Ninth Circuit Revives California Idea Submission Claims

DWT Media Law June 13, 2011 Comments Off on Ninth Circuit Revives California Idea Submission Claims
Ninth Circuit Revives California Idea Submission Claims

By Anna Buono

At some point, everyone has come up with an idea for a television show or movie.  In Hollywood in particular, it often seems that everyone – from the waiter to the lawyer to the personal trainer – is writing a screenplay or treatment of some sort.  On the one hand, these authors are not laboring over their works for nothing – they obviously hope to be able to sell their work.  But on the other hand, with so many people creating, it is just as obvious that not all writings will become productions.  Writers must get a foot in the door for the opportunity to get their work produced.  Yet studios, broadcasters, and production companies (collectively, “producers”) that take pitches hear dozens upon dozens of ideas before hitting on one that will get a green light.  For more than 50 years in California,[1] plaintiffs asserting idea submission claims have alleged that the “custom and practice” of the industry is for producers to hear these pitches with the understanding that they will compensate the writer if the disclosed idea is utilized.  The reality, however, is that producers do not assume that they have entered into a contract with every person that pitches an idea to them or sends them unsolicited material.

This contradiction in views stemming from a pitch meeting leaves room for allegations of “idea theft.”  While copyright law protects a disclosed work, it does not protect the ideas or facts contained within the work.  Thus, if a producer passes on a pitch, but later creates a product that contains similar ideas to what was pitched, what recourse does the author have?  Likewise, if the producer has heard a thousand pitches, what obligation does he or she have to keep track of every idea discussed at a pitch meeting?

For an author who has created a fixed work, such as a screenplay or treatment, a copyright infringement claim may lie if the producer copies the work.  For such a claim, the author will have to show substantial similarity between the protectable elements of the copyrighted work and the producer’s work.  What about those ideas that were discussed at the meeting that may not be spelled out in the work?  Does the Copyright Act pre-empt state law claims seeking recourse for use of these ideas?  For a moment in time, it appeared that these claims might be preempted.  However, a recent decision of an en banc panel of the 9th Circuit revived these claims, holding that as long as the author disclosed the idea with a bilateral expectation of compensation, the Copyright Act does not pre-empt a claim for breach of implied-in-fact contract.[2]

The case involved plaintiff parapsychologist Larry Montz claiming to have pitched his materials regarding a television show following a pair of paranormal investigators searching for evidence of ghosts to various producers.  After passing on his project, a television show titled “Ghost Hunters” began to air on the Sci-Fi channel.  “Ghost Hunters,” as the name indicates, follows a team of investigators of paranormal activity.  Montz sued, alleging state law claims for breach of implied contract and breach of confidence.  After the district court dismissed and the 9th Circuit affirmed on the basis of copyright pre-emption, the 9th Circuit took it up en banc and reversed, breathing life back into Mr. Montz’s claims and “reaffirming” the rule that breach of implied contract claims can withstand a pre-emption challenge.

The decision arguably does not change the law, but by applying the rule to the facts of this case, the court appears to have broadened the claim for breach of implied contract, particularly for damages purposes.  Montz’s allegations included language regarding partnership and sharing in the profits of production rather than the garden-variety claim for sale of the idea.  Thus, the decision makes clear that a plaintiff may seek damages not only for the reasonable value of the idea, but also for splitting profits or partnership interests.  This change or clarification in the law increases the burden on defendants in discovery because it ostensibly opens up more financial discovery than previously considered relevant in a breach of implied contract idea submission claim.  Plaintiffs’ lawsuits crying “Show me the money!” (“Jerry Maguire,” TriStar Pictures 1996) now have more backbone – not only can plaintiffs get past demurrer or a motion to dismiss on stating the bare minimum Desny-claim allegations, but the possibility of additional financial discovery and damages may increase the pressure on defendants.

Protection of Works under the Copyright Act

The first line of protection for a work of authorship is the Copyright Act.  The Copyright Clause (and the ensuing Copyright Act) grants to authors of writings the exclusive right to their respective writings.  Subject to certain limitations, Section 106 of the Copyright Act grants to the owner of the copyright the exclusive rights to do and to authorize any of the following:

(1) to reproduce the copyrighted work in copies or phonorecords;

(2) to prepare derivative works based upon the copyrighted work;

(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; and

(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly.[3]

Notably, these rights extend specifically to works that constitute a “writing” – that is, a work fixed in a tangible form.  In an effort to square First Amendment concerns with the constitutional protection afforded to authors of writings under the Copyright Clause,[4] the Copyright Act explicitly extends only to expression.  In fact, the Copyright Act explicitly provides that “[i]n no case does copyright protection of an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.”[5]  This “idea/expression dichotomy” prevents the protection of facts or ideas, while still providing security for the work as expressed in the writing.[6]

Under such circumstances, however, the Copyright Act gives little protection in a pitch meeting in which an idea is expressed, and then later utilized without compensating the one who provided the pitch.  Even where the pitch includes written or visual materials, a plaintiff has a high burden of showing that the protectable portions of a copyrighted work have been copied and that the defendant’s product is substantially similar to the copyrighted work.[7]

Substantial similarity is determined by applying both an “extrinsic” and “intrinsic” test.  The extrinsic test focuses on “articulable similarities between plot, themes, dialogue, mood, setting, pace, characters, and sequence of events,”[8] while disregarding non-protectable facts and scènes à faire which naturally flow from the plot.[9]  The intrinsic test, on the other hand, “examines an ordinary person’s subjective comparisons of the similarities between two works,” and is only to be applied by the jury after the plaintiff has survived the extrinsic test.[10]  Some flexibility exists, however, in the level of similarity that needs to be shown.  Under the “inverse ratio” rule, a plaintiff that can demonstrate access by the defendant to a copyrighted work need prove a lesser degree of similarity between the works.[11]

Despite this rule, in an overwhelming number of cases where a plaintiff alleges access on the basis of a pitch meeting or other submission (e.g., based on a treatment, screenplay, one sheet, or other expressive form), courts do not find a substantial similarity between the works.[12]  Even with proof of access through such meetings, the courts require the similarity to be focused on what is expressed in the work rather than the ideas embodied in the expression, a high hurdle when comparing a one-sheet or treatment to a completed film or television series.  So how can an author protect his or her ideas while still necessarily disclosing the work to those who can produce it?

Copyright Pre-emption

The Montz case illustrated this gap between copyright law and state law protection for an author’s work.  At one time, federal and state law protection co-existed for works of authorship.  In 1976, however, Congress amended the Copyright Act to provide for a uniform system of copyright application.  Section 301(a) of the Copyright Act provides that “all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by Section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103 … are governed exclusively by this title[.]”[13]  Consequently, “no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.”[14]

State and federal courts have frequently used this provision to dismiss claims that do nothing more than mimic a copyright claim.[15]  To determine whether a claim is pre-empted, courts apply a two-prong test:  (1) does the state claim involve a “work of authorship … fixed in a tangible medium of expression?”  And (2) does the state claim assert “legal or equitable rights within the general scope of copyright as specified by Section 106?”[16]  In the case of an author pitching his work, the first prong is frequently met by the written or visual materials he provides.  Thus, the focus is on the second prong, or whether there is any “extra element” alleged that would take the claim outside of the general scope of copyright.[17]  If the state law claim requires something that is qualitatively different from the rights protected under Section 106, it is not preempted.

Montz v. Pilgrim Films:  Does an Idea Submission Claim Qualitatively Differ from a Copyright Claim?

Montz began like many idea submission claims.  Decades ago, parapsychologist Larry Montz came up with the idea for a television show that would follow a team of paranormal investigators searching for evidence of ghosts.[18]  By 1996, Montz apparently made the idea more concrete and began to pitch it, along with publicist/producer Daena Smoller, to various television studios, producers, and their representatives.[19]  Between 1996 and 2003, Montz and Smoller developed screenplays, videos, and other materials, using these to pitch the proposed show to these entities, including representatives of NBC Universal and the Sci-Fi Channel.[20]  Despite “a number of meetings and discussions,” the studios passed on the project.[21]

Within the next few years, however, a television show was created and aired on what was then called the Sci-Fi channel entitled “Ghost Hunters.”  As may be obvious, the television show tracks a team of investigators who travel across the country seeking out and studying paranormal activity.[22]  The show was produced by Pilgrim Films & Television, Inc., and distributed by NBC Universal (parent to Sci-Fi).  Montz and Smoller sued Pilgrim and NBC, along with individual defendants, alleging copyright infringement, breach of implied contract, and breach of confidence, among other causes of action.  Specifically, they alleged:

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.[23]

Montz and Smoller also alleged that they expressly conditioned the presentation of their concepts as an offer to partner with the defendants, with the expectation that they would receive a share of the profits derived from any use of the idea.[24]  Plaintiffs alleged that their confidential relationship was breached by the taking and exploiting of their ideas and concepts, profiting from them to the exclusion of Plaintiffs.[25]  Amid some procedural wrangling in which plaintiffs voluntarily dismissed their copyright claim, the district court dismissed the state law claims on the grounds that they were preempted by the Copyright Act.[26]

On June 3, 2010, a three-judge panel of the 9th Circuit affirmed, with Judge Diarmuid O’Scannlain authoring the opinion holding both the implied contract and confidence claims were pre-empted.[27]  The court focused on the second prong of the pre-emption test:  specifically, whether the implied-in-fact contract claim “protect[ed] rights which are qualitatively different from the copyright rights.”[28]  The court noted that the “gravamen of the claim is that the defendants used the plaintiffs’ work, without authorization, to create (and then profit from) a new television program.”[29]  Consequently, the court held that “[t]he rights asserted by the plaintiffs under the implied contract are thus equivalent to the rights of copyright owners under § 106 – namely, the exclusive rights to use and to authorize use of their work.”[30]  On that basis, the court affirmed the district court’s order granting the defendants’ motion to dismiss the implied-in-fact contract claim.[31]  But that was not the end of it.  Shortly thereafter, the 9th Circuit sua sponte ordered a rehearing of the case en banc.[32]

This, of course, was not the first idea submission case to be heard by the 9th Circuit.  In 2004, the court issued a brief opinion in the case of Grosso v. Miramax Films in which plaintiff Jeff Grosso claimed violation of copyright and breach of implied contract regarding his screenplay, “The Shell Game.”  Grosso alleged that the defendants stole his ideas and themes for the movie “Rounders.” [33]  The district court granted summary judgment on the copyright claim, and dismissed the implied contract claim on the basis that it was preempted by the Copyright Act.[34]  A three-judge panel of the 9th Circuit, Judge Mary Schroeder authoring, affirmed summary judgment on the copyright claim, finding the works were not substantially similar.  Despite the lack of similarity, the court reversed the dismissal of the implied contract claim.[35]

Judge Schroeder explained that an implied contract claim in this context, modeled after Desny v. Wilder, can withstand a motion to dismiss because the contract is not a bargain for the idea itself, “but for the services of conveying that idea.”[36]  The court held that Grosso had alleged the extra element to take it outside of pre-emption on the basis of claiming that “the idea was submitted by Plaintiff to Defendants with the understanding and expectation, fully and clearly understood by Defendants that Plaintiffs would be reasonably compensated for its use by Defendants.”[37]  Granted, the opinion in Grosso neither explains how that submission was made nor iterates any facts alleged in the complaint at all.  In its amended opinion, the court makes clear that it was “compelled by the procedural posture” to reverse the decision, holding “only that the First Amended Complaint states a Desny claim.”[38]

Given that Grosso reflected the state of the law in the 9th Circuit, how did the three-judge Montz panel come to a contrary conclusion?  The June decision in Montz distinguished Grosso, pointing out that Montz alleged a partnering with the defendants rather than pitching the concept for sale.[39]  Indeed, Judge O’Scannlain wrote that this allegation was, in fact, inconsistent with a Desny claim, and thus Montz would not be able to amend to allege differently.[40]

It should be no surprise, then, that in reversing the decision in Montz, it was Judge Schroeder who authored the 7-4 majority opinion that reaffirmed Grosso.  In a more in-depth opinion than the court’s three-page decision in Grosso, the majority held that, where there is an expectation of compensation, the claim contains the extra element that defeats pre-emption:  “The extra element, the implied agreement of payment for use of a concept, is a personal one, between the parties.”[41]  The court assumed (as had been alleged) that the standard custom and practice in the industry created a bilateral expectation that a writer will be compensated for use of his idea.[42]  Noting that this approach “recognizes the gap that would otherwise exist between state contract law and copyright law in the entertainment industry,”[43] the decision offers some protection for those who create concepts and ideas that cannot be protected by copyright.  Likewise, the court held that a breach of confidence claim contains an extra element in protecting the duty of trust or confidential relationship between the parties, making it qualitatively different from a copyright claim.[44]

Also not surprisingly, Judge O’Scannlain maintained his position and dissented from the majority, focusing on the issue of authorization as the distinguishing issue:  “Where a copyright owner authorizes the use of his work, but does not receive the consideration he was promised, he has a contract claim; where a copyright owner does not authorize the use of his work, but, nonetheless, someone uses it to produce a substantially similar work, he has a copyright claim.”[45]  Reasoning that Montz alleged an offer to partner with defendants, which was not accepted, the allegation stated not an uncompensated authorized (contract) use, but an unauthorized substantially similar (copyright) use of the work.  Judge O’Scannlain additionally raised his concern that the majority decision effectively grants broader rights than those under copyright because “California implied contract law does not require as strict a showing of substantial similarity as federal copyright law.”[46]

Judge Gould, joining Judge O’Scannlain and authoring his own dissent, argued that “[t]he ‘extra element’ argument is impractical for an ‘implied’ claim like this.”[47]  Seeking a more cautious approach, Judge Gould noted that, with what is arguably an expansion of the federal copyright law by way of state law, “film production and network companies face the chaotic prospect of having to meet conflicting federal and state standards on essentially the same question, a result the Copyright Act aimed to avoid.”[48]

Implying Contracts in Idea Submission Cases

As Judge Schroeder iterated, this gap between copyright law and state law can be bridged by implying contracts in the entertainment industry, at least at the demurrer or motion to dismiss stage.[49]  This rule has been recognized by California courts since before the amendment of the Copyright Act and continues to remain viable where “a writer submits material to a producer with the understanding that the writer will be paid if the producer uses the concept.”[50]  In the paramount case, Desny v. Wilder, the plaintiff alleged that he pitched a movie idea to defendant Billy Wilder’s secretary over the telephone, and that she and Wilder understood that Wilder was to compensate him if he used the story.[51]  Wilder then produced a film that the plaintiff alleged was based upon his idea without compensating him.[52]  The California Supreme Court held that this was enough to plead breach of an implied contract to pay for use of plaintiff’s idea.[53]  The decision in Montz confirms that Section 301 of the Copyright Act does not alter this rule.

By allowing a so-called Desny-claim to survive a motion to dismiss, the Court “offered some protection for those who wish to find an outlet for creative concepts and ideas with the understanding that they are not being given away for free.”[54]  Citing to Woody Allen’s film “Crimes and Misdemeanors” (Orion Pictures 1989), the court posited that this protection was needed to protect “valuable creative sources” “in a dog-eat-dog business.”[55]  As the court had previously noted in Benay v. Warner Bros. Entertainment, Inc., “[c]ontract law, whether through express or implied-in-fact contracts, is the most significant remaining state-law protection for literary or artistic ideas.” [56]

To reconcile the concerns of the dissenters, implied contract claims also require a showing of substantial similarity between the pitch and the ultimate work at issue.[57]  The difference, however, is that under an implied contract, the substantial similarity analysis can include elements that would not be protected under copyright law, such as facts, ideas, scènes à faire, and the like.  Thus, the contract claim can be broader than what would be provided for under copyright law.[58]  Indeed, by expanding Grosso beyond a pitch for the sale of a work to include allegations of partnership and profit-sharing, Montz creates a potential for broader claims and more expensive discovery on damages.

Why Montz Matters

As a threshold issue, and as indicated by the dissenting opinions, the 9th Circuit’s en banc opinion will make it more difficult for defendants to defeat idea-submission claims on a demurrer or motion to dismiss, and thus may encourage even more litigation.  In that litigation, the breadth of the decision may also encourage broader financial discovery, as plaintiffs add allegations of profit-sharing and partnership interests rather than simply seeking payment for the reasonable value of the work.  The decision need not, however, lead to the “chaotic prospect” cited by Judge Gould.  Indeed, companies acting more cautiously to avoid litigation under California law will likewise avoid it under federal law.  In response to Montz and to avoid such chaos, production companies, networks, studios, and others who are targeted by these claims may want to consider being more aggressive about requiring many individuals to execute submission releases that expressly acknowledge that the pitch meeting does not create any implied agreement between the parties and that generally limits the individual to a copyright-infringement claim.


[1] See Desny v. Wilder, 46 Cal.2d 715 (Cal. 1956).

[2] Montz v. Pilgrim Films & Television, Inc., 2011 U.S. App. LEXIS 9099 (9th Cir. May 4, 2011).

[3] 17 U.S.C. § 106.

[4] U.S. Constitution, Art. I, Sec. 8, Cl. 8.

[5] 17 U.S.C. § 102(b).

[6] See Harper & Row, Publrs. V. Nation Enters., 471 U.S. 539, 556 (1985); see also Feist Publ’ns v. Rural Tel. Serv. Co., 499 U.S. 340, 349 (1991).

[7] Funky Films, Inc. v. Time Warner Ent. Co., L.P., 462 F.3d 1072, 1077 (9th Cir. 2006).

[8] Kouf v. Walt Disney Pictures & Television, 16 F.3d 1042, 1045 (9th Cir. 1994).

[9] Metcalf v. Bochco, 294 F.3d 1069, 1074 (9th Cir. 2002).

[10] Funky Films, 462 F.3d 1077.

[11] Shaw v. Lindheim, 919 F.3d 1353, 1361 (9th Cir. 1990).

[12] See, e.g., Shaw v. Lindheim, 919 F.2d 1353 (9th Cir. 1990) (“We have frequently affirmed summary judgment in favor of copyright defendants on the issue of substantial similarity”).  See also Benay v. Warner Bros. Entm’t, Inc., 607 F.3d 620 (9th Cir. 2010); Grosso v. Miramax Film Corp., 383 F.3d 965 (9th Cir. 2004); Funky Films, 462 F.3d 1072; Kouf, 16 F.3d 1042; Berkic v. Crichton, 761 F.2d 1289 (9th Cir. 1985); Litchfield v. Spielberg, 736 F.2d 1352 (9th Cir. 1984); Gable v. NBC, 727 F.Supp.2d 815 (C.D. Cal. 2010); Bernal v. Paradigm Talent & Literary Agency, 2010 U.S. Dist. LEXIS 142573 (C.D. Cal. Feb. 22, 2010); Milano v. NBC Universal, Inc., 584 F.Supp.2d 1288 (C.D. Cal. 2008); Thomas v. Walt Disney Co., 2008 U.S. Dist. LEXIS 14643 (N.D. Cal. Feb. 14, 2008); Bethea v. Burnett, 2005 U.S. Dist. LEXIS 46944 (C.D. Cal. June 28, 2005); Merrill v. Paramount Pictures Corp., 2005 U.S. Dist. LEXIS 45401 (C.D. Cal. Dec. 19, 2005); Green v. Schwarzenegger, 1995 U.S. Dist. LEXIS 14031 (C.D. Cal. July 11, 1995).

[13] 17 U.S.C. § 301(a).

[14] Id.

[15] See, e.g., Selby v. New Line Cinema Corp., 96 F. Supp. 2d 1053 (C.D. Cal. 2000); Del Madera Props. v. Rhodes & Gardner, Inc., 820 F.2d 973 (9th Cir. 1987), overruled on other grounds by Fogerty v. Fantasy, Inc., 510 U.S. 517, 114 S. Ct. 1023, 127 L. Ed. 2d 455 (1994); Symantec Corp. v. McAfee Assoc., Inc., 1998 U.S. Dist. LEXIS 22591 (N.D. Cal. 1998); Trenton v. Infinity Broadcasting Corp., 865 F. Supp. 1416(C.D. Cal. 1994); Fleet v. CBS, 50 Cal. App. 4th 1911 (1996).

[16] Laws v. Sony Music Entm’t, Inc., 448 F.3d 1134, 1137-1138 (9th Cir. 2006); Fleet v. CBS, 50 Cal. App. 4th 1911, 1919 (1996).

[17] Id. at 1143.  See also Kabehie v. Zoland, 102 Cal. App. 4th 513, 521 (2002).

[18] Montz, 2011 U.S. App. 9099 at **4-5.

[19] Id. at *5.

[20] Id.

[21] Id.

[22] Id. at **5-6.

[23] Id. at *6 (citing Compl. ¶ 46).

[24] Id. at **6-7.

[25] Id. at *7.

[26] Id. at **7-8.

[27] Montz v. Pilgrim Films & Television, Inc., 606 F.3d 1153, 1158 (9th Cir. 2010), reversed en banc, 2011 U.S. App. 9099.

[28] Id. at 1157.

[29] Id.

[30] Id.

[31] Id.

[32] 2010 U.S. App. LEXIS 20196 (9th Cir., Sept. 30, 2010).

[33] 383 F.3d 965, 967 (9th Cir. 2004).

[34] Id.

[35] Id.

[36] Id. at 967.

[37] Id.

[38] 2004 U.S. App. LEXIS 28043, *7 (9th Cir. 2004).

[39] Montz, 606 F.3d at 1158.

[40] Id. at 1159-1160.

[41] Montz, 2011 U.S. App. LEXIS 9099, at *13.

[42] Id. at *9.

[43] Id. at *15.

[44] Id. at *16.

[45] Id. at *28.

[46] Id. at *29.

[47] Id. at *32.

[48] Id.

[49] Montz, 2011 U.S. App. LEXIS 9099 at *15.

[50] Id. at *2.

[51] Desny, 46 Cal.2d at 726-727.

[52] Id.

[53] Id. at 745-746.

[54] Montz, 2011 U.S. App. LEXIS 9099 at **15-16.

[55] Id. at *16.

[56] 607 F.3d 620, 629 (9th Cir. 2010).

[57] 4 Nimmer On Copyright § 19D [08]A; Karlan v. Columbia Broad. Sys. Inc., 40 Cal.2d 799, 809 (1953); Sutton v. Walt Disney Prods., 118 Cal. App. 2d 598, 603 (1953).

[58] See Benay, 607 F.3d at 631.

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