Thursday, July 27, 2006

Grosso Mondo: Bad Ideas Never Die

Bad Ideas never die; no I'm not talking about the proposal to extend protection to fashion designs, but to protecting ideas themselves. Here are some excerpts from an article in yesterday's New York Times:

Matthew Benay filed a lawsuit here accusing Warner Brothers and others of stealing the idea for “The Last Samurai” from their screenplay of the same name. Three months later, another writer, Reed Martin, sued Focus Features and the director Jim Jarmusch, among others, saying they lifted “Broken Flowers” from his work. Shortly before that, yet another aggrieved writer, Maurice Fraser, filed suit against NBC Universal, saying it had taken the concept for its upcoming reality show “World Vision: An American Anthem” from his pitch “Battle of the States.”

In 2004, [in a case] called Jeff Grosso v. Miramax Film Corporation, [the Ninth Circuit] held that studios, producers and anyone else who considers an idea offered for sale can’t rely on the federal Copyright Act in fighting claims that they have entered under an implied contract to buy it for fair value if it’s found acceptable. That ruling, by the United States Court of Appeals for the Ninth Circuit in California, gave writers a way to sidestep the difficulties of a copyright claim — and opened the door to a growing stack of suits that are keeping Hollywood’s legal machinery even busier than usual.
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Miramax appears to have won the Grosso case when a state court judge earlier this month threw out a claim that a pair of writers had stolen the idea for the movie “Rounders” from the writer Jeff Grosso’s 1995 screenplay “The Shell Game.”

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In Grosso [385 F.3d 905] , the issue was one of preemption: does the Copyright Act preempt a state law action for idea theft, usually cast an an implied contract. If the answer to that question is no, there is also the question of whether a state law claim as been made out, and it is on this point that Grosso eventually lost. But he should have lost on the first question. In finding no preemption, the Ninth Circuit which surveyed both prior court of appeals and other court precedents at some length:

In Desny, 299 P.2d at 257, the California Supreme Court explained that where an idea is furnished by one party to another, a contract sometimes may be implied even in the absence of an express promise to pay. The Court held that a contract exists where "the circumstances preceding and attending disclosure, together with the conduct of the offeree acting with knowledge of the circumstances, show a promise [to pay] of the type usually referred to as ‘implied’ or ‘implied in fact.’" Id. at 270. The Desny rule is justified on the theory that the bargain is not for the idea itself, but for the services of conveying that idea. See Donahue v. Ziv Television Programs, Inc., 245 Cal. App. 2d 593, 54 Cal.Rptr. 130, 140, (Ct. App. 1966).
To establish a Desny claim for breach of implied-in-fact contract, the plaintiff must show that the plaintiff prepared the work, disclosed the work to the offeree for sale, and did so under circumstances from which it could be concluded that the offeree voluntarily accepted the disclosure knowing the conditions on which it was tendered and the reasonable value of the work. See Faris v. Enberg, 97 Cal. App. 3d 309, 158 Cal.Rptr. 704, 709 (Ct. App. 1979). Grosso’s complaint mirrors the requirements of Desny and states 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." We conclude that the complaint stated a Desny claim.
With respect to preemption, the Copyright Act, 17 U.S.C. § 301, establishes a two part test. Claims under state law are preempted where: (1) the work at issue comes within the subject matter of copyright, and (2) the state law rights are "equivalent to any of the exclusive rights within the general scope of copyright." Del Madera Props. v. Rhodes & Gardner, Inc., 820 F.2d 973, 976 (9th Cir. 1987) (internal quotation marks omitted) overruled on other grounds by Fogerty v. Fantasy, Inc., 510 U.S. 517; see also 17 U.S.C. § 301.
The dispositive preemption issue in this case is whether the rights protected by a Desny claim are equivalent to the rights protected by copyright. To survive preemption, the state cause of action must protect rights that are qualitatively different from the rights protected by copyright: the complaint must allege an "extra element" that changes the nature of the action. Del Madera, 820 F.2d at 977. Our prior decision in Landsberg v. Scrabble Crossword Game Players, Inc., 802 F.2d 1193, 1196-97 (9th Cir. 1986), supports treating the implied promise to pay required by Desny as an "extra element" for preemption purposes. In Landsberg, the defendants used the plaintiff’s idea for a Scrabble strategy book without paying the expected compensation, and we applied California law to affirm a judgment of liability on a Desny claim. We explained that:

The contract claim turns not upon the existence of a [copyright] . . . but upon the implied promise to pay the reasonable value of the material disclosed. Id. at 1196.
This discussion further muddies already muddied waters. The "idea" in Grosso was embodied in a screenplay and plaintiff Grosso had, in the same complaint, brought an unsuccessful copyright infringement claim. The implied contract claim was, thus, a phony effort to circumvent the lack of substantial similarity; it was as if plaintiff said, "you copied my expression, but if the trier of facts finds you didn’t, then you copied my idea." The fallacy of such an approach is readily apparent.

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By characterizing the inquiry as a bargain "not for the idea itself, but for the services of conveying that idea," the Grosso court attempted to shift the focus of the right from unauthorized use of the screenplay to a non-existent services for conveying the ideas in the screenplay. But there were no "services" rendered for conveying the idea, nor did Grosso seek recompense for the conveyance of the idea: he sought recompense for the post-conveyance use of the idea, that is the use in a screenplay alleged to have been substantially similar to plaintiff’s. Such claims are preempted.

An additional problem in idea cases is the very different standards applied in the two principal jurisdictions, California and New York, for what type of ideas are protectable and under what circumstances.

6 comments:

vince cox said...

All systems for idea protection create the potential for chaos; there are only vaporous standards to determine protectibility and infringement, and such standards are the core of any workable system of property rights.
Sadly, the otherwise estimable Arthur Miller has added fuel to the fire with a recent article -- COMMON LAW PROTECTION FOR PRODUCTS OF THE MIND:
AN "IDEA" WHOSE TIME HAS COME
by Arthur R. Miller
119 Harv. L. Rev. 703 (2006). This is an "idea" he has tried to push for years without ever seriously considering the costs of the legal indeterminacy his proposals would impose. He unsuccessfully argued the proposition that copyright should protect research in MILLER v. UNIVERSAL CITY STUDIOS, INC., 650 F.2d 1365 (5th Cir. 1981)

William Patry said...

I thought he was a playwright

Anonymous said...

http://en.wikipedia.org/wiki/Arthur_R._Miller

The other one passed away last year.

john noble said...

It must be one of the most common cocktail party questions put to lawyers... "I have this great idea for ___ -- how can I make sure they don't steal it." When the work hasn't been recorded in a tangible medium, or the invention hasn't been reduced to practice, the only answer is contract.

The law responds to the requirements of commerce. That so many of the cases come out of California, where the "pitch" is a tool of the trade, is unsurprising. You're right that the implied contract to pay is unsatisfactory. The breach is still copyright infringement, except that there isn't a valid copyright.

The issue might better be approached as an implied non-disclosure agreement in respect of a trade secret. The definition of trade secret supplies the extra element. "A trade secret is any information that can be used in the operation of a business or other enterprise and that is sufficiently valuable and secret to afford an actual or potential economic advantage over others."

It weeds out the cases where the idea for a movie is stolen from a published screenplay, preserving the idea-expression dichotomy that belongs to copyright law; or allegedly appropriated from an unsolicited proposal that came in over the transom, as though dropped in the suggestion box.

Industry standards might supply the measures necessary to maintain its value as a trade secret, distinguishing between cocktail party chatter, and the "non-disclosure agreement" prefaced in California with "let's do lunch."

At least the approach is useful when a lawyer is approached with the question, "I've got this great idea ... how do I make sure they don't steal it." The expected response, "what's the idea?," which leaves you pinned in the corner for half an hour, is replaced by, "don't tell me; you have to keep it a secret until you have a retainer agreement that promises my confidentiality."

William Patry said...

John:

I love the idea (pun intended) of how to avoid getting pinned down at a cocktail party. My approach to preemption is, I think, the same as yours: if plaintiff is suing for stealing an idea embodied in a work of authorship, it is preempted. If the idea is mrerely embodied in a pitch: "the movie is Dukes of Hazzard meet Ali G," I think there is no preemption, and whether there is state law protection is a different issue, although I presume not.

Anonymous said...

Your cite for Grosso v. Miramax is wrong. It's 383 F.3d 965.