Though it probably has nothing to with a high count of Midi-Chlorians, Hayden Christensen—the actor that played Darth Vader in the Episodes 2 and 3 of George Lucas’s Star Wars series—had the law in the Second Circuit clarified and reversed in his favor. In what could signal a shift in copyright preemption cases, the Second Circuit this week held that state law “implied in fact” contracts are not preempted by the Copyright Act. In rendering its decision in Christensen’s favor in Forest Park Pictures v. Universal Television Network, Inc., 11-cv-2011 (2d Cir Jun 26, 2012), the Second Circuit joins the Ninth Circuit in taking a narrower view of the application of Copyright Act preemption to state law claims.
Copyright Act preemption typically has been described as a “magic bullet” against plaintiffs who could not articulate a valid copyright infringement claim (a decision by the Southern District in New York from May and discussed here, held that New York’s unfair competition law would be preempted under certain circumstances). In Forest, for example, as explained below, Christensen claimed that Universal Television Network stole his idea for a television series. However, the facts alleged by Christensen in the complaint, in both its original and amended forms, probably could not support a claim for copyright infringement. As such, Christensen brought a claim under California state law—and, not surprisingly, Universal reached for the well-known solution, preemption.
Section 301 of the Copyright Act specifically preempts state law claims under certain circumstances. Courts generally apply a two part test for determining whether a state law is by the Copyright Act: (1) whether the subject matter of the state law right falls within the subject matter of the Copyright Act (the “subject matter requirement”) and (2) whether the right asserted under state law is equivalent to the exclusive rights protected by federal copyright law (the “equivalency requirement”). Only the second prong is relevant here, as it was the basis for the Second Circuit’s reversal.
In Forest, Christensen alleged that he developed an idea for a television series titled Housecall. According to Christensen, Housecall was a series about a doctor who, after being expelled from the medical community for treating impecunious patients, moves to Malibu and becomes a “concierge” doctor. According to the complaint, Christensen created materials, including character biographies, concepts, themes, and plot/story lines for the Housecall television series, and pitched the concept to Universal by sending the materials to and meeting with the network. Eventually, however, Universal rejected Housecall. Then in 2009, USA Network, which is owned by Universal, began broadcasting Royal Pains, a television show about a doctor who, is expelled from the from the medical community for treating patients unable to pay for medical services and relocates to the Hamptons to become a concierge doctor.
In support of the implied in fact contract, Christensen claimed the existence of an entertainment industry convention that writers and creators pitch creative ideas to television networks for the purpose of selling those ideas to the networks. Christensen further asserted that the television networks—including Univeral—were aware that Christensen and other creators have an expectation that the networks will compensate creators if the networks wind up using the creators’ ideas.
Judge Colleen McMahon of the Southern District of New York found that Christensen’s implied in fact contract claim was preempted. Neither side seriously disputed that the first prong of the preemption test—the subject matter test—as the screenplay and attendant materials clearly are the type of works that copyrights typically protect. As to the second factor, Judge McMahon held that the “breach-of-implied-contract claim based on [the] alleged right to be compensated for the use of [an] idea for a television series is equivalent to the exclusive rights protected by the copyright law and is therefore preempted by the Copyright Act.” Simply put, Judge McMahon ruled that if Christensen wanted to be compensated for the use of his work, his remedy was through the Copyright Act.
Interestingly, about a week before Judge McMahon’s opinion, the Ninth Circuit reached a contrary conclusion in Montz v. Pilgrim Films,649 F.3d 975 (9th Cir. 2011), based on very similar facts against the same defendant. The Montz plaintiffs pitched an idea for a television series following a team of paranormal investigators in various locations using devices to detect paranormal activity. They met with NBC Universal executives and personnel a number of times before the studio indicated it was not interested. Three years later NBC Universal began broadcasting the television show Ghost Hunters, which followed a team of paranormal investigators in various locations using devices to detect paranormal activity.
In Montz the Ninth Circuit reached a different conclusion than Judge McMahon’s with respect to the application of the “equivalency requirement” to a breach of implied contract claim. The Ninth Circuit found that this requirement was not met because a breach of implied contract asserts rights qualitatively different from rights protected by copyright. According to the Ninth Circuit a breach of implied contract claim requires proof of an extra element beyond copyright; namely an agreement by the defendant to pay the plaintiff for the use of a concept. NBC Universal unsuccessfully sought Supreme Court review of Montz, noting that, among other things, the Ninth Circuit treats preemption differently than Courts in the Second Circuit.
In reversing Judge McMahon’s decision, the Second Circuit specifically followed Montz. The Second Circuit found that the “equivalency requirement” was not met, holding that there were qualitative differences between implied-in-fact contract claims on the one hand and copyright infringement claims on the other hand. The Second Circuit explained that there is no express right to receive payment under the Copyright Act (only the right to prevent certain uses and then to cede that right in exchange for payment), and that a breach of an implied-in-fact contract therefore requires proof of extra elements beyond “use” or “copying” as a copyright claim would require. It also noted that a claim for payment under an implied in fact contract asserts a right against one party in particular (i.e. the contracting part), whereas copyright infringement is the assertion of a claim against the public at large. Although the Second Circuit narrowed the application of the law of copyright preemption, it also harmonized application of the law, mapping a more clear course for plaintiffs and defendants on both coasts.