biographies, the subject matter requirement is met because the Complaint alleges that USA Network used the ideas embodied in those written works. That the work contains within it some uncopyrightable ideas does not remove it from the subject matter of copyright. See Briarpatch, 373 F.3d at 305. Moreover, because the ideas that are the subject of the claim were fixed in writing—whether or not the writing itself is at issue—the claim is within the subject matter of copyright. See NBA, 105 F.3d at 849; see also Montz v. Pilgrim Films & Television, Inc., 649 F.3d 975, 979 (9th Cir.2011) (en banc) (holding that an idea for a television show, once fixed in a tangible medium, fell within the subject matter of copyright); Wrench LLC v. Taco Bell Corp., 256 F.3d 446, 455 (6th Cir.2001) (holding that an idea for a character, conveyed in storyboards, scripts, and drawings, was within the subject matter of copyright). Therefore, the first requirement for preemption is met.

The court however, did not find that Forest Park's claim for breach of an implied contract met the second prong of the test.

In order to establish preemption, USA Network must also demonstrate that the Complaint seeks to vindicate a "legal or equitable right[ ] that [is] equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106." 17 U.S.C. § 301(a). Section 106 gives copyright owners the exclusive rights, among other things, to reproduce a copyrighted work, to prepare derivative works, to distribute copies of the work to the public, and to display the work publicly. 17 U.S.C. § 106. A state law right is equivalent to one of the exclusive rights of copyright if it "may be abridged by an act which, in and of itself, would infringe one of the exclusive rights." Harper & Row, 723 F.2d at 200. "But if an extra element is required instead of or in addition to the acts of reproduction, performance, distribution or display, in order to constitute a state-created cause of action," there is no preemption. Computer Assocs. Int'l, Inc. v. Altai, Inc., 982 F.2d 693, 716 (2d Cir.1992) (internal quotation marks omitted).

Applying this "extra element" test, we have held numerous categories of claims to be not preempted, including trade secret claims, in which the plaintiff must show the defendant breached a duty of trust through improper disclosure of confidential material, id. at 717; certain "hot news" misappropriation claims, because the plaintiff must show time-sensitive factual information, free-riding by the defendant, and a threat to the very existence of the plaintiff's product, NBA, 105 F.3d at 853; and breach of confidential relationship, in which the plaintiff must show an obligation not to disclose ideas revealed in confidence, Smith v. Weinstein, 578 F.Supp. 1297, 1307 (S.D.N.Y.1984), aff'd without opinion, 738 F.2d 419 (2d Cir.1984). See also Harper & Row, 723 F.2d at 201 (in dictum, suggesting that conversion based on physical possession and control of a copyrighted work may not be preempted because such a tort involves "acts ... qualitatively different from those proscribed by copyright law").

The court held that Forest Park's implied contract claim did not seek to the equivalent of one of the exclusive rights within the copyright act.  Specifically, the court held that Forest Park's implied contract claim contained an "extra element" which is qualitatively different from a suit to vindicate a right in the copyright act.

In this case, the issue is whether a particular breach of contract claim survives preemption. More specifically, Forest Park alleges that it entered into an implied-in-fact agreement with USA Network that required USA Network to pay Forest Park for the use of its idea. See Complaint ¶¶ 24–26. There are several qualitative differences between such a contract claim and a copyright violation claim. First, the Copyright Act does not provide an express right for the copyright owner to receive payment for the use of a work. It simply gives the copyright owner the right to prevent distribution, copying, or the creation of derivative works (though, of course, the copyright owner may cede or all part of these rights for payment). See 17 U.S.C. § 106. Second, a plaintiff suing for failure to pay under a contract must prove extra elements beyond use or copying, including mutual assent and valid consideration. Third, a breach of contract claim asserts rights only against the contractual counterparty, not the public at large. As the Seventh Circuit explained in ProCD, "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.' " 86 F.3d at 1454.

. . .

Here the Complaint specifically alleges that the contract includes by implication a promise to pay for the use of Forest Park's idea. See Complaint ¶ 11 (alleging that it was understood when Forest Park met with Sepiol they were "pitching ... ideas with the object of persuading USA Network to purchase those ideas for commercial development") (emphasis added); id. ¶ 25 ("USA Network voluntarily accepted Plaintiffs' ideas knowing full well that Plaintiffs had submitted those ideas in confidence and for economic gain, and with the clear expectation of payment in the event those ideas were utilized by USA Network....") (emphasis added). The alleged contract does not simply require USA Network to honor Forest Park's exclusive rights under the Copyright Act (assuming the material at issue to be copyrightable); it requires USA Network to pay for the use of Forest Park's ideas. A claim for breach of a contract including a promise to pay is qualitatively different from a suit to vindicate a right included in the Copyright Act and is not subject to preemption.

The court therefore held that Forest Park's claim was not preempted.  The court went on to hold that under California law, an implied-in-fact contract was created by the actions and expectations of Forest Park and USA Network.

California has long recognized that an implied-in-fact contract may be created where the plaintiff submits an idea (the offer) that the defendant subsequently uses (the acceptance) without compensating the plaintiff (the breach). In Desny v. Wilder, 46 Cal.2d 715, 299 P.2d 257 (1956) (en banc), the plaintiff, Desny, telephoned Billy Wilder, then a producer and writer for Paramount Pictures, and told Wilder's secretary that he had an idea for a film. Id. at 726, 299 P.2d 257. At the secretary's request, Desny forwarded to Wilder a brief synopsis of the movie idea and stated that, if the idea were used, he expected to be paid. Id. at 726–27, 299 P.2d 257. Faced with the enforceability of such an agreement, the California Supreme Court held that a contract claim based on the submission of an idea could succeed either if the plaintiff received "an express promise to pay" or if "the circumstances preceding and attending disclosure, together with the conduct of the offeree acting with knowledge of the circumstances, show a promise of the type usually referred to as 'implied' or 'implied-in-fact.' " Id. at 738, 299 P.2d 257. For almost six decades following Desny, California courts have continued to recognize contract claims under the authority of that case. See Montz, 649 F.3d at 976–77.

. . .

Here, although Forest Park does not allege that it expressly conditioned disclosure on a promise of payment, the Complaint alleges facts that, if proven, would establish that USA Network knew or should have known such a condition was implied. Forest Park alleges that it pitched its ideas to USA Network "with the object of persuading USA Network to purchase those ideas for commercial development," and that USA Network and its agent Sepiol "at all relevant times knew (a) that writer-creators pitch creative ideas to prospective purchasers with the object of selling those ideas for compensation; and (b) that it was standard in the entertainment industry for ideas to be pitched with the expectation of compensation in the event of use."

The Second Circuit thereafter vacated the district court's judgment and remanded the case to allow the breach of the implied contract claim to go forward.

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