The 9th Circuit has ruled that copyright law does not preempt an implied contractual claim to compensation for use of a submitted idea, reviving a case in which a parapsychologist sought compensation for an idea that allegedly resulted in NBC’S Ghost Hunters series.  

Larry Montz had submitted screenplays, videos, and other materials to TV producers and NBC representatives, but the studios indicated that they weren’t interested. Three years later, after NBC produced the Ghost Hunters series, Montz sought compensation for breach of implied contract and breach of confidence under California law. The District Court ruled that federal copyright law preempted Montz's state-law claims and dismissed them. 

In a 7-4 en banc decision, the 9th U.S. Circuit Court of Appeals reversed, noting that the California Supreme Court has recognized that a writer and producer form an implied contract under circumstances where both understand that the writer is disclosing his idea on the condition that he will be compensated if it is used. The question 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 appeals court ruled that the implied agreement of payment for use of a concept is a personal one, between the parties. The court reaffirmed its rule that 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 dissent, Judge O'Scannlain wrote that 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.  

Judge 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 in the nature of copyright. 

Montz v. Pilgrim Films, No. 08-56954 (9th Cir. May 4, 2011). 

(Reporting by Ronald Owens, Principal Attorney Editor, San Francisco)