Court Ruling Clears Way for NBC Universal to Stand Trial Over Alleged 'Ghost Hunters' Theft

The Ninth Circuit Court of Appeals has handed down an important decision that will make it easier for writers to assert claims against Hollywood studios for ripping off their ideas. In the opinion issued Wednesday, a full panel of justices at the Ninth Circuit reversed a decision made last year that absolved NBC Universal of allegations of taking the idea behind the hit Syfy reality show Ghost Hunters from two plaintiffs.

In 2006, Larry Montz, a parapsychologist, and Daena Smoller, a publicist, filed a lawsuit against Syfy owner NBC Universal, producer Pilgrim Films & Television, and others, claiming they conceived the idea of a show about a team of paranormal investigators who go into haunted locations. The two claimed to have presented screenplays, videos and other materials to NBCU execs between 1996 and 2003.

The duo asserted a claim for a "breach of an implied contract," which essentially means that when a screenplay is submitted and accepted for review, there's an expectation that if the material is later used, the writer will get something. Smart plaintiffs have been arguing contract breaches instead of copyright infringement ever since the Grosso case six years ago involving the film Rounders prompted judges to set a high bar in analyzing similarities between copyrighted works and allegedly stolen ideas.

Up until now, the chief legal defense by Hollywood studios against allegations of an implied contract breach has been that writers are merely disguising their copyright claims as contract claims, and since federal copyright law trumps state contract law, plaintiffs should either assert copyright infringement or go home. 

When the Ghost Hunters case hit the Ninth Circuit last year, a three-judge panel agreed with this theory, but left open the possibility that an "extra element" could transform a copyright claim into a bona fide contract breach claim.

More specifically, the three-judge panel said that if there was an implied promise to pay for use of the idea, the contract claim would survive. In the Ghost Hunters case (officially, Montz v. Pilgrim Films), the court had only found there was an implied promise for partnership, not for payment, which the three-judge panel didn't find met the "extra element" sniff test.

The Ninth Circuit granted rehearing en banc (before every judge on the court), which led to yesterday's opinion. The key part:

"We see no meaningful difference between the conditioning of use on payment in Grasso and conditioning use in this case on a granting of a partnership interest in the proceeds of the production. Montz...has alleged he revealed his concept to defendants reasonably expecting to be compensated, if his concept was used. We conclude that the district court's judgment dismissing the contractual claim as preempted must be reversed."

A couple of judges dissented strongly, but assuming this doesn't land before the U.S. Supreme Court -- and it probably won't -- NBCU now will have to face a jury for allegedly stealing Ghost Hunters. We can also expect more writers to assert this claim in other cases given the wider birth passage. A secondary ramification of this decision may be that Hollywood studios become even more careful than they already are in the way they agree to hear ideas from writers and their agents.

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