Ninth Circuit Reverses Copyright Preemption Decision on En Banc Rehearing
This case was back before the Ninth Circuit for a second time, this time for a rehearing en banc.
You can find a more detailed explanation of the facts of the case in my previous post reporting on the opinion of the three-judge panel. The gist of the facts are that plaintiffs alleged that they pitched their concept for a new reality TV show to NBC Universal, Inc. and the Sci-Fi Channel and offered to partner "in the production, broadcast and distribution of" their concept. The representatives turned plaintiffs down but NBC later partnered with others to produce a series on the Sci-Fi channel that plaintiffs allege was based on their material.
Plaintiffs sued alleging, in part, state law claims for breach of implied contract and breach of confidence but the District Court dismissed those claims, concluding that they were preempted by federal copyright law.
A three-judge panel of the Ninth Circuit affirmed the District Court's decision, concluding that the claims for breach of implied contract and breach of confidence were not qualitatively different from a copyright claim, distinguishing the prior Ninth Circuit case of Grosso v. Miramax Film Corp., 383 F.3d 965 (9th Cir. 2004) in the process.
The Ninth Circuit ordered a rehearing of the case en banc, this time reversing the District Court's preemption decision.
The Ninth Circuit emphasized that it had held in previous cases that an implied contractual claim, like that of the plaintiffs in this case, were not preempted by the Copyright Act because such a 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.
Thus, the Ninth Circuit "again [held] that copyright law does not preempt a contract claim where plaintiff alleges a bilateral expectation that he would be compensated for use of the idea, the essential elements of a Desny claim that separates it from preempted claims for the use of copyrighted material."
The court likewise concluded that plaintiffs' claim for breach of confidence was not preempted because the "claim protects the duty of trust or confidential relationship between the parties, an extra element that makes it qualitatively different from a copyright claim."
The majority saw its approach to the preemption issue as filling a "gap that would otherwise exist between state contract law and copyright law in the entertainment industry":
The Desny innovation serves to give some protection for those who wish to find an outlet for creative concepts and ideas but with the understanding that they are not being given away for free. Without such legal protection, potentially valuable creative sources would be left with very little protection in a dog-eat-dog business. . . . Thus we were correct when we observed that "[c]ontract law, whether through express or implied-in-fact contracts, is the most significant remaining state-law protection for literary or artistic ideas." Benay, 607 F.3d at 629.
The decision was not unanimous, however, as there were two dissenting opinions.
The dissenting opinion authored by Judge O'Scannlain argued that the District Court properly concluded that "an action to enforce a promise not to use or to disclose ideas embodied in copyrighted material without authorization asserts rights equivalent to those protected by the Copyright Act" and were therefore preempted.
The dissenting opinion authored by Judge Gould asserted that the majority decision would "lead to uncertainty by making state law--with its ambiguity, variability, and volatility--available to litigants who bring nebulous state law claims that in substance assert rights in the nature of copyright."
The case cite is Montz v. Pilgrim Films & Television, Inc., No. 08-56954 (9th Cir. May 4, 2011) (en banc).
