User-Generated Content: Recent Developments 3 in Canada and the United States

A Publication of the ABA Forum on the Entertainment and Sports Industries

Volume 30, Number 2 November 2012

PROFILE Idea Submission Impossible? Outgoing The Battle between Copyright and Breach Editor-in-Chief of Contract Vered Yakovee By Shelly Rosenfeld BY TYRRELL DUPEY “There are only thirty-six fundamental dramatic situations, various facets of which form the basis of all human drama.”1 ered Yakovee did not always —Georges Politi, The Thirty-Six Dramatic Situations think she would get into sports Vlaw, but had always hoped that JERRY: So, we go into NBC, we tell them we’ve got an idea for a show about nothing. she would. “It has always been ‘I need to GEORGE: Exactly. make this happen,’ instead of ‘It will just JERRY: They say, “What’s your show about?” I say, “Nothing.” happen.’ I worked hard to learn about GEORGE: There you go. the industry and to meet people.” Her (A moment passes) hard work has paid off. Today, Yakovee is JERRY: (Nodding) I think you may have something there.2 a prominent lawyer in the areas of sports continued on page 22 and insurance coverage law. Even when applying to law school, Yakovee did so because she hoped she would work in sports, which were always A Brief Overview on Ticket a part of her life. In high school, playing basketball was central to her assimilation Scalping Laws, Secondary after she moved from Athens, Greece, to Los Angeles after ninth grade. In col- Ticket Markets, and the lege, she interned for San Diego’s ABC affiliate in the sports department, and sub- StubHub Effect sequently worked as a runner for ESPN’s X Games. After obtaining her Juris Doc- By Eric Schroeder, Josh Fisher, John Orbe, and John Bush torate from the University of Southern California (USC), Yakovee continued on Background and the Economics of Ticket Scalping that path, including volunteering for the he forces of supply and demand interact to help set the price on goods. In a Southern California Outrigger Racing perfect market situation, a good that is in limited supply, such as a ticket to Association (SCORA). T a baseball game, would be sold by the supplier for the highest price that the Yakovee first started volunteering for market can stand. However, ticket suppliers (i.e., teams) routinely sell tickets for less SCORA as its insurance coordinator. than the highest price the market can stand. There are various reasons for this prac- She read insurance policies for ade- tice, including the desire to have consistent sellouts or develop a sustainable fan base. quacy and figured out what an insurance continued on page 26 continued on page 32

1 • Published in Entertainment & Sports Lawyer, Volume 30, Number 2, November 2012. © 2012 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. Idea Submission Impossible

continued From page 1

Most shows are about “something.” And that “something,” However, this case illustrates the use of a breach of contract the substance of the pitch, treatment, or the submission, is why claim as a method for a writer who pitches a story to obtain both writers on the one hand, and TV networks and film studios relief. on the other, have so much at stake on the subject of idea sub- The California Supreme Court recognized that when a writer mission cases. If a writer pitches his story idea to a studio and submits material to a producer with the understanding that the is turned down, only to find a movie out in theaters years later writer will be paid if the producer uses the concept, the writer that embodies the same idea, what is the writer’s legal recourse? has either an express (by words) or implied (by conduct) con- At the same time, every time a movie is released, how worried tractual right to compensation. does a studio have to be that it will be inundated with lawsuits from writers? Copyright will not protect a concept for a TV [I]f the idea purveyor has clearly conditioned his offer to show or a movie, because there is no copyright protection for convey the idea upon the obligation to pay for it if it is an idea.3 But under certain circumstances, a writer may be able used by the offeree and that offeree, knowing the con- to claim that a contract has been breached between the writer dition before he knows the idea, voluntarily accepts its and the entity that uses his idea based on the theory that there disclosure . . . and finds it valuable and uses it, the law was a bilateral expectation of payment. This means that a writer will . . . hold that the parties have made an express (some- provides the idea to a producer with the understanding that the times called an implied-in-fact) contract . . . or will imply writer will be paid if the producer uses that idea. The two cir- a promise to compensate.11 cumstances where this may happen are either when the idea is presented for sale or when the parties would share the profits Aside from the express promise to pay, a contract claim based on from the exploitation of the idea. idea submission could “succeed . . . if ‘the circumstances preceding The recent decisions in Forest Park Pictures v. USA Televi- and attending disclosure, together with the conduct of the offeree sion, Inc., and Joe Quirk v. Sony Pictures Entertainment show that acting with knowledge of the circumstances, show a promise of the idea submission cases, also known as idea theft cases, are more type usually referred to as ‘implied’ or ‘implied-in-fact.’”12 That pro- relevant than ever. But to understand the issues behind these ducer has to have an opportunity to reject the offer or else he will lawsuits, it is most helpful to consider their context by examin- not be deemed to have accepted it. “The idea man who blurts out ing Desny v. Wilder, Montz v. Pilgrim Films, Grosso v. Miramax his idea without having first made his bargain has no one but him- Film Corp., and copyright preemption under § 301 of the Copy- self to blame for the loss of his bargaining power.”13 right Act. The Supreme Court denied certiorari for the Montz The court ruled in favor of Desny. Considering the facts, the decision in 2011.4 However, it is imperative that the Supreme court recognized that if Wilder used the benefit of the synopsis, Court take on the issue of idea submission so that Hollywood’s he would have to compensate Desny. “He who takes the ben- biggest battle scenes take place in theaters and on television efit must bear the burden.”14 The court explained that one of screens, and not in the courtroom. the secretary’s roles was to convey messages to Wilder such that “her knowledge would be [Wilder’s] knowledge.”15 Since she had Desny-Land the authority to transmit messages, including Desny’s synopsis of In Desny v. Wilder, the Supreme Court of California recog- his script and his offer to sell it, then the secretary certainly had nized “an implied contractual right to compensation when a the power to transmit the offer’s terms. writer submits material to a producer with the understanding The significance of the ruling in Desny is that it establishes that the writer will be paid if the producer uses the concept.”5 that just because something is not protectable by copyright does The California Supreme Court held that Desny “sufficiently not mean it is not protectable by a contract. But what about the pled the breach of an implied contract to pay for the use of his rights to a true story? Certainly Desny could not have a monop- idea.”6 Victor Desny wrote a script and called filmmaker Billy oly on the narrative of the events of Floyd Collins’s life story. Wilder’s office to pitch the idea.7 The story line was based on To answer that question, the Desny court cited Justice Holmes’s the true story of Floyd Collins, who was trapped in a cave and statement in a copyright case involving circus posters: “Oth- died before he was saved. Desny eventually dictated a summary ers are free to copy the original. They are not free to copy the of the script to Wilder’s secretary over the phone.8 He told the copy.”16 Desny’s script and Wilder’s movie had their roots in the secretary that Wilder could use the story if Wilder “paid him same story. The court stated that Wilder’s staff could have done ‘the reasonable value of it. . . .’”9 The secretary assured Desny their own research into the Floyd Collins story and turned their that “if Billy Wilder of Paramount uses the story, ‘naturally we discoveries into a script without paying Desny anything. But by will pay you for it.’”10 The Floyd Collins story did make it to the same token, the court argued, since Desny offered his synop- the big screen as the movie Ace in the Hole, starring Kirk Doug- sis for sale as a condition for the use of his idea, Wilder had no las. Desny sued to get the reasonable value of the story used in right to use his synopsis unless he paid for it.17 Wilder’s script. If this were merely a copyright issue, the analy- sis would be rather simple. The question would be whether the The Plot Thickens: Copyright Preemption movie script appropriated the expression of Desny’s synopsis. Copyright protection is very useful to writers in certain

22 • Published in Entertainment & Sports Lawyer, Volume 30, Number 2, November 2012. © 2012 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. circumstances, but in situations where it is the idea that needs such as NBC and the Sci-Fi Channel. Years later, Montz and protecting, not the expression, copyright law presents some Smoller brought the lawsuit against Pilgrim Films and NBC, challenges. Copyright protects an “original wor[k] of authorship alleging among other claims both copyright infringement and fixed in [a] tangible medium of expression.”18 Thus, if an idea breach of contract. is not written down, it does not fall within § 102(a)’s defini- The court in Montz also affirmed Grosso. Just as in Grosso, tion because it is not fixed in a tangible medium of expression. where the use of the idea was “condition[ed] . . . on payment,”27 Moreover, since copyright law does not protect ideas, the writer the court in Montz held that “conditioning use”28 of the idea could potentially protect his pitched idea by suing on a breach on “the granting of a partnership interest in the proceeds of the of contract claim if there was the understanding on both sides production”29 also formed the basis of a bilateral expectation of that he would be paid. In contrast, if an idea is written down, payment. In other words, the Ninth Circuit in Montz included copyright may prevent protection in two different ways because another way of expressing the bilateral payment expectation by it does not protect ideas even if written down and copyright finding that this requirement can be met by agreeing to divide may preempt a state claim of breach of contract. The way that the film or TV show’s profits.30 copyright preemption works, as described in Montz, is that The court held that the plaintiffs’ actions met the “offer for under § 301(a), the Copyright Act preempts state claims when sale” requirement. the plaintiff’s work “come[s] within the subject matter of copy- right and . . . the asserted state right is equivalent to any of the The Plaintiffs presented their ideas for the “Ghost exclusive rights within the general scope of copyright.”19 When Hunter” concept to the Defendants in confidence, pur- it comes to copyright preemption, despite the fact that copy- suant to the custom and practice of the entertainment right does not protect ideas regardless of whether they are fixed, industry, for the express purpose of offering to partner courts have held that “state-law protection for fixed ideas falls with the Defendant in the production, broadcast, and within the subject matter of copyright and thus satisfies the first distribution of the Concept. Accordingly, the Plaintiffs prong of the statutory preemption test.”20 The second prong of justifiably expected to receive a share of any profits and preemption is not fulfilled, since cases such as Grosso have held credit that might be derived from the exploitation of its that “the rights created under California law emanating from ideas and concepts for the Concept.31 Desny were qualitatively different from the rights protected by federal copyright law because a Desny claim includes an added Recent Sequels to Idea Submission Cases element: an agreement to pay for the use of the undisclosed ideas.”21 The Show Must Go On: Motion to Dismiss Not Granted This legal theory was advanced in Grosso v. Miramax Film Even before Premium Rush would hit movie theaters in Corp.,22 where the Ninth Circuit held that federal copyright law did August 2012, there had already been a big production about not preempt the implied contractual claim that Desny described. whether the defendants, Sony Pictures Entertainment, Inc., et Jeff Grosso wrote the screenplay The Shell Game and claimed that al. (Sony), engaged in idea theft from the plaintiff, Joe Quirk. Miramax stole his idea when it made Rounders, a movie about high- Quirk alleged that the movie used the idea from his novel Ulti- stakes poker starring Matt Damon.23 Although the court rejected mate Rush and that he was owed compensation for that use. In the copyright claim, saying the works were not “substantially sim- Joe Quirk v. Sony Pictures Entertainment, a federal judge in the ilar,” it held that copyright law did not preempt the breach of Northern District of California issued an order denying Sony’s contract claim.24 The contractual claim as explained in Grosso and motion to dismiss, stating that Quirk adequately “alleged facts Montz, which will be described later, requires a bilateral expecta- under which an implied contract plausibly could arise.”32 tion, meaning an expectation on both sides that the party will be Even before his action-packed novel was published in 1998, paid if his or her idea is used. This “bilateral understanding of pay- Quirk stated that he worked with an agent to send book cop- ment” constitutes an additional element that transforms a claim ies and synopses throughout the entertainment industry. The from one asserting a right exclusively protected by federal copyright named defendants in the present motion to dismiss, however, law to a contractual claim that is not preempted by copyright law.25 argued that they never received a copy of Quirk’s book. In The decisions in Grosso and Montz are favorable to writers, who can addition to Sony, the named defendants included Pariah, a pro- rely on copyright law to protect expression in their scripts, and rely duction company involved in making the film, as well as two on breach of contract claim to protect their ideas if they can prove a of the screenplay’s co-writers: director David Koepp and John bilateral expectation of payment. Kamps. Sony also is the parent company to Columbia Pictures Industries, Inc., and Quirk claimed that Columbia Pictures The Big Picture: Desny More than 50 Years Later received a copy of the book and also heard a pitch about mak- The specter of Desny came back to haunt a lawsuit involving ing the book into a movie. But even if that was the case, Quirk the show Ghost Hunter. The court in Montz held that “copy- had not yet proved that Sony or the other named defendants right law does not preempt a contract claim where plaintiff ever did. Rather, Quirk argued that the named defendants in alleges a bilateral expectation that he would be compensated the motion to dismiss had access to the book since Quirk and for use of the idea.”26 Larry Montz was a parapsychologist who his agent widely distributed it throughout Hollywood. Yet, as we conceived of a show featuring paranormal investigations in the have explored in the earlier cases, access is not enough. There field. Montz pitched the idea with publicist and producer Daena still has to be the bilateral expectation of payment, whether Smoller, providing screenplays and videos to several outlets express or implied. The court held that Quirk will eventually

23 • Published in Entertainment & Sports Lawyer, Volume 30, Number 2, November 2012. © 2012 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. “have to prove not only that a copy of the novel originally pro- to honor Forest Park’s exclusive rights under the Copyright vided by his agent ended up in the Moving Defendants’ hands, Act . . . it requires USA Network to pay for the use of Forest but also that each person who accepted it along the way did so Park’s ideas.”39 The court concluded that a breach of contract with the expectation that payment would be due if the ideas claim that has a promise to pay is “qualitatively different” from were utilized.”33 On the other hand, the defendants were not a copyright infringement lawsuit, such that the second prong is necessarily protected just because Quirk may not have submit- not fulfilled and the claim is not preempted by copyright. ted the book directly to them. The court held that there are Also, Sepiol scheduled the meeting “for the express pur- situations where “the expectation of payment may survive the pose of hearing Plaintiffs[’] pitch.”40 The court stated that USA transfer of a book from one person or entity to another.”34 Network and Sepiol knew that the industry standards are such Moreover, in the late 1990s, Warner Bros. obtained an that writers pitch ideas to producers to literally sell the idea and option to make a movie from the book and paid for a writer, expect to be paid if the idea is used. Specifically with regards to Jason Hefter, to write a screenplay based on the book.35 The the meeting, “[i]t was understood that Plaintiffs were pitching option expired and Quirk had no copyright in the screen- those ideas with the object of persuading USA Network to pur- play. This meant that Quirk could not bring a copyright claim chase those ideas for commercial development.”41 Even though against the filmmakers for their use of the screenplay’s copy- Forest Park did not expressly condition disclosure upon payment righted expression. Furthermore, the court stated, Quirk also if the idea was used, the court held that if Forest Park was able was prevented from bringing a claim for theft of ideas that to prove the allegations in the complaint, then USA Network the film adapted from the screenplay that are not in Quirk’s “knew or should have known such a condition was implied.”42 book.36 If the movie used ideas from the screenplay that were The reasons included the fact that Forest Park claimed that the not in Quirk’s book, Quirk would likely still have to prove purpose of pitching the ideas was to sell them, that USA Net- that there was a bilateral expectation of payment in order to work and Sepiol both knew that writers pitch with the purpose pursue a Desny claim. of selling their ideas, and that this was the industry standard.43 More specifically, Sepiol permitted Forest Park to pitch the Show and Tell: Forest Park Pictures v. Universal Television ideas without interrupting its presentation, and had conversa- Network, Inc. tions with the production company after the pitch. The reach of idea submission cases extends nationwide. In Forest Park Pictures v. Universal Television Network, Inc., the Conclusion: Coming Soon to a Courtroom Near You issue was whether the Copyright Act preempted a breach of contract claim when the idea was written down. Forest Park had In Hollywood, writers commonly submit copyrighted appealed an order from the United States District Court for the scripts to producers with the understanding that if the Southern District of New York, which granted Universal Tele- script is used, the producer must compensate the writer vision Network’s motion to dismiss on the basis that copyright for the use of the copyrighted material. But what happens law preempted Forest Park’s breach of contract claim. In June when the producer uses the idea or concept embodied in 2012, the Second Circuit Court of Appeals held that copyright the script, but doesn’t pay?44 law does not preempt a breach of contract claim when there is a promise to pay for the use of an idea. The court held that Forest This is the context in which idea submission cases tend to Park “adequately alleged the breach of a contract that included arise. As this article has explained, Desny v. Wilder found that an implied promise to pay.”37 there was an implied contractual right for a person to receive In Forest Park Pictures, Hayden Christensen, an actor, and payment when the writer submits the idea to a producer with his brother Tove, ran a production company called Forest Park the understanding on both sides that the studio will pay the Pictures (Forest Park), which sued a division of the Universal writer if the producer uses the idea. Both Montz v. Pilgrim Television Network known as USA Network. In 2005, For- Films and Grosso v. Miramax Film Corp. found that copyright est Park came up with an idea for a show titled Housecall. The law does not preempt breach of contract claims because there premise was based on a doctor who was kicked out of a medi- is the additional element of a bilateral expectation of pay- cal community because he serviced indigent patients who could ment. While each outcome depends on the specific facts of not pay their medical bills. The doctor subsequently moved to the case, the rulings in the idea submission cases mean that Malibu, California, and “became a ‘concierge doctor’ to the rich the writers in Forest Park Pictures v. USA Television, Inc., and and famous.”38 A concierge doctor is a doctor who makes house- Joe Quirk v. Sony Pictures Entertainment will be able to at least calls, hence the name of the show, Housecall. have the law on their side, meaning that their breach of con- Forest Park developed the idea into a series treatment, which tract claims are not preempted. it mailed to Alex Sepiol of the USA Network. The treatment With technology and content closely intertwined, there further explained the concept with story lines and character is a need to provide further content on additional platforms, biographies. For purposes of the preemption analysis, although no longer on just the airwaves and movie screens, but also copyright does not protect ideas, the treatment that embodied on computer screens and mobile devices. Although indus- the ideas certainly amounted to a work of authorship fixed in a try standard in Hollywood seems to be that pitch meetings tangible medium. Thus, the first prong of preemption was ful- are generally understood on both sides to be about selling the THE DATES! SAVE filled. For the second preemption prong, the court held that idea, which certainly helps in proving an implied breach of “[t]he alleged contract does not simply require USA Network contract claim, it is important for producers to be aware of

24 • Published in Entertainment & Sports Lawyer, Volume 30, Number 2, November 2012. © 2012 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. the situations they may encounter and how best to protect 13. Desny, 46 Cal. 2d at 739. themselves. Writers also can take certain steps before disclos- 14. Id. at 745. ing their ideas to ensure that if a producer uses an idea, it will 15. Id. at 727. have to pay the writers. Even if there is no express condition, 16. Id. at 742. courts look to industry standard and the specific actions of the 17. Id. parties that would indicate whether there was an implied con- 18. See 17 U.S.C. § 102(a). tract. When it comes to films and television shows, there is a 19. Montz, 649 F.3d at 979. lot of money and fame at stake for both sides, so writers can 20. Id. and will bring lawsuits to protect their ideas if they believe 21. Id. at 980. they can rely on the breach of contract claims. v 22. Grosso, 383 F.3d at 965. 23. Id. at 967. Shelly Rosenfeld is an associate in the Los Angeles office of Lewis Brisbois 24. Id. at 967–68. Bisgaard & Smith, specializing in intellectual property and technology. 25. Montz, 649 F.3d at 977. Before becoming an attorney, Ms. Rosenfeld worked as a television anchor 26. Id. and reporter. Special thanks to Stephen Weizenecker, a partner with Lewis 27. Id. at 978. Brisbois Bisgaard & Smith, for his guidance on this article. Ms. Rosenfeld 28. Id. can be reached at [email protected]. 29. Id. 30. Id. Endnotes 31. Id. 1. Desny v. Wilder, 46 Cal. 2d 715, 741 (1956). 32. Quirk v. Sony Pictures Ent., No. 3:11-CV-03773-RS, at 1 (N.D. Cal. Jul. 2. Larry David, “The Pitch,” Seinfeld, Season 4, Ep. 3, IMSDb (Internet 5, 2012) (order denying motion to dismiss). Movie Script Database), http://www.imsdb.com/transcripts/Seinfeld-The-Pitch. 33. Id. at 6. html (last visited July 25, 2012). 34. Id. 3. See 17 U.S.C. § 102. 35. Id. at 3. 4. Grosso v. Miramax, 383 F.3d 965 (9th Cir. 2004). 36. Id. at 6–7. 5. Montz v. Pilgrim Films, 649 F.3d 975, 976 (9th Cir. 2011). 37. Forest Park Pictures, 683 F.3d at 428. 6. Id. at 979. 38. Id. 7. Desny, 46 Cal. 2d at 726. 39. Id. at 432–33. 8. Id. 40. Id. at 428. 9. Id. at 727. 41. Id. 10. Id. 42. Id. at 435. 11. Id. at 739. 43. Id. 12. Forest Park Pictures v. Universal Television Network, Inc., 683 F.3d 424, 44. Montz, 649 F.3d at 976. 434 (2d Cir. 2012).

Live Webinar and Teleconference: Video Game and Digital Media Winning by Spinning? The Ethics of Conference Litigating Cases in the Media June 10, 2013 November 27, 2012, 1:00 pm – 2:30 pm EST Los Angeles, CA

Second Annual Entertainment Law Third Annual Nashville for Technology Companies Entertainment Law Symposium Spring 2013 September 2013 Nashville, TN San Francisco, CA

Fourth Annual International Legal Symposium on the World of Forum Annual Meeting Music, Film, Television, and Sports October 3–5, 2013

SAVE THE DATES! SAVE May 2–3, 2012 Ritz Carlton New York Battery Park The Palms Hotel and Spa Miami Beach, FL New York, NY

25 • Published in Entertainment & Sports Lawyer, Volume 30, Number 2, November 2012. © 2012 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.