‘Substantial Similarity’: A New Approach to Dismissing Implied-in-Fact Contract Claims?
In many ways, we are living in a golden age of entertainment. The production of new films and short-form programming is on the rise. New means of distribution are being created by long-term market participants and new entrants. And the industry is turning its attention to diverse viewpoints and yet-to-be-told stories.
These exciting developments, however, inextricably lead to assertions that new productions have been created by copying or drawing on material created by others. Such claims (whether based in copyright law or contract law or otherwise) have long existed, but the number of lawsuits being filed may be growing.
As defendants search for low-cost, efficient ways of dismissing frivolous cases, courts increasingly are asked to sit as Solomonic decision-makers adjudicating whether two works are substantially similar or whether they merely draw on a common source of inspiration. As discussed below, whereas such decisions once required costly litigation, judges around the country (and particularly in New York state) are now deciding these cases on early motions to dismiss based on a straightforward review of the works-at-issue.
Yet, while this growing trend has resulted in the dismissal of numerous copyright claims in the New York courts, it has yet to be applied to implied-in-fact contract claims involving similar underlying facts (i.e., allegations that a production used a work in breach of an implied promise to pay for such use). This article describes the copyright law trend and considers its application to contract law principles in the New York courts.
The Revolution of Courts Deciding Substantial Similarity
At one time, it was believed that in the Second Circuit the issue of whether two works are substantially similar—one of the elements of a copyright infringement claim—required a trial by jury and could not be decided by a judge as a matter of law. See, e.g., Arnstein v. Porter, 154 F.2d 464, 468 (2d Cir. 1946). In the mid- to late-1970s, however, courts in the Southern District of New York began to turn against the tide, granting defendants summary judgment of non-infringement because the works-at-issue were not substantially similar. See, e. g., Alexander v. Haley, 460 F. Supp. 40 (S.D.N.Y. 1978); Musto v. Meyer, 434 F. Supp. 32 (S.D.N.Y. 1977); Gardner v. Nizer, 391 F. Supp. 940 (S.D.N.Y. 1975); Fuld v. Nat’l Broad. Co., 390 F. Supp. 877 (S.D.N.Y.1975).
In 1980, the Second Circuit remarked that this was an “important development in the law of copyright, permitting courts to put ‘a swift end to meritless litigation’ and to avoid lengthy and costly trials.” Hoehling v. Universal City Studios, 618 F.2d 972, 977 (2d Cir. 1980). Deciding a case on summary judgment, however, still requires the parties to engage in expensive and time-consuming discovery.
In 2010, the Second Circuit addressed the lingering issue of whether discovery was needed to decide whether two works are substantially similar. In Peter F. Gaito Architecture v. Simone Development, a major milestone of Second Circuit copyright litigation procedure, the court ruled that it was “entirely appropriate for a district court to resolve” the issue of substantial similarity on a motion to dismiss. 602 F.3d 57, 63 (2d Cir. 2010). In so doing, the Second Circuit joined its sister circuits in recognizing that substantial similarity could be decided on a motion to dismiss. See, e.g., Taylor v. IBM, No. 02-10391, 54 F. App’x 794 (5th Cir. 2002); Jacobsen v. Deseret Book Co., 287 F.3d 936 (10th Cir. 2002); Nelson v. PRN Prods., 873 F.2d 1141 (8th Cir. 1989); Christianson v. W. Publ’g Co., 149 F.2d 202 (9th Cir. 1945).
In deciding such motions, courts may consider the works-at-issue—which “supersede and control contrary descriptions of them,” Walker v. Time Life Films, 784 F.2d 44, 52 (2d Cir. 1986)—as well as any “documents attached to the complaint as exhibits, and any documents incorporated in the complaint by reference.” McCarthy v. Dun & Bradstreet, 482 F.3d 184, 191 (2d Cir. 2007). As a result, “no discovery or fact-finding is typically necessary, because what is required is only a visual comparison of the works.” Gaito, 602 F.3d at 64 (internal quotation marks omitted).
As a result of these developments, courts have taken the issue of substantial similarity into their own hands in numerous cases. For example, in Alexander v. Murdoch, there was no substantial similarity between a treatment and pilot script, on the one hand, and a television program, on the other hand, despite the fact that they both involved a “large, nontraditional, dysfunctional, contemporary American family that includes individuals of various races, ethnicities, sexual orientations, ages, and marital statuses.” No. 10 Civ. 5613, 2011 WL 2802899, at *17 (S.D.N.Y. May 27, 2011), R&R adopted, 2011 WL 2802923, aff’d, 502 F. App’x 107 (2d Cir. 2012). Similarly, in Allen v. Scholastic, two books that tell “the story of a wizard competition” where the protagonist “takes part in—and ultimately wins—the competition” were held not to be substantially similar. 739 F. Supp. 2d 642, 662 (S.D.N.Y. 2011).
The cases dismissing copyright claims on a motion to dismiss due to a lack of substantial similarity are legion. See, e.g., Ditocco v. Riordan, 496 F. App’x 126 (2d Cir. 2012), aff’g, 815 F. Supp. 2d 655 (S.D.N.Y. 2011); Canal+ Image UK Ltd. v. Lutvak, 773 F. Supp. 2d 419 (S.D.N.Y. 2011); Bell v. Blaze Magazine, No. 99 Civ. 12342, 2001 WL 262718, at *3-4 (S.D.N.Y. March 16, 2001).
An Evolution to Courts Dismissing Implied-in-Fact Contract Claims?
Recognizing that copyright infringement lawsuits involving dissimilar works would be dismissed on Rule 12(b)(6) motions, plaintiffs began asserting other types of claims. One claim that has risen to prominence relies on an alleged implied-in-fact contract between the plaintiff and defendant. Sometimes such claims are essentially copyright claims by another name and, thus, preempted by the Copyright Act. Alexander, 2011 WL 2802899, at *18. But other times they are not. See, e.g., Forest Park Pictures v. Universal Television Network, 683 F.3d 424, 432 (2012) (alleged breach of promise to pay survives preemption analysis).
Just because an implied-in-fact contract is not preempted by the Copyright Act, however, does not mean that it cannot be subject to early dismissal. California courts have recognized that an implied-in-fact contract premised on an agreement of payment for the use of a work requires that the work actually be used for a breach to exist. To determine such use, they consider whether the original work and the new work are substantially similar, Benay v. Warner Bros. Entm’t, 607 F.3d 620, 631 (9th Cir. 2010), using an analysis that can be similar to that used in copyright cases. Ryder v. Lightstorm Entm’t, 246 Cal. App. 4th 1064, 1076 (2016). While the Second Circuit has acknowledged this aspect of California contract law, Whitfield v. Lear, 751 F.2d 90, 93 (2d Cir. 1984), it does not appear that New York courts have dismissed claims on this basis.
In light of the increased interest from the judiciary in dismissing cases involving dissimilar works on early motions to dismiss, it is possible that in the future such implied-in-fact contract claims will be dismissed due to a lack of substantial similarity. Given the existing Second Circuit law discussed above, it would be straightforward for a court to consider the works-at-issue on a Rule 12(b)(6) motion to dismiss, and the California cases suggest that substantial similarity may provide the proper analysis to determine whether an entertainment property was used. Moreover, there may be other claims that are susceptible to such motions. See, e.g., Wolstenholme v. Hirst, 271 F. Supp. 3d 625, 645 (S.D.N.Y. 2017) (New York dilution claim fails as the parties’ trade dress was not substantially similar).
While the New York courts now appear comfortable deciding substantial similarity as a matter of law in copyright cases, it awaits to be seen whether similar implied-in-fact contract claims will survive motions to dismiss or whether the courts will follow the adage of King Solomon and conclude that “there is no new thing under the sun.” Ecclesiastes 1:9 (King James).
Joshua L. Simmons is an intellectual property partner at Kirkland & Ellis. He can be reached at email@example.com.
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