Ninth Circuit Finds State Law Claims Preempted by the Copyright Act
The plaintiffs--Larry Montz (a parapsychologist) and Daena Smoller (a publicist)--alleged that in 1981, Montz conceived of a new reality TV show involving a team of paranormal investigators who would investigate and occasionally debunk claims of paranormal activity. Between 1996 and 2003, plaintiffs alleged that they presented screenplays, videos, and other materials relating to the proposed show to representatives of NBC Universal, Inc. and the Sci-Fi Channel "for the express purpose of offering to partner . . . in the production, broadcast and distribution of the Concept." Although the reps allegedly were not interested in Montz's concept, NBC subsequently partnered with others to produce a series called Ghost Hunters on the Sci-Fi Channel that plaintiffs alleged was based on their material.
Plaintiffs then sued alleging claims for, among others, copyright infringement and two relevant state law claims:
(1) that "by producing and broadcasting" Ghost Hunters, the defendants breached an "implied agreement not to disclose, divulge or exploit the Plaintiffs' ideas and concepts without the express consent of the Plaintiffs, and to share with the Plaintiffs . . . the profits and credit for their idea and concepts"; and (2) that the defendants breached the plaintiffs' confidence "[b]y taking the Plaintiffs' novel ideas and concepts, exploiting those ideas and concepts, and profiting therefrom to the Plaintiffs' exclusion."
Defendants moved to dismiss the complaint for failing to state a claim for relief. The District Court for the Central District of California held that the plaintiffs' complaint alleged sufficient facts to state a federal copyright claim but that plaintiffs' state law claims for breach of an implied in fact contract and breach of confidence were preempted by federal copyright law. The District Court therefore dismissed those state law claims with prejudice and without leave to amend. Subsequently, the parties stipulated to voluntary dismissal of plaintiffs' copyright claim and thereafter final judgment was entered in favor of defendants.
Plaintiffs then appealed the dismissal of their state law breach of implied contract and breach of confidence claims (as well as the District Court's denial of leave to amend those claims) on the ground that they were preempted by the Copyright Act.
Because there was no dispute that the first condition for preemption was met (that the claim comes within the subject matter of copyright), the Ninth Circuit's inquiry was limited to the second condition: that the rights asserted under the state law claim are "equivalent" to the exclusive rights of copyright owners under Section 106 of the Copyright Act. The Ninth Circuit concluded that the breach of implied contract claim satisfied this second condition and was therefore preempted:
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. The rights asserted by the plaintiffs under the implied contract are thus equivalent to the rights of copyright owners under Section 106--namely, the exclusive rights to use and to authorize use of their work.
In so concluding, the Ninth Circuit distinguished a prior case that upheld a similar claim by differentiating between the nature of the implied contracts involved in the two cases. In the case in which the claim survived preemption, the implied agreement allegedly involved an implied promise to pay for use of the idea whereas here the alleged implied promise was not to disclose, divulge or exploit the ideas and concepts without the plaintiffs' express consent. Therefore, according to the Ninth Circuit:
Whereas the breach of the alleged agreement in Grosso violated the plaintiff's right to payment on a sale, the breach of the alleged agreement in this case violated the plaintiffs' exclusive rights to use and to authorize use of their work--rights equivalent to those of copyright owners under Section 106.
For similar reasons, the plaintiffs' state law breach of confidence claim suffered the same preemption fate as it was "not qualitatively different from a copyright claim."
Interestingly, just days after this opinion, the Ninth Circuit issued an opinion in Benay v. Warner Bros. Entm't, Inc. in which it affirmed summary judgment on a copyright infringement claim against the plaintiffs but reversed summary judgment to defendants on the plaintiffs' state law implied in fact contract claim. A discussion of the Benay case can be found here.
The case cite is Montz v. Pilgrim Films & Television, Inc., No. 08-56954 (9th Cir. June 3, 2010).
