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NAVIGATING THE PITCH MINEFIELD - Sometimes There's Nothing More Dangerous Than A Good Idea

Posted By Neville Johnson & Douglas Johnson, Wednesday, November 15, 2017

Theft of idea and copyright litigation keep lawyers very busy, as dishonesty involving literary property is very real. Hollywood’s true currency is good and valuable ideas. A creative executive who has no ideas can find him or herself without a job. Protectable intellectual property can be as simple as an expression of an idea or as complex as a completed screenplay or book. The starting point in idea theft is whether the idea is protectable. The fundamental belief is that ideas, on their own, are not legally protected.

Some ideas are so commonplace and ordinary that they are excluded from copyright law protection under the scenes a faire doctrine. The most common example of this doctrine is the plot from Shakespeare’s “Romeo and Juliet,” the story of two young people from warring families who fall in love with tragic results. A Wikipedia page currently lists 88 film and television adaptations of “Romeo and Juliet.”

The most important method of selling ideas in the film and television industry is the pitch. So how does the intellectual property exchanged in a pitch meeting secure legal protection? Ordinarily before the pitch, there is no written contract between the two parties to buy and sell the idea. What is to stop the recipient from appropriating every good idea that comes his or her way? One legal protection for ideas is known as the “implied-in-fact” contract. California courts have held that an implied contractual right to compensation may arise when a creative submits material to a producer with the understanding that the creator will be paid if the producer uses that idea.

Given the possibility of an implied-in-fact contract, the recurring question asked by clients on both sides of the pitch is how to avoid claims of idea theft. How can the writers submitting intellectual property protect their rights in their submissions? And conversely, how can recipients of submitted scripts protect themselves from accusations of idea theft?

 

Development of the Implied-In-Fact Contract in California

California’s courts began wrestling with these questions in 1956 in the seminal case Desny v. Wilder. In that case, Victor Desny called director Billy Wilder at Paramount Pictures, with a “great idea” for a movie. The central idea of the movie was the life story of Floyd Collins, a boy who became trapped in a cave 80 feet deep. Desny could not get past Wilder’s secretary, who told him the 65-page treatment was too long for Wilder to read.

Three days later, Desny called back with a three-page outline. Wilder’s secretary asked Desny to read the outline over the phone so she could take it down in shorthand, and he did. The secretary told Desny she liked the story, would talk it over with Wilder and “let him know” what happened. Desny told the secretary that Paramount and Wilder could only use the story if they paid him. To Desny’s surprise, Wilder and Paramount made a movie concerning the life and death of Floyd Collins, Ace in the Hole, which closely paralleled Desny’s synopsis, as well as the historical material on Floyd Collins. However, the film also included fictional material unique to Desny’s synopsis. Desny sued, claiming that Wilder and Paramount breached an implied contract.

The California Supreme Court agreed with Desny, recognizing that even when an unsolicited idea submission is made, the circumstances of the disclosure may support the finding of an implied-in fact-contract.

Usually the parties will expressly contract for the performance of and payment for such services, but in the absence of an express contract, when the service is requested and rendered, the law does not hesitate to infer or imply a promise to compensate for it. In other words, the recovery may be based on a contract either express or implied. The person who can and does convey a valuable idea to a producer who commercially solicits the service or who voluntarily accepts it knowing that it is tendered for a price should likewise be entitled to recover.

A plaintiff suing for breach of implied-in-fact contract relating to an idea submission must prove that (1) she conditioned her offer to disclose the idea to the defendant on the defendant’s express promise to pay for the idea if the defendant used it, (2) the defendant, knowing the condition before the idea was disclosed to him, voluntarily accepted its disclosure, and (3) the defendant found the idea valuable and used it.

For an implied-in-fact contract to form, the recipient must understand the conditions under which the idea is being disclosed. If, for example, the creator blurts out the idea to a Hollywood producer she just met at a bar, there is no contract. The recipient must be given the opportunity to reject the submission before it is conveyed. Unsolicited pitches rarely have legal protection!

Therefore, the eager creative should not tell anyone and everyone in town about their idea, because the likelihood is that it will be stolen unless the disclosure is made under circumstances where the recipient either requested the idea or it was understood from the circumstances that there is an expectation of payment, e.g., a pitch meeting at a studio.

Two elements are required to raise the inference of use: that the defendant had access to the plaintiff’s idea, and that he copied it. Copying can be demonstrated by showing that the defendant’s work is substantially similar to plaintiff’s idea.

Where a writer or producer conveys an idea to a potential purchaser, and the defendant produces a product similar to that idea, an inference arises that recipient used the idea. Moreover, less similarity is required when the evidence of access is stronger, but the similarity must be to a material element or qualitatively important part of the idea, and could range from a mere basic theme up to an extensively elaborated premise.

Access to the idea is proven if one is able to demonstrate that the person creating the movie had an opportunity to view or copy the plaintiff’s work. Access can also be established is the recipient of the idea is an individual in a position to provide suggestions or comment to a supervisory employee, or is an employee within the unit from which the defendant’s work was developed. However, there is a recent example in which a court dismissed a caseon the grounds of its being too speculativewherein a project had been submitted to an agent at a major agency and the plantiff argued that a different agent at that agency could have had access to it.

The “substantial similarity” standard in a Desny claim is much lower than in a copyright case. “Substantial similarity” in Ninth Circuit copyright cases is complicated and it is generally thought that the studios and recipients fare better in copyright cases.

New York also recognizes Desny-type claims, but adds an extra element: An idea must be novel to the buyer for an implied-in-fact contract to exist.

 

Advantages and Disadvantages of Desny Claims versus Copyright Claims

A Desny claim and a copyright claim may be brought together in the same lawsuit. Both types of claims will revolve around the timing of the idea theft. The same evidence will be used to establish the case, i.e., emails, computer hard drive searches, witness depositions. While a Desny claim and a copyright claim may be brought simultaneously, each type of claim has advantages and disadvantages.

Damages: The winner of a copyright infringement case is entitled to his or her actual damages, as well as all profits the infringer made from the project. A prevailing plaintiff in a Desny claim, however, must prove the reasonable value of the ideas used by the defendant. If a submitter has no proven track record of having his or her work produced, the defendant will assert that damages are limited by the writer’s stature. Whereas if a producer has previously earned fees and backend participation in the past, damages will likely be greater.

However, some courts have held that damages should be based on the value of the idea to the defendant. Damages are problematic for rookie writers and producers in Desny claims, and a case may not be worth pursuing for this reason.

State court advantage: The Desny claim can be filed in state court, while copyright claims are limited to federal court. In California state court, a plaintiff may prevail if he convinces 9 out of 12 jurors. Federal courts require a unanimous jury verdict for a plaintiff to prevail.

Attorney fees: The prevailing party in a copyright case may be able to recover his or her attorney fees and costs incurred in the litigation. This could be in the hundreds of thousands of dollars. However, this award cuts both ways—an unsuccessful plaintiff could find himself bankrupted by these fees and costs. Attorney fees are not automatically given to the winning party, but are subject to the court’s discretion. The court must give substantial weight to the objective reasonableness of the losing party’s position before making such an award.

For example, in two recent trials involving songs by Marvin Gaye and Led Zeppelin, the courts used their discretion in denying the attorney fees award, finding that the case presented novel issues and the outcome of those issues was far from clear during the litigation.

Because of this issue, we commonly recommend that a plaintiff file only a Desny claim in state court, rather than filing an additional federal copyright claim.

Copyright claims require registration: A copyright claim is predicated on registration of the idea with the U.S. Copyright Office. An owner of intellectual property can’t recover statutory damages (minimum damages) or attorney fees unless the idea was registered with the copyright office three months before the disclosure or publication of the work. Copyright registration opens the door to these damages, which can be a valuable tool in obtaining a settlement.

Independent creation defense to Desny claim: The independent creation defense is the primary defense against a Desny claim. This defense allows the defendant to overcome a claim by affirmatively proving that any similarity is purely coincidental and that no use of the plaintiff’s idea occurred because the defendant’s project was independently created.

 

Making Submissions – Best Practices

The easiest way to protect ideas when making a pitch is to create a clear paper trail long before that meeting with a potential producing partner. Creating a paper trail begins with registering the idea. We recommend all treatments and scripts be registered with the U.S. Copyright Office immediately upon creation. The Writers Guild of America provides a registration service for use by the general public, as well as its members. The purpose of this registration is to establish the completion dates of material written for film and television. The registration provides a dated record of the idea, a date that will be the crux of any infringement or breach of contract action. In our opinion, registration with the Copyright Office is the way to go.

A “leave behind,” the written pitch, is and should usually be left with the person(s) being pitched.

The paper trail should continue after the pitch. Send a follow-up email to the recipient of the idea thanking the person who took the pitch. Again, this will help prove the timing of the submission.

Protection of the idea with this paper trail implicates more than payment for the idea. It also protects a potential writing credit. The importance of receiving a writing credit goes far beyond immediate monetary compensation. In the film and television world, the writing credit is particularly valuable and can be career-defining, as it performs a marketing function in that it helps to obtain work and helps set the writer’s “quote”, assists in negotiating for a higher rate of compensation once a job opportunity has been offered and can assist in obtaining additional compensation based on a substantial contribution to a project as reflected by the credit received.

 

Receiving Submissions – Best Practices

The recipient of ideas should also be concerned about possible claims of idea theft and should take steps to avoid such claims. The obvious first step is to refuse to accept unsolicited submissions of ideas. The second line of defense is use of a submission agreement, which should be fully executed before the contents of the submitted work are disclosed. These agreements will commonly include a provision stating that the person submitting the idea understands that the recipient may have a similar idea in progress. The submission agreement may also include a provision for mandatory mediation or binding arbitration in the event of a dispute, and a provision giving attorney fees to the prevailing party.

The downside of demanding mandatory arbitration is the cost. Another downside with commonly used arbitrators like JAMS, is the issue of potential institutional bias. (See Johnson & Johnson, “Hollywood Docket: One Sided World,” 27 New York State Bar Assn, Entertainment, Art and Sports Law Journal 23 (2016).) This article points out that the major studios love mandatory arbitration, and there is a perceived bias by arbitrators who are suspected of being more lenient in the hopes of garnering repeat business.

The submission agreement often is not required when the writer is established and represented by a reputable agent or attorney.

In conclusion, theft of ideas is commonplace, as are meritless lawsuits. Beware and do your best to protect yourself. Courtrooms are not the theatre in which you want your ideas to be played out.

 

Neville Johnson and Douglas Johnson are partners at Johnson & Johnson LLP, in Beverly Hills, CA, which specializes in entertainment litigation and transactions. Associate Ron Funnell assisted in writing the article.

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