Copyright Preemption Takes Another Hit In Idea Submission Cases

Kelley Drye Client Advisory

On June 26, 2012, the United States Court of Appeals for the Second Circuit rendered a decision in which it reversed the district court’s decision to dismiss plaintiffs’ idea theft claim on the ground of copyright preemption.  As such, the Court remanded the case for further proceedings.  Forest Park Pictures, Tove Christensen and Hayden Christensen v. Universal Television Network, Inc., No. 11-2011-cv.  The question presented by the Forest Park case relates to the extent to which the Copyright Act preempts contract claims involving copyrightable property.

With respect to the Copyright Act, Congress intended to create a broad statutory preemption scheme in order to create national uniformity regarding author’s rights.  H. R. Rep. No. 94-1476, at 129 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5746; Peckarsky v. Am. Broad. Co., 603 F. Supp. 688, 695 (D.D.C. 1984); see also Daboub v. Gibbons, 42 F.3d 285, 288 (5th Cir. 1995).  Accordingly, Congress created section 301 of the Copyright Act, which expressly provides for statutory preemption of any rights under state or common law equivalent to and within the scope of federal copyright law.  17 U.S.C. § 301.

Under Section 301, claims involving rights, remedies, and conduct not qualitatively different from copyright claims, or merely copyright by another name,” are preempted.  Omnibus Copyright Revision Legislative History, 89th Cong., 1st Sess., Supplementary Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law: 1965 Revision Bill, at p. 85 (1975).  In determining whether section 301 preempts a state law claim, courts decide whether (1) the work falls under the subject matter of copyright and (2) the right or remedy asserted is equivalent to a right protected or remedy set forth in the Copyright Act.  17 U.S.C. § 301 (a), (b).

In Forest Park, the plaintiffs alleged that they created a written treatment for a television series about a doctor who became a concierge” doctor to the rich and famous after he was expelled from the medical community for treating patients who could not pay.  They allegedly pitched their idea to the USA Network, including by mail and in an in-person pitch meeting.  A little less than four years later, the USA Network broadcast a television show called Royal Pains, allegedly in which a doctor became a concierge” doctor to the rich and famous after he was expelled from the medical community for treating patients who could not pay.  The USA Network did not compensate the plaintiffs in connection therewith, and litigation ensued.

In their complaint, the plaintiffs claimed that the USA Network entered into an implied contract to pay the plaintiffs a reasonable compensation if their idea was used.  The district court dismissed the lawsuit, holding that the implied contract claim was preempted by the Copyright Act.   Forest Park Pictures v. Universal Television Network, Inc., 2011 U.S. Dist. LEXIS 50081, *9 (S.D.N.Y. May 10, 2011).

On June 26, 2012, the Court of Appeals vacated the district court’s judgment dismissing the complaint, and remanded for further proceedings.  The Court easily dispatched the first prong of the preemption test, finding that the plaintiffs’ treatment fell within the subject matter of copyright because such written materials are works of authorship that are fixed in a tangible medium.”  17 U.S.C. § 301(a).  As the Court explained, because the ideas that are the subject of the claim were fixed in writing[,] … the claim is within the subject matter of copyright.

With respect to the second prong of the preemption test, the Court held that the plaintiffs’ allegation that they entered into an implied-in-fact contract with the USA Network that required the network to pay plaintiffs for use of their idea was not preempted.

Most notably, the opinion stands for the proposition that where a plaintiff actually alleges the elements of an enforceable contract (including mutual assent and valid consideration), and where that contract requires the defendant to pay for the disclosure and/or use of the plaintiff’s idea, such a claim is not preempted by the Copyright Act.  The Court reasoned that “[a] claim for breach of contract including a promise to pay is qualitatively different from a suit to vindicate a right included in the Copyright Act[.]”  The Court explained that that Copyright Act does not provide an express right for the copyright owner to receive payment, and that contract claims are different from copyright claims because they require extra elements beyond copying” (such as offer, acceptance and consideration).

However, the Second Circuit took pains to clarify that it was not holding that preemption is precluded whenever there is an express or implied contract claim, leaving that question open for another day.  The Court also noted that implied-in-law contracts and unjust enrichment claims within the idea submission context remain preempted because such claims are not materially different from a claim for copyright infringement that requires a plaintiff to prove that the defendant used reproduced, copied, or displayed a copyrighted work.

The Second Circuit’s ruling in Forest Park Pictures serves as a useful reminder to creators, producers and distributors of content to take certain preventive steps to minimize the risk of idea theft claims:

1)  Document pitch meetings carefully, such as who attended and what was discussed.

2)  Preserve evidence to demonstrate independent creation - dated notebooks, outlines, script drafts, email correspondence, etc.

3)  Contracting parties can explicitly agree upon the level of similarity required (as between the defendant’s work and the idea man’s pitch materials) which will trigger an obligation to pay for the use of the pitch materials.  For example, the parties can agree that, in the event of a dispute, the defendant will be required to compensate the pitch man only if the two works are substantially similar within the meaning of the United States Copyright Act and the case law interpreting that Act.

4) Make clear during discussions that absent an express written agreement to the contrary, the producer does not agree to pay for the use of general ideas or non-original elements of a work.

Click below to read the Forest Park Pictures v. Universal decision.