Major players in the entertainment industry should be aware of the US Court of Appeals for the Ninth Circuit’s recent decision in Montz v. Pilgrim Films & Television, Inc., 649 F.3d 975 (9th Cir. 2011), a case regarding a pitch for a television show concept. The court’s decision indicates that meetings where third parties pitch an idea for a television show or movie to a television network, movie studio, or production company can create an implied contract or confidential relationship. Furthermore, the decision suggests that the use of the television show or movie concept without compensation/credit to the person who pitched the idea can result in state law-based breach of contract and breach of confidence claims. Notably, these state law claims can proceed in the Ninth Circuit even if the underlying copyright claims cannot, because the Ninth Circuit holds such state law claims are not preempted by the Federal Copyright Act. The Montz decision is of great importance not only because the Ninth Circuit hears a large number of idea submission cases thanks to its proximity to Hollywood, but also because it has exacerbated a circuit split over the preemption question that may soon be addressed by the US Supreme Court.

In Montz, the plaintiffs, Larry Montz and Daena Smoller, claimed that they pitched an idea for a television show to NBC Universal and the Sci-Fi Channel (together with other entities, the “defendants”), regarding a team of paranormal investigators that look into claims of paranormal activity. The plaintiffs alleged that the pitch was made in keeping with standard industry practice, whereby they submitted the idea for the purpose of partnering with the defendants and with a justifiable expectation of a share of the profits and credit if the defendants exploited the idea. Three years after the pitch, when the Sci-Fi Channel (now known as the SyFy Channel) launched the Ghost Hunters television series, which follows a team of paranormal investigators who explore claims of paranormal activity, the plaintiffs sued the defendants alleging copyright infringement as well as state law-based breach of implied contract and breach of confidence claims.

The defendants argued that the Federal Copyright Act preempted the state law claims, an argument that both the US District Court for the Central District of California and a panel of the Ninth Circuit accepted. However, sitting en-banc, the Ninth Circuit reversed the district court and panel decisions and found that such claims were not preempted. The court noted that the Copyright Act preempts state claims where the plaintiffs' work “comes within the subject matter of copyright” and the state law grants “legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright.” The appeals court found that a pitch for a television series that is fixed in a tangible medium of expression (in this case screenplays, videos, and similar formats) was within the subject matter of copyright. The Ninth Circuit then determined that breach of implied contract and breach of confidence claims were not “equivalent” to any of the exclusive rights of copyright holders because they included an “added element,” namely an implied agreement that the defendants would pay for the use of the plaintiffs’ idea in the breach of implied contract claim, and a duty of trust or confidential relationship in the breach of confidence claim. Thus, even though the copyright claims could not proceed because “a concept for a film or television show cannot be protected by a copyright,” the breach of implied contract and breach of confidence claims could proceed.

In August, concerned about the repercussions of the Ninth Circuit’s decision, the defendants filed a writ of certiorari with the US Supreme Court. The defendants noted that the Second and Fourth Circuits find such state law claims are preempted, but the Ninth Circuit does not, resulting in a circuit split and confusion among the lower courts. Multiple parties are seeking leave to file amicus briefs in the matter.

As previously stated, the Montz case and the uncertainty over the preemption issue should be of great interest to many major players in the entertainment industry, including television networks, movie studios, and production companies, because they receive pitches for new shows and movies regularly. In the Ninth Circuit, and potentially elsewhere, such pitch meetings may create implied contracts or confidential relationships that the networks, studios, and production companies must honor. In the Second and Fourth Circuits, where such state law claims are preempted, plaintiffs have a much harder time succeeding in court because the Copyright Act’s “substantial similarity” test is harder to satisfy than the elements of the state law claims.