Copyright Act does not preempt state breach of implied contract claim

Law Reporter, Dec 2004

Grosso v. Mimmax Film Corp., 383 F.3d 965 (9th Qr. 2004).

The Ninth Circuit Court of Appeals held the federal Copyright Act, 17 U.S.C. § 301, does not preempt a state breach of implied contract claim.

Here, Grosso presented Miramax with a movie screenplay about poker. When Miramax later released Rounders, a different movie about poker, Grosso sued, alleging breach of contract in violation of California law, among other claims. The federal trial court dismissed the state law claim, holding it was preempted by the Copyright Act.

Reversing in part, the Ninth Circuit noted the California Supreme Court has held that a contract may be formed when an idea is furnished by one party to another, where die circumstances surrounding the disclosure and the conduct of the offeree show an implied promise to pay. The theory of this rule is that the bargain is not for the idea itself, but for the services of conveying that idea, the court said. In order to prevail for breach of implied-in-fact contract, the court said plaintiff must show he prepared the work, disclosed the work to the offeree for sale, and did so under circumstances from which it could be concluded the offeree voluntarily accepted disclosure knowing the conditions on which it was tendered and the reasonable value of the work.

Under the Copyright Act, state law claims are preempted when (1) the work at issue falls within the copyright subject matter, and (2) the state law rights are "equivalent to any of the exclusive rights within the general scope of copyright." A state claim is not preempted if there is an "extra element" that makes the claim qualitatively different from a copyright action, the court determined. Here, die alleged implied promise to pay is an extra element, and the existence of a copyright is not at issue.

Accordingly, the court remanded.

Plaintiff's Counsel

John A. Marder,

Steven J. Renick, and

Sylvia Havens, all of Los Angeles, Cal.