Forest Park Pictures v. Universal Television Network, Inc.  
U.S. Court of Appeals, Second Circuit
Case no. 11-2011-cv, Decided June 26, 2012

A recent Second Circuit case has held contract claims with promises to pay are not preempted by the Copyright Act.  This case was decided under circumstances involving idea theft in television shows, however this may easily be applied to the video game industry.  (For example, one may recall the Bissoon-Dath case holding that the God of War franchise did not infringe upon the copyrights of plaintiffs.)  Plaintiffs alleged they had sent their works to agents working with Sony in 2002 and that this had coincided with the development of the game that began 3 years prior to its release in 2005.  This case was decided under the copyright law regime, however plaintiffs may choose to seek relief for idea theft under state law. Studios in turn may seek to dismiss these claims through preemption by the Copyright Act.  Section 301 of the Copyright Act states that:

On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.  17 U.S.C. §301 (a)

What this means is that claims brought under state law will be preempted by the Copyright Act if the claim is under the subject matter of the Copyright Act and if the rights sought to be protected are protected by the Copyright Act.  Many courts follow the “extra element” test to determine preemption.  This case is described by the Second Circuit as follows: “‘But 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,’ there is no preemption.”  In other words, a claim is not preempted by the Copyright Act if it includes one extra element that qualitatively differentiates it from a copyright claim.

Studios may seek to combat a myriad of idea theft claims, often brought as state law contract claims, through copyright preemption.  Studios may seek to have such suits thrown out based on copyright preemption and may later argue that allegedly stolen ideas are not protected by copyright law.

In Forest Park Pictures v. Universal Television Network Inc, a decision recently issued on June 26, 2012, the Second Circuit reversed a decision holding contract claims preempted by the Copyright Act.  In this case, Hayden and Tove Christensen under Forest Park Pictures brought suit against Universal Television Network for breach of implied contract.  Forest Park claimed that they had pitched an idea for a television show to a USA Television Network programming executive named Alex Sepiol.  The concept of the television series focused around a character who “after being expelled from the medical community for treating  patients who could not pay, moved to Malibu, California, and became a “concierge” doctor to the rich and famous.”  Forest Park sent a written series treatment to Sepiol and later met with him in person to pitch the idea for the show, later alleging “that it was standard in the entertainment industry for ideas to be pitched with the expectation of compensation in the event of use.”  In 2009, USA produced and aired “Royal Pains,”  a show “in which a doctor, after being expelled from the medical community for treating patients who could not pay, became a concierge doctor to the rich and famous in the Hamptons.”  The district court dismissed Forest Park’s claim against Universal for breach of implied contract, holding that it was preempted by the Copyright Act.

On appeal, the Second Circuit sought to answer two questions: “first, whether Forest Park’s breach of implied contract claim is preempted by the Copyright Act; and second, if such a claim is not preempted, whether Forest Park adequately pleaded a claim under state law.”

In answering the first question, the Second Circuit found that a claim for breach of contract including a promise to pay is not preempted by the Copyright Act.  The court applied the “extra element” test and found that a contract claim and copyright infringement claim have several qualitative differences between them.  The court named three qualitative differences between the two types of claims: That the “Copyright Act does not provide an express right for the copyright owner to receive payment for the use of a work,”  that “a plaintiff suing for failure to pay under a contract must prove extra elements beyond use or copying, including mutual assent and valid consideration,” and that “a breach of contract claim asserts rights only against the contractual counterparty, not the public at large.”  The court did not address, however, whether all contract claims or contract claims with included promises to pay are protected from preemption by the Copyright Act.  This particular claim against Universal involved a breach of contract claim with promise to pay.  USA was required to pay Forest Park for the use of its idea under the implied contract and this court found that this claim was “qualitatively different from a suit to vindicate a right included in the Copyright Act” and thus protected from preemption by the Copyright Act.

By holding that breach of contract claims are not preempted by the Copyright Act, studios may now face more costly litigation from suits alleging idea theft. These suits are not uncommon, especially when a given TV show or movie becomes popular.  This may have similar implications for studios in the video game industry.  Using the Bissoon-Dath case as an example, video game studios are not immune to idea theft suits and studios may be precluded from using the preemption defense in some situations.

As more information on this case becomes available, this post will be updated.