Intellectual Property

Westlaw Journal INTELLECTUAL PROPERTY

Litigation News and Analysis • Legislation • Regulation • Expert Commentary VOLUME 26, ISSUE 8 / JULY 31, 2019

EXPERT INTERVIEW WHAT’S INSIDE

PATENT 9 Fishing-lure patent Q&A: Entertainment attorney James application revived on appeal In re Rudy (Fed. Cir.) Sammataro on the impact of the ‘idea 10 Google accused of ripping off submission’ lawsuit involving ‘Stranger Things’ digital ad technology in U.S. lawsuit By Patrick H.J. Hughes Impact Engine v. Google (S.D. Cal.) The brothers Matt and Ross Duffer began working on a project in 2010 that became 10 Tourniquet patent holder’s the “Stranger Things” series launched on Netflix in July 2016. suit to proceed against medical supplier Filmmaker Charlie Kessler claimed he pitched a Composite Resources v. Recon film concept at the 2014 Tribeca Film Festival to Medical (D. Nev.) the Duffer brothers. DESIGN PATENT The pitch was based on his short film “Montauk,” 11 In win for Ford, Fed Circuit produced in 2012, about a government facility won’t extend ‘functionality’ performing top-secret experiments involving the defense to patent law supernatural. Kessler pitched the idea for a full- Automotive Body Parts Association v. Ford Global length film. Technologies (Fed. Cir.) In April 2018, Kessler filed a lawsuit in REUTERS/Mario Anzuoni Los Angeles federal court claiming the Duffer "Stranger Things" creators Ross (L) and Matt (R) Duffer pose at the COPYRIGHT premiere for the second season of the Netflix series in Los Angeles on 12 $18 million verdict in slot- brothers breached an implied contract in creating Oct. 26, 2017. “Stranger Things.” Kessler v. Duffer, No. BC700197, machine copyright row stands Thomson Reuters: What is the general legal complaint filed (Cal. Super. Ct. Apr. 2, 2018). GC2 Inc. v. International Game framework involving idea-submission cases Technology (N.D. Ill.) The Duffer brothers moved for summary as opposed to a copyright infringement case? 13 Marvel defeats copyright lawsuit over ‘Iron Man 3’ judgment, but the court denied the motion. For instance, what legal theories do plaintiffs poster The litigation ended in May, when Kessler generally rely upon in an idea-submission case? Horizon Comics Productions dropped his case and announced to James Sammataro: Claims for copyright v. Marvel Entertainment (S.D.N.Y.) Deadline.com that his work “had nothing to infringement and idea misappropriation are often do with the creation of ‘Stranger Things.’” filed in tandem. Federal law governs copyright, TRADEMARK CONTINUED ON PAGE 7 14 BlackRock sues California real estate investment company over similar name EXPERT ANALYSIS BlackRock Inc. v. Black Rock Funding Corp. (S.D.N.Y.)

INSURANCE When can exclusive patent licensees sue in 15 Coffee roaster on its own for fake ‘Kona’ coffee suits, their own name? insurers say Travelers Indemnity Co. of Venable LLP attorneys Christopher E. Loh and Frederick C. Millett discuss the America v. Luna Gourmet standing requirement for patent licensees bringing suit and say what those entering Coffee & Tea Co. (D. Colo.) into patent license agreements should do. SEE PAGE 3

42539679 ’Stranger Things’ his idea? (vii) Did the defendant have the JS: The denial of the Duffers’ summary CONTINUED FROM PAGE 1 opportunity to prevent disclosure? judgment motion was so startling because TR: What are the types of facts that can the underlying fact pattern had all the hallmarks of a doomed case. The “meeting” but state law governs idea-submission law prove dispositive in an idea-submission case? was the classic, happenstance cocktail pitch. with five interrelated theories: property, JS: A plaintiff must establish facts express contract, implied contract, unjust demonstrating: that she prepared a work (a There was no existing relationship between enrichment/quasi-contract, and confidential script, spec, treatment or otherwise); that she Kessler and the Duffers. relationship. clearly conditioned her offer to disclose the There was no pre-arrangement. Kessler These theories have been inconsistently idea upon an obligation to be compensated testified that he did not know that the Duffers applied by state courts exercising their if the recipient uses the idea; the recipient would be attending the party. express or implied powers to fashion justice used the idea without compensating her; The meeting occurred in a social setting (at based on the particular facts in front of them. the recipient had the opportunity to reject a cocktail party), not on a studio lot. The the attempted disclosure if the conditions Consequently, the case law is all over the conversation was brief, 10 to 15 minutes. of tender were unacceptable; and the place, affording different levels of protection reasonable value of the work. There was no exchange of written materials: in different states for those who submit ideas Kessler admittedly never sent the Duffers any and then claim misappropriation. It is insufficient to show merely that an idea written materials after the alleged meeting was conveyed, is valuable, and has been used TR: When does a pitch give rise to potential and his short film was publicly available at for profit. legal exposure? the time of the meeting. A plaintiff must also show salient JS: Typically, it is the parties’ relationship, Kessler never followed up with the Duffers. circumstances preceding and attending rather the substance of the idea/pitch, that disclosure. About the only thing that the Duffers could determines exposure. have done differently was skip the premiere Dispositive showings in real-world cases have An idea voluntarily shared by a stranger party, refrain from social banter and avoid included, for example, an arranged meeting during cocktail party small talk should be civil niceties. at the defendant’s studios or in their offices; subject to a vastly different fate than one a calendar invitation that reads: “pitch TR: What, if anything, was the significance shared at a pre-arranged formal business meeting”; the arrangement of the meeting that Kessler’s short film “Montauk” was meeting scheduled between known parties by a manager, agent or an attorney; an publicly available? on a studio lot. existing relationship in which the defendant JS: Justice [Louis] Brandeis famously However, there is no precise line at which a previously compensated plaintiff; defendant stated that “[ideas] become, after voluntary pitch crosses from conversation to contract. solicited or requested the materials before, communication to others, free as the air to The conduct of the parties must suggest that during or after the meeting; a paper common use.” a pitch was invited and rendered based on an trail (texts/WhatsApp communications, When Kessler voluntarily communicated inferred promise to be compensated. internal emails); and the provision of Vimeo “Montauk” to the public, he undercut any passwords. The typical idea submission case turns on the reasoned suggestion that he conditioned his following questions: (i) How did the parties Ultimately, the more it feels like a business disclosure of the story’s thematic elements interact? (ii) where did the parties meet? meeting, the more it is likely to be considered upon receiving future compensation. (iii) Was the idea solicited or unsolicited? a business meeting and, by extension, a TR: Kessler claimed he pitched his story in (iv) What did the plaintiff share (i.e., a raw compensable pitch. idea, a treatment, a script, a screenplay)? (v) New York, but he brought suit in California. Do TR: What could the Duffers have done Was the idea disclosed in the context of a different jurisdictions afford different levels of differently to better protect themselves? Are business meeting or casual conversation? (vi) protection to idea submissions? Are certain there magic words or specific actions that Did the plaintiff communicate an expectation jurisdictions more defendant-friendly? should be used to fortify a defense? of receiving compensation in exchange for JS: Because different states have different idea submission laws, venue shopping is a critical part of a plaintiff’s strategy. New York and California law are openly in conflict. A claim premised on a property right or unjust enrichment is not recognized in California, but is in New York. James Sammataro is a partner at Pryor Cashman LLP in Miami and New York law requires a higher standard of co-chair of the firm’s media and entertainment group. He was recognized proof that the idea be sufficiently novel — or by Billboard magazine as one of 2018’s top music lawyers and has trial experience in high-stakes copyright, trademark, defamation, First “strikingly new, unusual or different.” Amendment, right-of-publicity and noncompete matters. He can be reached at [email protected]. California courts do not require novelty and tend to overly examine the conduct of the parties (that is, was the promise to pay

© 2019 Thomson Reuters JULY 31, 2019 n VOLUME 26 n ISSUE 8 | 7 stated after the idea was disclosed, was the TR: What kind of impact can an idea- JS: Don’t expect to attend a Hollywood party recipient charged with the knowledge that submission claim have on a film’s release or and find a director or producer ready for a the submitter sought payment?). on the launch of a TV series? giddy chat about your spectacular new idea Kessler simply filed in a jurisdiction more JS: Even frivolous claims can wreak for a show. friendly to his facts. devastating consequences, particularly if Parties used to be considered relatively safe TR: What advice do you provide clients who they’re brought early during production. ground. want to share but protect their ideas? After the court’s denial of the Duffer brothers’ JS: We counsel our media clients from “Don’t expect to attend a motion for summary judgment, however, all dealing with unknown parties or creating Hollywood party and find a social gatherings now pose professional any opportunity in which an opportunistic director or producer ready hazards. plaintiff can claim that a casual conversation for a giddy chat about your It helped that the case was dismissed, but gives rise to an entitlement to compensation. even that is under suspicion of a hush-hush spectacular new idea In recent years, we have, for example, advised settlement. clients to meet first-time pitchers in a coffee for a show.” Now the industry’s professional risk shop (not on a studio lot). managers are calculating whether anybody A claim may preclude the producer’s ability We have also urged our clients to respond to who claims to have blurted an idea at a to secure an errors-and-omissions insurance sweet 16 bash can hold a project ransom “preserve the record” correspondences, and policy or, worse, result in a lost distribution respond with details to correct inaccurate for a five- or six-figure nuisance settlement. window as a distributor may be reticent to Trust erodes. Vigilance escalates. Hollywood emails/texts summarizing a one-sided release a film under threatened or pending account of an alleged meeting. chalks the outline around another cautionary litigation. tale. WJ TR: Has there been any industry fallout from the “Stranger Things” case?

WESTLAW JOURNAL CLASS ACTION

This reportercovers the proliferation of the class action lawsuit in numerous topic areas at the federal, state, and ap- peals court levels. Topics covered include consumer fraud, securities fraud, products liability, automotives, asbestos, pharmaceuticals, tobacco, toxic chemicals and hazardous waste, medical devices, aviation, and employment claims. Also covered is legislation, such as the 2005 Class Action Fairness Act and California’s Proposition 64, and any new federal and state legislative developments and the effects these have on class action litigation.

Call your West representative for more information about our print and online subscription packages, or call 800.328.9352 to subscribe.