DreamWorks Animation's Victory in 'Kung Fu Panda' Case Affirmed

"Kung Fu Panda 2"

The Chinese-themed film was nominated for best animated feature.

A California appeals court upheld a verdict in favor of DreamWorks Animation after a jury found that the studio didn't steal the idea to create its mega-successful Kung Fu Panda movies.

Terence Dunn, a self-described “writer-producer-teacher-philospher” who was CEO of a company called Zen-Bear Inc., sued in June 2010 for breach of an implied contract. At a trial in the summer of 2011, he told a jury that he made a four-to-five minute pitch to a Dreamworks executive in November 2001, and followed it up with a phone call over his "proposal for Zen-Bear, the Kung Fu Panda."

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He wanted compensation for the studio's alleged use of his idea, but a jury wasn't swayed. On appeal, Dunn challenged the verdict on the basis that the trial judge had erred with improper jury instructions over the test for determining use of an idea.

On Tuesday, California's Second Appellate District weighed in with some wisdom on the nature of ideas. Here's the full ruling.

Kung Fu Panda came out in 2008 and starred the voice of Jack Black. It went on to gross more than $630 million worldwide. A successful sequel also was released.

Dunn said that he had created a "Zen-Bear" in the early 1990s and hired an illustrator "to design [his] concept of a martial arts panda bear."

He says he spoke for months with Dreamworks executive Lance Young about his idea, and alleged that he was told in 2002 that DWA already had a "martial arts panda project." He says his final conversation with Dreamworks happened with another Dreamworks executive named Michael Lachance.

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Lachance oversaw the Kung Fu Panda project after Dreamworks CEO Jeffrey Katzenberg suggested in 2000 at a roundtable meeting that the company "take a look at pandas as a possible subject for a movie."

According to the legal documents, Lachance drafted a story outline entitled "Kung Fu Panda," dated Nov. 27, 2001, one week after Dunn claims he pitched his ideas to Young at the holiday party.

Before a verdict happened in the case, a judge instructed the jury, "For Plaintiff to recover for Breach of Implied Contract in this case, he must prove that the movie Kung Fu Panda is substantially similar to the movie he pitched to DreamWorks. Substantial similarity is determined by making a comparison of the two works based on the opinion of the average individual."

But the judge declined Dunn's invitation to add, "Differences between the movie and the pitch do not necessarily mean they are not substantially similar. You may find that differences between the movie and Plaintiff's pitch were deliberately contrived to disguise the fact that Plaintiff's ideas were being used."

A California appeals court says that the failure to deliver this guidance wasn't an error.

"The first sentence unnecessarily highlights an obvious point -- Dunn need not prove his pitch was identical to the film Kung Fu Panda in order to establish his cause of action," says the decision. "The second sentence of this proposed instruction amount[s] to an argument to the jury in the guise of a statement of law, and the trial court properly refused to include it in its instructions to the jury."

Dunn also contended that the verdict should be overthrown because of how the judge responded to a question from the jury.

The jury asked, "If an idea is expressed by Dunn to DreamWorks, incorporated in an intermediate work and abandoned before the movie is made, does this constitute use?"

The judge responded, "No."

Despite Dunn's argument that the jury was confused and required a different answer with further instructions, the ruling says it was a correct answer.

"The jury asked about abandonment of Dunn's idea, not differences between Dunn's idea and the film," adds the appeals court. "The question does not indicate the jury was seeking clarification on the substantial similarity standard."

E-mail: eriq.gardner@thr.com; Twitter: @eriqgardner