In the News
June 17, 2005
Copyright Violation: File Under the Copyright Act-or Is It Breach of Contract? A Look at Grosso v. Miramax Film Corp.
By Mathew B. Rabin
The pitch meeting-whether for a screenwriter selling a script or an apparel designer shopping designs-is an integral first step to exploring a larger business relationship. It's no surprise, though, that many pitch meetings don't lead anywhere. What happens if your submission is copyrighted, and you later find that the company went forward with your work without you?
Usually claims of copyright violation must be dealt with in federal court, under the Copyright Act. Such actions cannot be brought in state courts; federal courts have exclusive jurisdiction. But in late 2004, the 9th Circuit Court of Appeals in the case of Grosso v. Miramax Film Corp. held that despite the Copyright Act's preemption, the plaintiff's claim of breach of an implied contract "transformed the action from one arising under federal copyright law to one sounding in contract"-the domain of state law.
The plaintiff in this case, Jeff Grosso, claims that Miramax unlawfully took his ideas when, after pitching his screenplay, "The Shell Game", Miramax produced the movie "Rounders". Grosso filed his action in federal court, claiming copyright infringement and breach of implied contract-i.e. that both Grosso and Miramax understood and expected that Grosso would be reasonably compensated if Grosso's work was used. The trial court threw out Grosso's copyright claim, concluding his screenplay and Miramax's film were not substantially similar. They also denied his contract claim on grounds that it was preempted by the Copyright Act.
On appeal, the 9th Circuit agreed-sort of. While they found that the denial of the copyright infringement was correct, the court held that the contract claim was valid since "it alleges an extra element [meaning the "bilateral expectation of compensation" in the implied contract] that transforms the action" to a contract claim. The court went all the way back to 1956, using the holding from Desny v. Wilder, where the California Supreme Court held that a claim for breach of implied contract may be used when the user of a "valuable idea" accepts the information from the idea creator without paying for it.
Interesting. And unsettling. Didn't the trial court and the appellate court both find that the underlying screenplay was NOT substantially similar to the Miramax movie? So where's the extra element here-where's the use of the valuable idea? How do you determine the plaintiff's damages? These are just a few of the questions the 9th Circuit's decision has raised.
So where does this leave us? This week Miramax asked the US Supreme Court to review of the appellate court's decision. The Court may overturn the 9th Circuit yet again. Nevertheless, the import is clear: don't rely on verbal assurances or implication. In any pitch meeting, it is essential to memorialize each side's understanding in writing.