Damages in “Idea Submission” Cases

Among my clients are writers who developed an idea for a show or movie — anything from an outline or treatment to a full script – presented that idea to a studio or producer, and then afterwards believed the idea was used in a finished product without the author’s permission.  Although California courts have clearly determined such plaintiffs have potential claims, the amount or type of damages they can recover remains unsettled.

These cases rarely present a viable claim of copyright infringement.  A copyright claim should involve significant copying of expression, not merely alleged copying of ideas, themes or plot.  Additionally, few prospective plaintiffs want to proceed with a copyright claim when they hear that, if they lose, a   judgment could be entered against them for the other sides’ attorneys’ fees.

If the client pitched his or her ideas to a person who produced a work allegedly embodying those ideas, the client may have a so-called “idea submission” or “Desny” case, meaning a potential claim for breach of express or implied contract or breach of confidence.

In Desny v. Wilder, 46 Cal.2d 715 (1956), the plaintiff called the office of film producer Billy Wilder to communicate an idea for a film based upon the story of a person who became trapped and perished in a cave.  He reached Wilder’s secretary.  The plaintiff wanted to submit a 65-page script, but the secretary said Wilder would not read anything of such length and took down the story idea by shorthand.  She said she would present the idea to Wilder; the plaintiff said he wanted payment if the idea was used.  Later Wilder produced a film that the plaintiff claimed was based upon the idea submitted to Wilder’s secretary.  The California Supreme Court reversed an order granting summary judgment for Wilder, finding that the evidence of an agreement to pay for use of the idea synopsis created triable issues concerning the formation and breach of a contract.

The elements of an express or implied contract claim involving ideas are well defined under California law.  “[F]or [a Desny] implied-in-fact contract one must show: that he or she prepared the work; that he or she disclosed the work to the offeree for sale; under all circumstances attending disclosure it can be concluded that the offeree voluntarily accepted the disclosure knowing the conditions on which it was tendered (i. e., the offeree must have the opportunity to reject the attempted disclosure if the conditions were unacceptable); and the reasonable value of the work.”  Faris v. Enberg, 97 Cal.App.3d 309, 318, 158 Cal.Rptr. 704, 709 (1979).  It is error to require the plaintiff to show that disclosure of the idea was “clearly conditioned” on payment. Gunther-Wahl Productions, Inc. v. Mattel, Inc., 104 Cal.App.4th 27, 35-39, 128 Cal.Rptr. 50, 57-59 (2002).  Rather, the expectation of payment for use of the disclosed idea may come from industry custom.  Montz v. Pilgrim Films & Television, Inc., 649 F.3d 975, 977-78 (9th Cir. 2011).

An “idea submission” case may also sound in breach of confidence.  “An actionable breach of confidence will arise when an idea, whether or not protectable, is offered to another in confidence, and is voluntarily received by the offeree in confidence with the understanding that it is not to be disclosed to others, and is not to be used by the offeree for purposes beyond the limits of the confidence without the offeror’s permission.”  Faris v. Enberg, 97 Cal. App. 3d 309, 323, 158 Cal.Rptr. 704, 712 (1979).

While the elements needed to prove liability for a breach of contract or confidence claim have been well developed, the standards governing an award of potential damages are not as clear.

A plaintiff on a contract claim may seek damages sufficient to compensate for the harm caused by the breach.  CACI No. 350.  This would usually not be more than could have been obtained had the contract been performed (the “benefit of the bargain”).  Cal. Civ. Code § 3358.  Defendants will therefore argue that even if liability is shown, damages would be limited to the fee the plaintiff would have earned to license the idea.  If the plaintiff has no substantial history of earnings from licensing stories or screenplays, such a fee would not likely be very large, perhaps limited to “scale” (minimum payments set forth in a collective bargaining agreement) if the plaintiff is a guild signatory.

The plaintiff, on the other hand, will likely feel that if s/he proves liability, the defendant should not get away with first stealing the idea and then paying only the license fee that would have been negotiated had the defendant sought permission for its use.  This feeling will be stronger if the defendant is alleged to have used the idea to earn significant sums through misappropriation of the plaintiff’s idea.  However, no California court has expressly held that either disgorgement of profits or attorneys’ fees – remedies both potentially available under copyright law – are available for breach of contract or confidence.

The attorney struggling with how to frame damages in a Desny case would do well to consider whether cash or non-cash compensation other than an up-front license fee could be proven as an element of the agreement.  For example, if the plaintiff proves she was promised not only payment for her idea but “story by” or production credit in the resulting work, her agent or an expert could testify to the potential value of that credit in the marketplace and seek recovery under a “benefit of the bargain” theory.  Or, if an opportunity to work on or otherwise participate in the production or a share of profits can be shown to be elements of the express or implied bargain, sums for loss of opportunities or profits could be claimed.  See Trademark Properties Inc. v. A&E Television Networks, 422 Fed.Appx. 199 (4th Cir. 2011) (award of profits for use of idea upheld as jury could have accepted evidence that a split of revenues was intended); Wrench LLC v. Taco Bell Corp., 256 F.3d 446 (6th Cir. 2001) (upholding jury verdict for plaintiff based on use of idea for ad campaign involving proposal to earn percentage of advertising budget, sales and licensed products).

Just as the element of a promise to pay for use of an idea may be inferred from the circumstances or industry custom, custom may also provide a basis for inferring an agreed method of compensation.  For example, in Stanley v. CBSInc., 35 Cal.2d 653, 667 (1950), involving an implied agreement to pay for use of an idea in a radio show, the damage award was supported by evidence of a custom to pay a percentage of production costs based upon the number of weeks a show was on the air.  Donahue v. United Artists Corp., 2 Cal.App.3d 794 (1969) involved submission of story outlines for a television show involving scuba diving, allegedly used in the show “Sea Hunt.”  The jury’s award of $200,000 in damages was upheld on appeal as supported both by a co-owner’s opinion of the market value of the idea at the time of submission, and by testimony supporting the existence of a custom of paying a per-episode royalty for show concepts.  The trial judge denied a motion for new trial on damages on the theory that the jury could reasonably have awarded a fee of $2.00 for each of 100,000 airings of the show.

There exists some support for an outlier theory that disgorgement can be an element of a contract or confidence action based on a Desny theory.  In Landsberg v. Scrabble Crossword Game Players, Inc., 802 F.2d 1193 (9th Cir. 1986), the plaintiff sued for breach of an implied-in-fact contract to compensate him for use of his ideas in a strategy book for the Scrabble board game.  The district court awarded all of the defendant’s profits plus pre-judgment interest.  The Ninth Circuit rejected the argument that disgorgement of profits was an improper remedy, finding that the contract required not only compensation for use of the idea but also permission to use the idea, and that because the defendant had no right to use the idea it had no right to keep the  profits.  To rule otherwise, the court reasoned, would be to sanction theft of the idea and limitation of plaintiff’s compensation to a license fee in a forced exchange.  802 F.3d at 1198.  See also Reeves v. Alyeska Pipeline Service Co., 56 P.3d 660 (Alaska 2002) (for breach of an implied contract not to use an idea for a visitors’ center, under Landsberg “the proper measure of Reeves’s compensatory damages is the profit that Alyeska actually realized by exploiting Reeves’s idea. We thus conclude that the trial court properly rejected Alyeska’s attempt to limit Reeves’s damages to the fair value of his services”).

Landsberg has neither been adopted nor rejected by the California courts.  I believe that it could be difficult to convince a trial judge to approve a jury instruction based upon Landsberg given the well-accepted maxim that a plaintiff cannot recover in excess of the benefit of the intended bargain.  If such an instruction was given and a sizable verdict rendered, a sharp battle on appeal would surely ensue.

A better approach to enhancement of a potential damage award than the risky course of arguing disgorgement, and one less susceptible to reversal on appeal, would be to urge that the amount of the intended or fair compensation for use of an idea could take into account the degree of financial success enjoyed by the recipient as a result of use of the idea.  A damage award could then be based upon the “value of the use [of the plaintiff’s idea] to the defendant.”  Donahue v. United Artists Corp.supra, 2 Cal.App.3d at 804.  For example, what if a top film producer, who earns millions per film, was struggling to find the idea that would launch a desired feature film project.  An uncredited writer supplies that idea, which is used without permission; the film is a hit.  Would the plaintiff’s damages be limited by evidence of market license fees paid to inexperienced writers for film stories?  Or, could it be argued that the film producer should pay a just portion of his millions in earnings for use of the idea without permission?  In this scenario, I believe that a judge would give a jury instruction authorizing damages for the value of the idea “to the defendant” and wide latitude to argue the latter theory of damages to the jury.

“’The most elementary conceptions of justice and public policy require that the wrongdoer shall bear the risk of the uncertainty which his own wrong has created.  * * * ‘The constant tendency of the courts is to find some way in which damages can be awarded where a wrong has been done. Difficulty of ascertainment is no longer confused with right of recovery’ for a proven invasion of the plaintiff’s rights.’”

Id. (internal citation omitted).

I believe that any practitioner considering a Desny claim would do well to consider at the outset not only liability, but how to fashion jury instructions that will be supportive of the plaintiffs’ theory of damages, approved by the trial court and upheld on appeal, especially given the relatively sparse guidance in this area.