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October 19, 2011 / screwvala

Pitch Forks Pilgrim

So you’ve got a great idea for a film, television show, whatever. You take your treatment or script and pitch your project to a studio or a producer. Unfortunately, you don’t get an offer. But hang on, now you see a preview for your show or film. Now what?

If you’re in California, the Ninth Circuit decision in Montz v. Pilgrim Films & Television, Inc., No. 08-56954 may offer a clue.

Let’s set the stage. Larry Montz, a parapsychologist hatches an idea to create a television show following a team of paranormal investigators in the field.  Years of pitching the project, including screenplays and videos followed, with no interest from any network or studio. Among the networks approached were NBC and the Sci-Fi Channel. Enter Ghost Hunters a series produced by NBC and Pilgrim for the Sci-Fi Channel. The program features John Conrad Hawes who leads a team of paranormal investigators around the country on field investigations. Sound familiar? It sure did to Montz, who sued. That he sued is not particularly remarkable. It’s the nature of the claim that is of interest here.

Rather than sue for copyright infringement, Montz claimed the existence of an implied-in-fact contract under California law in which the producers agreed to pay him for the use of his concept. In 1956, the California Supreme Court recognized the existence of an implied-in-fact contract where a writer submits a concept to a producer or studio on condition that she will be compensated for its use. Desny v. Wilder, 299 P.2d 257 (Cal. 1956). The producers, however, sought to dismiss the claim as preempted by copyright law. In 1976, the Copyright Act was amended to preempt state law claims over work that falls under the “subject matter of copyright” and where the state law affords relief that is “equivalent to any of the exclusive rights within the general scope of copyright.” 17 U.S.C. §301(a).

The District Court and a three-judge panel of the Ninth Circuit held that the Copyright Act preempted Montz’s state law claims. However, in a rehearing before all eleven judges of the entire Ninth Circuit, the Court, in a narrow 7-4 majority reversed and held that the Desny claim could proceed.

There was no serious question that the material submitted by Montz was within the subject matter of copyright.  At issue, then, was whether an implied-in-fact copyright claim provides relief equivalent to the Copyright Act.  What does that mean exactly?  Copyright owners have the exclusive right to reproduce, distribute, and publish copyrighted work and to prepare derivative works based on the copyrighted work.  17 U.S.C. §106.  Any state claim that fits within that bundle of rights is preempted by the Copyright Act.  Where does that leave Montz’s demand for payment under an implied-in-fact contract theory?

On rehearing, a majority of the Ninth Circuit held that the Copyright Act does not preempt an implied-in-fact contract for payment. In fact, the Ninth Circuit has previously held that Desny claims are not preempted because the agreement to pay for use of the copyrighted material does not fall within the exclusive rights under §106. Grosso v. Miramax Film Corp., 383 F.3d 965 (9th Cir. 2004). The Montz Court held that his claim was essentially identical to the claim at issue in Grosso.  In so holding, the Ninth Circuit concluded that the agreement to pay for the use of the material introduced an additional element that differed qualitatively from the rights secured by copyright. As the Court noted, the contract claim here was a bilateral agreement between Montz and the producers that he was to be paid if the concept was used. Therefore, his claim could proceed.

Remember that this was a 7-4 decision. Why did four members of the Court disagree? The dissent appears to focus on the allegation that the implied-in-fact contract included a promise by the producers to seek Montz’ permission before exploiting his concepts. According to the dissent, the fact that Montz sought to retain control over the use of his content causes preemption of his claim. In the minds of the dissenting judges, by seeking to partner as a co-producer on a series instead of engaging in an outright sale, his claim is no different than a claim arising under the Copyright Act.

Perhaps the Supreme Court will weigh in. Until then, Desny claims remain alive and well in California.

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