December 20th, 2011

Daily Journal

Fans’ Ideas at Risk

Studios’ Interaction With Fans Can Land Them in Hot Water if it Appears They Stole Ideas

LOS ANGELES – In the digital era, relationships between many corporate marketing departments and their customers have become as interactive as a video game. But as companies encourage fan participation – soliciting everything from “friendship” on social network websites to user-developed promotional videos and ideas – lawyers say their corporate clients are becoming more exposed to losing.

Theoretically, a company could be sued if it uses an idea posted on its Facebook wall, emailed to a staff member or submitted in a contest without paying the submitter. And lawyers say a recent 9th U.S. Circuit Court of Appeals decision, which found that an implied contract exists if a plaintiff expected to be paid for his or her idea when submitted, has further emboldened potential litigants. Larry Montz v. Pilgrim Films & Television Inc., 606 F.3d 1153 (9th Cir., June 3, 2010).

In one such lawsuit, filed last week against Discovery Channel parent company Discovery Communications Inc., a filmmaker claimed she won a pitching contest but was turned down after a formal pitch meeting. She said she was told her idea for a reality television show following the day-to-day operations of a medicinal marijuana dispensary in Southern California was “too edgy” for the network. But a year later, Discovery premiered “Weed Wars,” a similar program, shot on location at an Oakland- based dispensary.

Theoretically, a company could be sued if it uses an idea posted on its Facebook wall, emailed to a staff member or submitted in a contest without paying the submitter.

Kylie Krabbe submitted her idea via email to the Council on International Nontheatrical Events’ “5 on 5 for 5” contest in the spring of 2010. Chosen as a finalist, Krabbe gave a five-minute presentation to five development executives, including Discovery Senior Vice President and CINE President Rita Mullin.

Krabbe’s attorney, Devin A. McRae of Early Sullivan Wright Gizer & McRae LLP, said the point of the contest was to win the opportunity to pitch an idea for sale to an industry executive.

“The contest would be completely meaningless if CINE or the CINE-selected industry executive could simply decide to use the idea without paying the contest’s winner,” McRae said. “Everyone involved understood that Ms. Krabbe submitted her idea on the condition of payment for its use and not once was it even remotely suggested that CINE or anyone else had the right to just take it, as they did.”

A spokeswoman for Discovery declined to comment on the allegations.

Wendy Revel, executive director of CINE, said the submission process – which asked contestants to send a one-page proposal via email, including a description of the concept, the length, format, intended audience and an estimated budget – was informal and didn’t include information on how contestants might protect their ideas.

“We have reputable people in the industry who are looking at them and hearing their pitches,” Revel said.

Dominique R. Shelton, an intellectual property specialist with Edwards Wildman Palmer LLP who is not involved in the case, said the Montz case re-established so- called industry custom and practice in a way that invited more plaintiffs’ implied contract claims and that companies should beware.

“It used to be that unless the plaintiff clearly conditioned disclosure of an idea on payment, the implied-in-fact contract would not be presumed,” Shelton said. “Now, when a company is operating a promotion or receiving ideas, they’re going to want to bake into the submission agreement language that says they do not want industry custom and practices to be infused into the contract. Making that express rather than arguing about it later is probably a good idea.”

Neither side would discuss whether Krabbe to forego the new practice when she formally pitched the Discovery executives, but that will likely come to light as the litigation proceeds.

Glen L. Kulik, an idea theft specialist with Kulik, Gottesman, Mouton & Siegel LLP who is not involved in the case, said that most contests have no implied contracts.

“In submitting the idea, the writer is doing so to get his or her name and reputation known and to win a contest,” Kulik said, “not to sell the idea to the people running the contest.”

But he added that depends on who is running the contest, the contest rules and the prize. In Krabbe’s case, those details will be critical.

Source: Daily Journal, Erica Phillips