USDC N.D. California, July 5, 2012

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  • District court denies motion to dismiss breach of implied contract claim alleging that defendants used plaintiff’s novel Ultimate Rush, and screenplay derived from his book, in creating motion picture Premium Rush, finding that plaintiff adequately alleged facts under which a Desny claim plausibly could arise, notwithstanding that plaintiff did not allege that his novel was submitted directly to any of the moving defendants.

Plaintiff Joe Quirk brought suit for copyright infringement and breach of implied contract against a number of defendants, asserting they used his 1998 novel Ultimate Rush and a screenplay derived from the book (commissioned by a motion picture studio not named as a defendant in the case) as the basis for the motion picture Premium Rush. Defendants brought a motion to dismiss arguing that Quirk could not pursue his claim for breach of an implied contract against those defendants that were not alleged to have directly received a copy of his novel as part of his agent’s efforts to obtain a movie deal. The district court denied defendants’ motion, finding that while it was “far from clear” that he ultimately would be able to prevail on his claim of breach of implied contract based on any use by defendants of either the novel or a screenplay derived from the novel, Quirk had adequately alleged facts under which an implied contract plausibly could arise.

Quirk wrote his novel between 1994 and 1997. Prior to its publication in 1998, Quirk’s agent allegedly distributed pre-release copies and synopses of the novel widely “among entertainment industry participants.” Of the named defendants, however, only Columbia Pictures Industries, Inc. (not a party to the motion to dismiss) allegedly received a pre-release copy and entertained a “pitch” of a possible film project based on it directly from Quirk’s agent. In his complaint, Quirk alleged in detail a number of “relationships” between the defendants and others in the motion picture industry, in support of his theory that a copy of the novel or the notion of making it into a film, or both, passed through one or more routes between those to whom his agent submitted the novel directly and the defendants. In the late 1990s, Warner Brothers (not a defendant) also obtained an option to make a film from Quirk’s novel and commissioned a screenplay (the Hefter Screenplay), which Quirk alleged circulated widely throughout the industry. Acknowledging that he owns no copyright in the Hefter Screenplay, Quirk asserted that because it is a derivative work of the novel, it cannot be used as the basis for a film without his consent, and that the Premium Rush script bears evidence of copying from both from the Hefter Screenplay and his novel.

Defendants argued that Quirk could not state a claim for breach of an implied contract to compensate him for the use of his novel because he did not submit his novel to any of the defendants directly, under circumstances that would warrant finding a "bilateral expectation" of compensation, as required by the California Supreme Court’s decision in Desny v. Wilder and Ninth Circuit cases applying it. In other words, according to the district court, defendants argued that “unless a writer can show that he gave a work directly to an individual defendant, or to an employee or agent of a corporate defendant with express authorization to bind the entity, there can never be a claim sounding in implied contract.” Quirk argued for a much broader rule permitting a plaintiff to bring a Desny claim “whenever a plaintiff can ‘trace’ a copy of a work allegedly used by a defendant, back to the recipient of plaintiff's initial movie proposal, notwithstanding the number of intervening hands that touched it.”

The district court declined to accept either argument, noting that neither party pointed to controlling precedent directly addressing the issue. Noting that the essence of an implied contract claim is a “bilateral understanding” that the use of the idea requires compensation, the district court rejected Quirk’s theory that all he needs to do is “trace” a particular copy of his novel found in defendants’ possession to one that was submitted in a context that might support an implied contract, stating that Quirk ultimately would have to prove not only that a copy of the novel originally provided by his agent ended up in the defendants' hands, but also that “each person who accepted it along the way did so with the expectation that payment would be due if the ideas were utilized.” The court also rejected defendants’ argument, however, that Quirk could not maintain an implied contract claim based only on the fact that they were not the precise entities to which Quirk’s agent allegedly submitted the novel. According to the court: “There are circumstances under which the expectation of payment may survive the transfer of a book from one person or entity to another.”

Noting that Quirk’s allegations that his novel was transferred with such a bilateral expectation were both conclusory and speculative, and that Quirk conceded that he needed to develop additional facts through discovery to support his theories, the court nevertheless concluded that dismissing Quirk’s claims prior to the development of a more complete factual record would be inappropriate, particularly because Quirk’s allegations relating to the Hefter Screenplay more strongly supported the inference that any person or entity receiving a copy of the screenplay would have had an expectation that using it would require compensation, and that Quirk had alleged sufficient facts to warrant the presumption that the defendants had used the Hefter Screenplay in developing Premium Rush.

Recognizing that Quirk does not own a copyright in the screenplay, the district court held that Quirk could not pursue an infringement or implied contract claim to the extent defendants’ film contained protectable elements of expression or ideas found in the screenplay but not the novel. The court held, however, that the moving defendants had not met their burden of establishing, as a legal matter, that the author of an underlying work uses his right to pursue a Desny claim where the ideas embodied in the underlying work happen to be transmitted to the defendants through the vehicle of a derivative work.