Ninth Circuit Confirms Viability Of 'Desny' Claim Based On Promise To Pay For Use Of An Idea

Summary

On May 4, 2011, the Ninth Circuit, sitting en banc, confirmed that copyright law does not preempt implied-in-fact contract claims based on a bilateral expectation that the defendant would compensate the plaintiff for the use of his or her idea. Montz v. Pilgrim Films & Television, Inc., No. 08-56954, 2011 U.S. App. LEXIS 9099 (9th Cir. May 4, 2011). Further, it held there was no meaningful difference, for purposes of the preemption analysis, between a promise to pay for such use and a promise to enter into a partnership to share the proceeds derived from such use.

Background of the Case

As alleged in the complaint, plaintiffs pitched their idea to the defendant for a reality television show, in which paranormal investigators traveled the country investigating paranormal activity. Their presentation included television screenplay treatments, video and other production materials. The studio defendants passed on the idea. Several years later, defendants launched a new series based on the same concept.

In 2006, plaintiffs filed suit asserting claims for copyright infringement, breach of implied contract and breach of confidence. The complaint alleged that the plaintiffs had disclosed their concept for a reality show to defendants in confidence, pursuant to the custom and practice of the entertainment industry, for the express purpose of offering to partner with the defendants in the production, broadcast and distribution of a show based on the concept. They further alleged that they justifiably expected to receive a share of any profits and credit that might be derived from exploitation of their idea.

The defendants moved to dismiss the complaint. The copyright claim was found to be sufficient. However, the district court (Judge Florence-Marie Cooper) dismissed the state law claims on the basis that they were preempted by Section 301(a) of the Copyright Act.

Plaintiffs later stipulated to the dismissal of the copyright claim and, with nothing left to adjudicate, the district court entered judgment in favor of the defendants. This appeal followed.

The Ninth Circuit's Decision

Initially the district court's dismissal of the state law claims was affirmed by a three-judge panel of the Ninth Circuit. For an analysis of the earlier three-judge panel's decision visit ( http://www.fenwick.com/docstore/Publications/Litigation/Litigation_Alert_06-10-10.pdf). The Court subsequently agreed to rehear the matter en banc and, in a 7-4 decision...