Wednesday, July 31, 2013

Copyright Law - Second Circuit - Is An Implied in Fact Contract Under California Law Preempted By the Copyright Act?

Television Series, Preemption of Implied In Fact Contract To Sell an Idea, Pitching an Idea, Choice of Law, Conflicts of Law

 Forest Park Pictures v. Universal Television Network Inc., 683 F.3d 424 (2d Cir. June 26, 2012).  Forest Park pitched an idea for a television series based on a concierge doctor who made house calls to the rich and famous after being shunned by the medical profession for treating patients without payment.  First pitch was by mail.  Then a follow up meeting and communication.  Then silence.  Just under four years later, USA Network comes out with a show called “Royal Pains” with an identical story premise.  Forest Park sues.  The district court granted USA Network’s motion to dismiss on the grounds that Forest Park’s claim was preempted by the Copyright Act.  On this appeal, the Second Circuit reversed, finding that an implied-in-fact contract under California law is not preempted by the Copyright Act.   Preemption exists where a state law creates a right equivalent to one under the Copyright Act, that is “if it may be abridged by an act which, in and of itself, would infringe one of the exclusive rights” under the Copyright Act.  But there is no preemption where “if an extra element is required instead of or in addition to the acts of reproduction, performance, distribution or display, in order to constitute a state-created cause of action”.   The Second Circuit’s decision contains an excellent survey of state law claims that have been held to be preempted by the Copyright Act and a survey of sister circuits that have determined that certain contract claims involving copyright are not preempted.  The Second Circuit distinguished between contracts implied in fact and those implied by law.  An implied-in-fact contract is a “true contract” that arises from the tacit consent of the parties.  It is not preempted.  An implied-in-law contract (or unjust enrichment claim) merely requires proof of unjust enrichment and is not different from a copyright infringement claim.  Accordingly, an implied-in-law contract is preempted by the Copyright Act.  Noting a potential conflict between New York and California on the issue of whether a contract may be implied in fact, the Second Circuit applied the “center of gravity” choice of law analysis and found that California law applied.  An important decision worth reading in an area of law that is murky and difficult.
 Purchase Copyright Litigation Handbook 2012-2013 by Raymond J. Dowd from West here  

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