May 23 (Westlaw Journals) - The 9th U.S. Circuit Court of Appeals has ruled that copyright law does not preempt an implied contractual claim for compensation when a submitted idea is used.

The ruling revived a case in which a parapsychologist sought payment for his submissions to television studios that allegedly resulted in NBC’S “Ghost Hunters” television series.

Larry Montz submitted screenplays, videos and other materials to TV producers and NBC representatives, but the studios indicated that they weren’t interested, the opinion says.

Three years later, after NBC produced the “Ghost Hunters”series for the Sci-Fi network, Montz filed suit seeking compensation for breach of implied contract and breach of confidence under California law.

The U.S. District Court for the Central District of California ruled that federal copyright law preempted Montz's state law claims and dismissed them.

In a 7-4 en banc decision, the 9th Circuit reversed the lower court, noting the California Supreme Court has recognized that a writer and producer form an implied contract where both understand that the writer is disclosing his idea on the condition that he will be compensated if it is used.

The question before the court was whether copyright law preempts such claims.

To survive preemption by federal copyright law, a state cause of action must assert rights that are qualitatively different from the rights protected by copyright.

The 9th Circuit ruled that the implied agreement of payment for use of a concept is a personal one between the parties.  In doing so, the court reaffirmed its rule that copyright law does not preempt an implied contractual claim to compensation for use of a submitted idea.

Montz's claim for breach of confidence was also not preempted by federal copyright law.  The claim protected the duty of trust or confidential relationship between the parties, an extra element that made it qualitatively different from a copyright claim.

In a dissent, Judge Diarmuid F. O'Scannlain said Montz expected to receive compensation and credit for use of his work only because he also expected copyright protection.  Nothing in the complaint qualitatively distinguished the breach-of-implied-contract claim from a copyright claim, the judge wrote.

Judge Ronald M. Gould also dissented, warning that the majority's decision will lead to uncertainty by making state law available to litigants who bring nebulous state law claims that in substance assert rights over copyright.

Montz v. Pilgrim Films & Television Inc. et al., No. 08-56954, 2011 WL 1663119 (9th Cir. May 4, 2011).

(Reporting by Ronald Owens, principal attorney editor, Thomson Reuters, San Francisco)