A Federal copyright claim won't always preempt a state-law claim for implied contract, particularly when submitting a pilot or series pitch to a studio. In simpler terms: A party can sue a television network if a network rejects his idea, only to use it on its own years later.
A 9th Circuit Court of Appeals ruled in favor of Larry Montz, a parapsychologist, and Daena Smoller, a publicist, who claimed that NBC stole their idea. They demanded payment based on an idea that they submitted to NBC, which became the basis of NBC's series, "Ghost Hunters."
The 9th Circuit ruling is based on a claim by Montz, who alleges that he submitted several items to NBC, including videos. At the time, NBC indicated to Montz that it was not interested in his ideas.
Three years later, however, NBC produced "Ghost Hunters."
Montz is alleging that NBC breached an implied contract and is seeking compensation from NBC, according to The San Francisco Chronicle.
While the District Court sided with NBC, saying that copyright law preempted the state law claims of breach of implied contract and breach of confidence, the District Court opinion was reversed 7-4 by the 9th Circuit en banc.
In the 9th Circuit's reasoning focused on the fact that the California Supreme Court has previously recognized the implied contract that is created between a writer and a producer, where an idea is disclosed to the latter under the premise that compensation would follow, should the idea be used. The issue was discussed previously by the 9th Circuit in Grosso v. Miramax, where the court ruled that an implied contractual claim is not preempted by federal law.
The essential threshold, the court stated in its opinion, is that the state cause of action should assert rights that are qualitatively different from the rights protected by copyright. The court writes:
"[T]he contractual claim requires that there be an expectation on both sides that use of the idea requires compensation, and that such bilateral understanding of payment constitutes an additional element that transforms a claim from one asserting a right exclusively protected by federal copyright law, to a contractual claim that is not preempted by copyright law."
This decision may be a real blow to the entertainment industry, as it broadens the applicability of implied contracts and protects the hundreds, if not thousands, of "little guys" who submit content to major studios every year, in the hopes that their idea will be picked up.
This new ruling places an impetus on studios to tighten up their legal forces and perhaps take greater care in how they handle submissions from wannabe screen writers. Perhaps strong written contracts need to be established when an idea is submitted to a studio, going forward. Perhaps studios need to tighten the procedures relating to how they handle submitted content.