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‘Inside Out’ Case Shows Gray Area Between Inspired, Swiped (1)

Feb. 16, 2021, 10:01 AM; Updated: Feb. 16, 2021, 6:21 PM

It happens all the time, at least according to copyright complaints: Someone pitches an idea to a major movie studio and nothing comes of it—or so the writer thought until seeing it in a theater.

But when they sue, the nature of the law, courts’ sometimes differing interpretations of it, and major media companies’ vast resources and experience navigating the courts can make it difficult for creators to prevail.

Spurned pitch-makers encounter myriad nuances within copyright and contract law, along with inherent subjectivity in separating inspiration from imitation, valuable ideas from recycled tropes.

Copyright law intentionally permits building on ideas to create something new, leaving space for a studio to potentially act in ways legally sound but ethically questionable, intellectual property and entertainment attorneys said.

The Hollywood-inclusive Ninth Circuit’s recent revivals of high-profile lawsuits, including one involving the 2018 Oscar-winning film “The Shape of Water,” have signaled a higher bar for studios to secure dismissal.

But Hollywood still has plenty of favorable precedents to harness in bids to end cases quickly, intellectual property attorney Patrick M. Arenz of Robins Kaplan LLP said. Arenz recently lost a bid to revive claims against the Walt Disney Co. over Pixar’s animated hit “Inside Out.”

“No matter the case, there is enough case law for the studios to take a shot to get it dismissed before it gets started,” he said, adding that decisions yield “a whole host of different results, depending on what court you’re in and maybe what day of the week.”

Breach-of-implied-contract law can protect not just tangible, fixed creative works but potentially abstract, broad concepts still at “a very raw idea stage,” entertainment attorney James L. Johnston of Davis & Gilbert LLP said. But ideas vary in specificity, quality, and novelty.

“That’s where the real gray area is: How do you distinguish between ideas in a world where every idea builds on another idea?” Johnston said. “There’s no question that there are potential ethical lines that can be crossed. You may technically be in the right but there’s a legitimate question as to whether or not somebody’s owed something.”

Inspired or Infringed

Because copyright infringement requires access to the copied work, studios usually buffer themselves by blocking unsolicited pitches and returning them unopened. Pitches without an agent or past industry experience are rare, attorneys say.

But child psychology expert Denise Daniels said she’d been in active talks with Disney executives, including the director of “Inside Out,” about her The Moodsters characters. Her 2017 lawsuit alleged that Pixar ripped off her idea of five monochromatic characters representing different emotions. Disney had never used walking, talking emotions, she argued, yet four of her five emotions appear in both iterations, three represented by the same color.

Last month the U.S. Supreme Court declined to hear Daniels’ last-chance bid to revive her case. The U.S. Court of Appeals for the Ninth Circuit had affirmed the lower court’s dismissal, finding the notion of using a color to represent an emotion didn’t merit copyright protection. It also noted differences between The Moodsters and characters living in an 11-year-old girls’ head in “Inside Out,” plus a lack of allegedly shared plots or settings.

Copyright law doesn’t and shouldn’t protect ideas like The Moodsters characters pitched by Daniels, attorneys said.

“The Copyright Act is not intended to thwart people from building on what others before them have done, so long as it is based on their ideas but not on their expression,” said former Miramax general counsel Alan R. Friedman of Fox Rothschild LLP.

Marketplace of Ideas

Daniels also sued for breach of implied contract. The 1956 California Supreme Court decision Desny v. Wilder said “ideas are free as air,” yet ruled that parties can still sell them. It found Paramount Pictures’ Billy Wilder stole Victor Desny’s pitched idea when it created the movie “Ace in the Hole.”

Based on Desny, Daniels would have to show Disney had an understanding that if Disney used her idea, she’d be compensated.

Courts wrestled with a threshold for when an idea could be subject to an implied contract, but eventually decided it must have value, entertainment attorney Greg Korn of Kinsella Weitzman Iser Kump LLP said.

“Say you come in and say ‘Do a TV show about love.’ Or ‘Do a TV show about sports.’ Do we now have a contract that prevents the studio from making a show about love or sports?” Korn said. “The answer now is pretty clearly no, because there’s been no value provided. But these can be very tricky claims.”

Disney quickly dodged Daniels’ contract claim on a different front. The court said a pitch can’t create an implied contract if a work is already published. Daniels listed a November 2005 publication date on her copyright registration for her The Moodsters “bible.” She also posted a pilot to YouTube in 2007.

“Don’t publish the work before the pitch,” entertainment attorney Jamice Oxley of Pryor Cashman LLP said. “An executive can claim they had access to this concept another way.”

Daniels said the court misapplied stray language from an unpublished district court decision to toss her contract claim. Under the Copyright Act, disclosure of The Moodsters to Disney in 2005 constituted publication. In any case, what matters is that the idea was new to Disney when it was pitched, Arenz said.

“The issue is not whether the idea is new to everyone, but whether it’s new to the defendant,” Arenz said.

The Ninth Circuit didn’t address the publication issue. It said Daniels didn’t provide enough detail indicating that her conversations with Disney implied a contract. It cited a 2004 Ninth Circuit case that revived a case against Miramax over the film “Rounders.” The 2004 panel found sufficient a claim that the “idea was submitted” to Miramax “with the understanding and expectation, fully and clearly understood by defendants” that he’d be paid for its use.

Daniels made that argument, saying said she pitched her idea “with the understanding, as is custom in the entertainment and motion picture industry” that she’d be paid if her idea were used. But the Ninth Circuit deemed that “boiler-plate” and insufficient to proceed to discovery.

Drawing a Line

Arenz said he thinks both intentional and unintentional copying happens in the film and television industry, as “greed is a powerful drug for some.”

Oxley acknowledged studios and networks “really are goliaths” with a strong power advantage over creators. But Oxley, who often represents creators but also sometimes studios, said reputation and legal liability act as constraints.

“The energy is always in the spirit of collaboration and creation,” Oxley said. “It’s a relationship business. No studio or network is in a hat and dark glasses looking to steal, because it will backfire in the long run.”

Others went further to say concerns of widespread idea-laundering are overblown, and that legitimate ideas are compensated, or at least settled before a lawsuit gets far.

Friedman expressed concern that Ninth Circuit revivals of cases involving Netflix’s “Stranger Things” and “Pirates of the Caribbean” opened the door to weak clams. He pointed to the early 1990s sitcom “Herman’s Head”—where four characters represent different personality aspects—as just one example showing personified emotions isn’t a particularly new idea.

He also said it’s possible—and arguably fair—to try to engineer something that harnesses any existing copyright-protected work’s appeal while altering just enough to keep it copyright-safe.

“I don’t think that’s unethical. But it’s risky,” Friedman said. “You might not get it right. And I think that happens.”

(Updated with additional reporting. Earlier version corrected law firm name in 14th paragraph.)

To contact the reporter on this story: Kyle Jahner in Washington at kjahner@bloomberglaw.com

To contact the editor responsible for this story: Keith Perine at kperine@bloomberglaw.com

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