Making the Perfect Pitch

New York State Bar Association - Entertainment, Arts and Sports Law Journal

Fall/Winter 2017

By Neville Johnson and Douglas Johnson

Introduction

Theft of idea and copyright litigation keep lawyers very busy, as dishonesty involving literary property is very real. Hollywood's 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. How, then, 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? 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 the 1950s in the seminal case Desny v. Wilder.1  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 that 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 that she could take it down in shorthand, and he did. The secretary told Desny that 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 histori- cal material on Floyd Collins. 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 submis- sion 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 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.2

A plaintiff suing for breach of implied-in-fact contract relating to an idea submission must prove that (1) he or she conditioned his or 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 or her, voluntarily accepted its disclosure, and (3) the defendant found the idea valuable and used it.3

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 who he or she just met at a bar, then there is no contract.4  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 an 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.

“Where a producer has previously earned executive producer fees and backend participation in the past, damages will likely be greater.”

Two elements are required to raise the inference of use: the defendant had access to the plaintiff's idea and copied it.5. Copying can be demonstrated by showing that the defendant's work is substantially similar to the plaintiff's idea.

Where a writer or producer conveys an idea to a potential purchaser, and the defendant produces a productsimilar to that idea, an inference arises that recipient used the idea.6  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, and could range from a mere basic theme up to an extensively elaborated idea.7

Access to the idea is proven if one is able to show the person creating the movie had an opportunity to view or copy the plaintiff's work.8 Access can also be established if the recipient of the idea was an individual in a position to provide suggestions or comment to a supervisory employee, or an employee within the unit from which the defendant's work was developed.9. However, a court recently dismissed a case where a project had been submitted to a major agency and another agent there could have had access to it, on the basis that this was too speculative.10

The substantial similarity requirement in a Desny claim is much lower than in a copyright case. Substantial similarity in Ninth Circuit copyright cases is subject to a much more rigorous test involving both extrinsic and intrinsic similarity:                      Proof of the substantial similarity is satisfied by a two-part test of extrinsic similarity and intrinsic similarity. Initially, the extrinsic test requires that the plaintiff identify concrete elements based on objective criteria. The extrinsic test often requires analytical dissection of  a work and expert testimony. Once the extrinsic test is satisfied, the factfinder applies the intrinsic test. The intrinsic test is subjective and asks “whether the ordinary, reasonable person would find the total concept and feel of the works to be substantially similar.”11

Likewise, in the Second Circuit, substantial similarity is complex, requiring that the copying be both qualitatively and quantitatively sufficient to conclude that actionable copying has occurred.12.  The qualitative component concerns the copying of expression, rather than ideas, a distinction that often turns on the level of abstraction at which the works are compared. The quantitative component generally concerns the amount of the copyrighted work that is copied.13

New York alos recognizes Densy-type claims.14  New York law adds an extra element: an idea must be novel to the buyer for an implied-in-fact contract to exist.15

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, including emails, computer hard drive searches, and witness depositions. While a Desny claim and a copyright claim may be brought simultaneously, both have 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.16. A prevailing planitiff in a Desny claim, however, must prove the reasonable value of the ideas used by the defendant. Where 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. Where a producer has previously earned executive producer 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 of the idea to the defendant.17. 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 or she convinces nine out of the 12 jurors. In New York state court, a verdict may be rendered by five out of the six 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 him or herself 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.18

For example, in two recent trials involving songs by Marvin Gaye and Led Zeppelin, the courts used 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.19. Due to this issue, a plaintiff may be better filing only a Desny claim in State court.

“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.”

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 cannot 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.20. Copyright registration opens the door to these damages, which can be a big stick 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.21

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 the producer. Creating a paper trail begins with registering the idea. It is advisable that 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.

A “leave behind,” the written pitch, is and should usually be left with the person(s) being pitched. In addition, the paper trail should continue after the pitch, such as sending 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, and helps set the “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.22  Credits are of “extreme and vital importance,” and are “the lifeblood in this industry.”23

Receiving Submission—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 arbitra- tion is the cost. Another downside with commonly used arbitrators like JAMS is the issue of institutional bias.24  The submission agreement is often not required when the writer is established and represented by a reputable agent or attorney.

Conclusion

Theft of ideas is commonplace, as well as meritless lawsuits. It is advisable for one to be aware and do the best to protect one's client. Courtrooms are not the theatre for ideas to be played out.

Endnotes

1. 46 Cal.2d 715, 731 (1956).

2. Id. at 733-34.

3. Id. at 738-39.

4. See id. at 739.

5. Sutton v. Walt Disney Productions, 118 Cal.App.2d 598, 603 (1953).

6. Hollywood Screentest of America, Inc. v. NBC Universal, Inc., 151 Cal. App.4th 631, 646 (2007).

7. Golding v. R.K.O. Pictures, 35 Cal.2d 690, 695 (1950); Fink v. Goodson- Todman Enterprises, Ltd., 9 Cal.App.3d. 966, 1007-08, fns. 14, 15 (1970).

8. Meta-Film Assocs., Inc. v. MCA, Inc., 586 F. Supp. 1346, 1355 (C.D. Cal. 1984).

9. Id. at 1357.

10. Counts, et al. v. Meriwether, et al., U.S. District Court for the Central District of California, Case No. 14-cv-000396.

11. Three Boys Music Corp. v. Bolton, 212 F.3d 477, 485 (9th Cir. 2000) (citations omitted).

12. Castle Rock Entertainment, Inc. v. Carol Pub. Group, Inc., 150 F.3d 132, 138 (2d Cir. 1998).

13. Ringgold v. Black Entertainment Television, Inc., 126 F.3d 70, 75 (2d Cir. 1997).

14. Downey v. General Foods Corp., 31 N.Y.2d 56 (1972); Nadel v. Play-By- Play Toys & Novelties, Inc., 208 F.3d 368, 376 (2d Cir. 2000).

15. See e.g., Am. Bus. Training v. Am. Mgmt. Ass'n, 50 A.D.3d 219 (1st Dept. 2008).

16. 17 U.S.C. § 504(b).

17. See Donahue v. United Artists Corp., 2 Cal. App.3d 794, 804 (1969).

18. Kirtsaeng v. John Wiley & Sons, Inc., 136 S. Ct. 1979 (2016).

19. Williams, et al. v. Gaye, et al., U.S. District Court for the Central District of California, Case No. 13-cv-06004; Skidmore v. Led Zeppelin, et al., U.S. District Court for the Central District of California, Case No. 15-cv-03462.

20. 17 U.S.C. § 412.

21. Hollywood Screentest of Am., Inc. v. NBC Universal, Inc., 151 Cal. App.4th 631, 646-47 (2007); Mann v. Columbia Pictures, Inc., 128 Cal. App.3d 628, 650-51 (1982).

22. Selz, et al., Entertainment Law (Thomson Reuters, 3d Ed. 2016) § 22:15; see § 22:23 (“The fact that the recipient's billing is well- known due to past successes can justify more money than would be paid for the same rights, money or services from someone not as famous”).

23. Id. at § 22:15.

24. 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 it is believed will be more lenient on them so as to garner repeat business.

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

Reprinted with permission from: Entertainment, Arts and Sports Law Journal, Fall/Winter 2017, Vol. 28, No. 3, published by the New York State Bar Association, One Elk Street, Albany, NY 12207.