Opposition Brief — Taco Bell Corp. v. Wrench LLC

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No. 01-701

In The Supreme Court of the United

TACO BELL CORPORATION, Petitioner,

Vv.

WRENCH LLC, JOSEPH SHIELDS, AND THOMAS RINKS,

Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Sixth Circuit

BRIEF FOR THE RESPONDENTS IN OPPOSITION

JEFFREY O. BIRKHOLD

Counsel of Record

DOUGLAS A. DOZEMAN

VALERIE P. SIMMONS

EDWARD J. BARDELLI

DANIEL P. ETTINGER

JOHN J. BURSCH

Warner Norcross & Judd LLP

900 Fifth Third Center

111 Lyon Street, N.W.

Grand Rapids, MI 49503

(616) 752-2000

Counsel for Respondents

QUESTION PRESENTED

Whether § 301 of the Copyright Act preempts a state law

contract containing an implied-in-fact promise to pay for the use of

RULE 29.6 STATEMENT

Pursuant to Supreme Court Rule 29.6, Respondent Wrench LLC

has no parent corporation and issues no stock. Respondents Joseph

Shields and Thomas Rinks are individuals.

ili

TABLE OF CONTENTS

Page

Ente eMEEDD 2.65... ..., 03.05... 5 i

Name AO EATON 50055. o65 ecco ices es cc li

coi neh tent apni ic oe a iii

\Ssbeetp setae three cies oe ea v

creer a WHCASE..... ws... l

I. NATURE OF THE CASE ESUDEN SG beh Uva ® v0 ¢ l

> BUATEOGINT OF PACTS <i. 2

lil. PROCEEDINGS BELOW ....................... 4

REASONS FOR DENYING THE PETITION .........___. 6

I. THISCASEIS ILL-SUITED F OR SUPREME COURT

et eS AO. 8

A. Because this Case Presents an Issue of First

Impression in the Courts of Appeals, It Should Not

Be Reviewed by this Court ................._. 8

2. An issue of immediate public importance is not

A AUSSIE S a 10

iv - Page

3. The issue presented is not mature .......... 11

B. Because the Sixth Circuit Remanded this Case, It

Should Not Be Reviewed by this Court ......... 12

Il. THE DECISION BELOW DOES NOT CONFLICT

WITH A DECISION OF ANY OTHER COURT OF

Og 8 OTS PEL TET eo Poe oer e 13

A. The Sixth Circuit Correctly Held that § 301 Does

Not Preempt Implied-in-Fact Promises to Pay for

the Use of Copyright Subject Matter ........... 15

B. Petitioner’s Alleged Conflict Rests Solely on Sixth

ent Sy ee ae eh er 17

C. The Remedies Issue Is Entirely Irrelevant to § 301

Preemption—the Issue Actually Presented by this

CODD ag ic iceveneccachcubaee bole bibseess 19

Il]. THE PETITION CONTAINS MISSTATEMENTS OF

eT ee eye Seep er rrr y 23

IV. PETITIONER’S POLICY ARGUMENTS DO NOT

WITHSTAND SCRUTINY ........ EEO E POLST yr 25

CONCLUSION: oi eevee soe eeeeeeeeeeerseeeeeees 28

TABLE OF AUTHORITIES

Page

Federal Cases

Acorn Structures, Inc. v. Swaniz,

846 F.2d 923 (4th Cir. , SSRI COTE Se BES 9

Aronson v. Quick Point Pencil Co.,

beta ooy bg hgh Sg clei) aE ORT OE Fn Ra ie eS 9

Baltimore & Ohio R.R. y. United States,

We ei. 24

Bhd. of Locomotive Firemen & Enginemen v.

Bangor & Aroostook R.R. ‘

ccs cy. OS RR Ee es Sat ads 12

Bus. Trends Analysts, Inc. v. Freedonia Group, Inc.,

887 F.2d 399 (2d Cir. REESE ier I ia ale 22

California v. ARC Am. Corp.,

ci ecccce ty 7

Computer Assocs. Int'l, Inc. v. Altai Inc.,

apn y ae Ors CO Ce. 1992) ..................... 16, 20

Davis v. Gap, Inc.,

meee tee GeGw. Ml)... :.. oi. 21, 22

vi Page

Del Madera Props. v. Rhodes & Gardner, Inc.,

820 F.2d 973 (9th Cir. 1987), overruled on other

grounds by Fogerty v. Fantasy, Inc., 7

S7O U.S. SEF Lone sc eer etka tereedeseveceses 16, 20

Deltak, Inc. v. Advanced Systems, Inc.,

767 F 26 TST Can We TOE Feb ebecetevercicses 21, 22

Durden v. California,

121 B. Ch. FS Geers « bcs Nose pda e by cbee pecses 1]

Harper & Row Publishers, Inc. y. Nation Enters.,

S73 U.S, Sa Cl ics cd pecad ease ibasctevesecces 7

Harper & Row Publishers, Inc. v. Nation Enters.,

723 F.2d 195 (2d Cir. 1983),

rev'd on other grounds, 471 U.S. 539 (1985) .......... 16

Lackey v. Texas,

514 U.S. 1045, 115 S. Ct. 1421 (1995) ..... ccc eves. 11

Landham v. Galoob Toys, Inc.,

227 F.3G GES CR ee cate sb becvtsccecvceses’ 13

Lipscher v. LRP Publ’ns Inc.,

266 F346 1950S CG Ee reves tccdeteeccaciess 8

McCray v. New York,

461 UD. FG Cees ee cb cai wade cee ei deevrbocees 1]

Mitchell Novelty Co. v. United Mfg. Co.,

94. Sap. GEE Ce PE bs Kcoinecavccccsvcce 27

Vii Page

Murray Hill Publ'ns, Inc. v. ABC

Communications, Inc.,

264 F.3d 622 (6th Cir. RES apap pomenirg as 18, 27

Nat'l Car Rental Sys., Inc. v. Computer

Assocs. Int'l, Inc.,

991 F.2d 426 (8th Cir. 1993) ............. 8, 9, 16, 19, 20

Northwest Airlines, Inc. vy. Duncan,

531 U.S. 1058, 121 S. Ct. 650 BE he ee ee 8,11

ProCD, Inc. v. Zeindenberg,

worn t4er.(rmcew. 1996) ..................... 8, 21

Reeves v. Sanderson Plumbing Products, Inc. :

530 U.S. 133, 120 S. Ct. 2097 PEARED ber l

Rice v. Sioux City Mem'l Park Cemetery, Inc.,

F949 U.S. FO (1955)... oo oweccs We ee nies ha ki, 10

Rodrigue v. Rodrigue,

218 F.2d 432 (Sth Cir. 2000) .................... 19, 20

Rosciszewski v. Arete Assocs., Inc.,

1 F.3d 225 (4th Cir. ae can ee Ns St 16, 20

Taquino v. Teledyne Monarch Rubber,

893 F.3d 1488 (Sth Cir. 1990) ....................... 9

Va. Military Inst. v. United States,

508 U.S. 946, 113 S. Ct. 2431 a fe 12

Worth v. Universal Pictures, Inc.,

5 F. Supp. 2d 816 (C.D. Cal. Daas 5 fo potas. 25

Vill Page

State Cases

Cascaden v. Magryta,

Bee OAs PER I, SOU oc bee cecsccececavccsesn 23

Desny v. Wilder,

299 P.2d 257 (Cal. 1956) ... 2.2... cece cece eee eeee 13

Ekl v. Knecht,

Se PRRs BOO Ce PL BGP EP hg cdactocccsescceces 27

Reeves v. Alyeska Pipeline Serv. Co.,

SOG Pe BES FE a Bad wae wahevessceccsess 26

Statutes and Rules

SF AR Oe sv idu'dd Si aetesectbecdesdwuaveres passim

Fe PU ViceNeke Vadvedisenuebebeecegecenat passim

TERR EE F bad AC ENas coc ctevbcdesecdae eee seers 22

FF Ree EE +c dck ceed aedscoreeeceraasasein et 21,22

DAA Be cites kas ren dceedsannetecarckweveees li

1X Page

Other Authorities

Glen L. Kulik, Copyright Preemption:

Is This the End of Desny v. Wilder?,

21 Loy. L.A. Ent. LJ. 1 SERRE Sarena Oe 26

H.R. Rep. No. 94-1476 (1976),

reprinted in 1976 U.S.C.C.A.N. 5659 ................. 9

Melville B. Nimmer & David Nimmer,

Nimmer on Copyright (2000) ......... 9, 10, 16, 22, 24, 26

Restatement (Second) of Contracts BG kiwtedes ceeok tee 24

Restatement (Second) of Contracts RS CIEE cre ene 13

Robert L. Stern, et al.,

Supreme Court Practice (7th ed. Ra hexceuyas ck. 17

BRIEF FOR THE RESPONDENTS IN OPPOSITION

Petitioner seeks to invalidate a state law implied-in-fact contract

simply because the contract relates to intellectual property.

Petitioner claims the contract is preempted by § 301 of the

upheld the contract, using the “extra element” test employed by all

the courts of appeals in analyzing preemption under § 301. The

Sixth Circuit reversed summary judgment for Petitioner and

remanded the case to the district court for further proceedings.

Petitioner asserts a conflict between the Sixth Circuit here and

other courts of appeals. But there is no conflict. The Sixth

Circuit’s ruling below is the only court of appeals ruling on

preemption of implied-in-fact contracts under § 301. Petitioner

relies on pure dictum in the Sixth Circuit’s opinion to fabricate its

asserted conflict.

STATEMENT OF THE CASE!

I. NATURE OF THE CASE.

Respondents seek their expectation damages under an

implied-in-fact contract, Pet. App. 8a-9a, in which (1) they created

and disclosed to Petitioner a marketing concept featuring a live

Chihuahua obsessed with Taco Bell food, and (2) Petitioner

promised to pay for its use of the concept in its advertising and

marketing, see id. at 2a-4a, 38a-41a. Petitioner used Respondents’

‘Because the Petition arises from summary judgment under

Rule 56, this Court “must draw all reasonable inferences in favor

of” and “should give credence to the evidence favoring”

Respondents, the nonmoving party. Reeves v. Sanderson Plumbing

Products, Inc., 530 U.S. 133, 150-51, 120 S. Ct. 2097 (2000)

(discussing Rule 50, which “mirrors” Rule 56).

Chihuahua concept and related ideas as intended by the parties’

implied-in-fact agreement, id. at 21a, but then breached the

agreement by failing to pay for such use as promised, id. at 15a.

Petitioner tries to characterize this case as one seeking redress

for unauthorized use of Respondents’ “Psycho Chihuahua” cartoon

caricature, i.e. a case akin to one for copyright infringement.

Pet. 3-5, 11. But that mischaracterizes the case for two

fundamental reasons. First, the work product at issue is not the

cartoon caricature. It is the live Chihuahua concept created and

disclosed to Petitioner under the parties’ implied-in-fact contract.

Pet. App. 3a-5a. Second, Petitioner’s use of Respondents’ concept

and related ideas did not breach the contract. /d. at 15a. To the

contrary, the very purpose of the contract was Petitioner’s use of the

Chihuahua concept, and Respondents worked diligently for one

year to produce a marketing concept specifically designed to

promote Petitioner’s food products. See id. at 2a-6a.

Il. STATEMENT OF FACTS.

Two of Petitioner’s officers—Rudy Pollack, vice-president, and

Ed Alfaro, creative services manager—approached Respondents

Thomas Rinks and Joseph Shields in June 1996 at a licensing

exposition in New York to discuss Respondents’ cartoon caricature

“Psycho Chihuahua.” Pet. App. 2a. Thereafter, for approximately

one year, Petitioner solicited Respondents to create a marketing

concept and advertising ideas derived from this Chihuahua

character. In response to Petitioner’s solicitations, Respondents

adapted the character into one specifically suited for Petitioner’s

marketing needs and presented Petitioner with numerous

advertising and promotional ideas based on the adapted Chihuahua

character. See id. at 2a-6a. Petitioner solicited and Respondents

disclosed the Chihuahua concept and related ideas pursuant to a

mutual understanding that Petitioner would pay for any use it might

make of them. /d. at 3a-4a, 39a.

This one-year business relationship between Petitioner and

Respondents includes the following highlights:

* In July 1996, Respondents told Petitioner that a live Chihuahua

manipulated by computer graphic imaging should be used in

television commercials. The dog would exhibit the general

personality of the carton caricature—a small dog with a big dog

attitude—but would now be obsessed with Taco Bell food. Pet.

App. 2a-3a.

* In November 1996, Respondents’ licensing agents met with

Petitioner to discuss Petitioner’s use of Respondents’ evolving

Chihuahua character and marketing ideas. Pet. App. 31a.

Petitioner requested a specific licensing proposal from

Respondents. /d.

* OnNovember 18, 1996, Respondents sent Petitioner a detailed

licensing proposal, providing a specific basis for calculating

fees to be paid to Respondents for Petitioner’s use of the

Chihuahua-based marketing concept. Pet. App. 4a, 32a.

Petitioner did not accept or reject the proposal. /d But the

parties continued to discuss Petitioner’s use of Respondents’

concept and ideas. /d. at 32a. ,

* On February 6, 1997, Petitioner met with Respondents, and

Respondents presented Petitioner with their ideas for a full

advertising, licensing, and promotional campaign featuring a

live Chihuahua manipulated by computer technology. Pet.

App. 4a, 32a. Respondents presented orally specific ideas for

television commercials, including a male dog passing by a

female dog to get to Taco Bell food. /d

¢ OnApril 4, 1997, Respondents’ licensing agents made a formal -

presentation of the Chihuahua concept to Petitioner, including

storyboards depicting Respondents’ ideas for television

commercials and samples of uniform designs, T-shirts, food

wrappers, posters, and cup designs. Pet. App. 5a, 33a.

¢ InJuly 1997, Petitioner aired a television commercial featuring

a live Chihuahua manipulated by computer technology. In it, a

male dog passes by a female dog to get to a person eating Taco

Bell food. Pet. App. Sa-6a, 34a-36a.

¢ The Chihuahua commercial was well-received. Petitioner then

made the Chihuahua character the focus of a national

advertising campaign, which proved to be very successful. Pet.

App. 6a, 36a.

lil, PROCEEDINGS BELOW.

In the district court, Petitioner sought summary judgment

regarding Respondents’ implied-in-fact contract claim on three

grounds: (1) the evidence does not create a triable issue on the

existence of a contract implied-in-fact, Pet. App. 38a-41a; (2) the

evidence establishes conclusively that Petitioner’s advertising

agency independently created the Chihuahua marketing concept,

i.e., that Petitioner did not use Respondents’ concept and ideas, id.

at 5la-58a; and (3) even if the parties’ conduct created an

implied-in-fact contract, and even if Petitioner used Respondents’

work pursuant to the contract, Respondents’ claim for breach of the

contract is preempted by § 301 of the Copyright Act, id. at 41a-Sla.

The district court ruled against Petitioner on the first ground,

holding that Respondents “presented sufficient evidence to create

a genuine issue of material fact regarding whether an implied in fact

contract existed between the parties.” Pet. App. 41a. Critical to the

court’s holding was Petitioner’s concession that the parties had a

mutual understanding of compensation for use: if Petitioner used

Respondents’ concept and ideas, Petitioner “would compensate

[Respondents] for the fair value of such use.” Jd at 39a.

The district court also ruled against Petitioner on the second

ground, holding that the record contains sufficient evidence to

support the allegation that Petitioner used Respondents’ creative

work in producing commercials featuring a live Chihuahua

obsessed with Taco Bell food. Pet. App. 51a-58a. A reasonable

inference exists that Petitioner “passed” Respondents’ concept and

ideas to its advertising agency, the alleged independent creator. Jd

at 57a.

But the district court ruled for Petitioner on the third ground,

holding that § 301 preempts Respondents’ contract claim. Pet.

App. 4la-5la. The court concluded that Respondents’ contract

rights “are equivalent to the exclusive rights granted by [§ 106 of

the] Copyright Act.” /d. at 50a.

The district court premised its preemption holding on a patent

mischaracterization of Respondents’ contract Claim. The court

ignored the compensation element of the contract and viewed

Petitioner’s implied-in-fact promise as a prohibitory “promise not

to use [Respondents’] ideas and concepts,” Pet. App. 51a, rather

than an affirmative promise to pay for the contractual right to use

Respondents’ work. This mischaracterization led the court to

conclude that the contract implied-in-fact did nothing more than

prohibit conduct already prohibited by § 106 of the Copyright Act:

“Here, [Petitioner’s] alleged promise not to use [Respondents’]

ideas and concepts does not differ from the Copyright Act’s

prohibition against preparing derivative works from or displaying

copyrighted works.” Jd

On appeal, the Sixth Circuit affirmed the “implied-in-fact

contract” and “use” holdings of the district court, Pet. App. 8a-9a,

21a, but reversed the court’s preemption ruling, id. at 13a-21a. The

court recognized the compensation element of the contract, id. at

20a (The “implied-in-fact contract claim contains the essential

element of expectation of compensation.”), and properly

characterized Petitioner’s implied-in-fact promise, not as a promise

to refrain from using Respondents’ creative work, but as a promise

to pay for its use of such work, id at 15a (“The gist of

[espondents’] state law implied-in-fact contract claim is breach of

an actual promise to pay for [Respondents’] creative work.”).

Having properly determined the nature of the promise at issue,

the Sixth Circuit reasoned that (1) Petitioner breached the contract

by failing to pay as promised, not by “use of the work alone,” id.;

(2) Petitioner’s promise to pay is an extra element of the contract

claim, as compared to a claim for copyright infringement, an

element “in addition to the acts of reproduction, performance,

distribution, or display” protected by § 106, id.; and (3) the promise

to pay makes the contract claim “qualitatively different from a

requirement of proof of an enforceable promise and a breach

thereof which requires, inter alia, proof of mutual assent and

consideration, as well as proof of the value of the work and

[Petitioner’s] use thereof,” id.

REASONS FOR DENYING THE PETITION

No compelling grounds exist for grant of certiorari. The issue

presented is whether § 301 of the Copyright Act preempts state law

contracts containing an implied-in-fact promise to pay for the use

of copyright subject matter. The Sixth Circuit recognized that

implied-in-fact contracts are actual contracts requiring proof of the

same elements as express contracts, and joined five other courts of

appeals in holding against contract preemption under § 301, a

position consistent with the historic power of the states over private

contracts.

Petitioner patently misstates the law in attempting to

manufacture a split in the courts of appeals. Section 301 does not

call for a comparison of state law remedies with the remedy

provisions of the Copyright Act. Rather, § 301 asks whether the

right being asserted under state law is equivalent to one of the five

exclusive rights set forth in § 106 of the Act. The Sixth Circuit

correctly held that when an author sells a work under private

contract, the author’s contractual right to be paid is not equivalent

to the author’s right under § 106 to be the only person permitted to

reproduce, adapt, publish, perform, or display the work. The Sixth

Circuit’s passing reference to remedies was immaterial to its

holding and constitutes nothing more than dictum.

Here, preemption itself, rather than state law, would stand “as

an obstacle to the accomplishment and execution of the full

purposes and objective of Congress.” California v. ARC Am.

Corp., 490 U.S. 93, 100-01 (1989). Implied-in-fact contracts are

actual consensual agreements requiring mutual assent and

consideration. And contracts are the means by which authors

capitalize on their copyright monopolies, monopolies “designed to

assure contributors to the store of knowledge a fair return for their

labors.” Harper & Row Publishers, Inc. v. Nation Enters.,

471 U.S. 539, 546 (1985). In other words, in enacting the

monopoly rights as an economic incentive to spur creative effort,

and, at the same time, have intended to preempt state law

commercial contracts, the primary means by which authors can

economically exploit their monopoly rights and earn a profit from

their works.

I. THIS CASE IS ILL-SUITED FOR SUPREME COURT

REVIEW.

A. Because this Case Presents an Issue of First Impression

in the Courts of Appeals, It Should Not Be Reviewed by

this Court.

The Sixth Circuit correctly stated that “[t]his case raises a

question of first impression.” Pet. App. la. No other court of

appeals has opined regarding the applicability of § 301 of the

sui generis status makes this case inappropriate for Supreme Court

review for three reasons.

1. The courts of appeals are not in conflict.

A core ground for granting certiorari is a conflict among the

courts of appeals. See Northwest Airlines, Inc. v. Duncan,

531 U.S. 1058, 121 S. Ct. 650, 650 (2000) (O’Connor, J.,

dissenting from denial of certiorari) (“The Courts of Appeals . . .

have taken directly conflicting positions on this question.”) The

issue presented here, however, is one of first impression in the

courts of appeals, and there is thus no conflict among them. The

Sixth Circuit ruled that § 301 does not preempt implied-in-fact

contracts containing a promise to pay for the use of copyright

subject matter. No court of appeals has held otherwise. In fact, no

court of appeals has held that § 301 preempts any contract, express

or implied-in-fact. To the contrary, every court of appeals

addressing the issue of contract preemption under § 301 has ruled

against preemption. See Lipscher v. LRP Publ'ns Inc.,

266 F.3d 1305, 1318-19 (11th Cir. 2001) (newsletter subscription

agreement); ProCD, Inc. v. Zeindenberg, 86 F.3d 1447, 1449-55

(7th Cir. 1996) (software license agreement); Nat'l Car Rental Sys.,

Inc. v. Computer Assocs. Int'l, Inc.,991 F.2d 426, 431-435 (8th Cir.

1993) (software license agreement); Taquino v. Teledyne Monarch

Rubber, 893 F.3d 1488, 1501 (5th Cir. 1990) (sales and manager

agreement); Acorn Structures, Inc. v. Swantz, 846 F.2d 923, 926

(4th Cir. 1988) (architecture services agreement).

The Sixth Circuit did not create a conflict here. Rather, it

created unanimity among the courts of appeals. The Sixth Circuit

correctly recognized that an implied-in-fact contract “‘is a

consensual agreement presenting the same elements as are found in

an express contract,”” Pet. App. 19a (quoting 4 Melville B. Nimmer

& David Nimmer, Nimmer on Copyright § 16.03, at 16-11 (2000)

[hereinafter Nimmer]), and joined the Fourth, Fifth, Seventh,

Eighth, and Eleventh Circuits in holding against § 301 preemption

of state law contracts. Such unanimity among the courts of appeals

finds support in this Court’s pronouncement in Aronson v. Quick

Point Pencil Co., 440 U.S. 257, 262 (1979): “Commercial

agreements traditionally are the domain of state law. State law is

not displaced merely because the contract relates to intellectual

property.” It finds support in the legislative history of § 301:

“Nothing in the bill derogates from the rights of parties to contract

with each other and to sue for breach of contract.” H.R. Rep.

No. 94-1476, at 132 (1976), reprinted in 1976 U.S.C.C.AN. 5659,

5748. (Fora full discussion of § 301’s legislative history, see Nat'l

Car Rental Sys., 991 F.2d at 433-34.) And it finds support in the

leading commentary on copyright law:

[A; breach of contract action (whether such contract

involves a mere idea or a fully developed literary

work) is not predicated upon a right that is

“equivalent to any of the exclusive rights within the

general scope of copyright ....” This for the

reason that a contract right may not be claimed

unless there exists an element in addition to the

mere acts of reproduction, performance, distribution

or display. That additional element is a promise

(express or implied) upon the part of defendant.

4 Nimmer § 16.04[C], at 16-25 (emphasis added).

2. An issue of immediate public importance is not

presented.

A second core ground for granting certiorari is the public

importance of the issue presented. See Rice v. Sioux City Mem'l

Park Cemetery, Inc., 349 U.S. 70, 79 (1955) (“[T]he question was

of importance merely to the litigants and did not present an issue of

immediate public significance.”). In the circumstances presented

here, however, the sui generis nature of this case evidences its lack

of immediate public importance. Section 301 of the Copyright Act

became effective on January 1, 1978. 17 U.S.C. § 301(a). From

that date until July 6, 2001, the date of the decision below, no court

of appeals addressed the applicability of § 301 to implied-in-fact

contracts arising under state law. Such contracts and the Copyright

Act have peacefully coexisted for over 22 years. Certainly, if state

law implied-in-fact contracts posed a serious obstacle to the

purposes of the Copyright Act, or significantly interfered with the

marketplace for intellectual property, the question of § 301

preemption would have been before the courts of appeals on

numerous occasions during the last 22 years. But the question has

not been before the courts of appeals at all except for this case.

Far from presenting an issue of immediate public importance,

the Sixth Circuit’s decision merely continues the law as it has

existed for many years without appellate comment. The decision

does not change the law or modify existing precedent. Review by

this Court is unwarranted.

3. The issue presented is not mature.

This Court often practices judicial restraint, waiting until an

issue matures through study and interpretation by a number of

lower courts before it undertakes review of the issue. See

Durden v. California, 121 S. Ct. 1183, 1183 (2001) (Souter, J.,

dissenting from denial of certiorari) (“[R]ulings by other courts . . .

would be valuable to us in any examination of the issue we might

ultimately give it.”); Lackey v. Texas, 514 U.S. 1045,

115 S. Ct. 1421, 1422 (1995) (Stevens, J., respecting denial of

certiorari) (“[A] denial of certiorari on a novel issue will permit the

state and federal courts to ‘serve as laboratories in which the issue

receives further study before it is addressed by this Court.’”

(quoting McCray v. New York, 461 U.S. 961, 963 (1983) (Stevens,

J., respecting denial of certiorari))).

Here, the Court’s practice of judicial restraint will be wisely

exercised. This case presents an issue of first impression. A three

judge panel decided the case on a 3-to—-0 vote. En banc

consideration was denied. The issue presented has not been studied

in a number of cases by several courts of appeals, it is not mature,

and it is thus not well suited for Supreme Court review. Cf

Northwest Airlines, Inc. v. Duncan, 531 U.S. 1058, 121 S. Ct. 650,

651 (2000) (O’Connor, J., dissenting from denial of certiorari)

(“The legal issue is . . . well suited for resolution by this Court. The

two leading cases . . . are both the product of en banc consideration.

They have fully explained the relevant considerations, including the

language and history of the ADA and its pre-emption clause, as

well as the policies supporting the possible interpretations . . . .”).

This Court should exercise judicial restraint and allow this issue of

first impression to mature through further lower court

consideration.

B. Because the Sixth Circuit Remanded this Case, It

Should Net Be Reviewed by this Court.

This Court’s normal practice is to deny review before final

judgment in the lower courts. Va. Military Inst. v. United States,

508 U.S. 946, 113 S. Ct. 2431, 2432 (1993) (Scalia, J., respecting

denial of certiorari) (“We generally await final judgment in the

lower courts before exercising our certiorari jurisdiction.”). A case

remanded by the court of appeals is not considered ripe for

Supreme Court review. Bhd. of Locomotive Firemen &

Enginemen v. Bangor & Aroostook R.R., 389 U.S. 327, 328 (1967)

(per curiam) (“[B]ecause the Court of Appeals remanded the case,

it is not yet ripe for review by this Court.”). Here, the Sixth Circuit

reversed the district court’s grant of summary judgment in

Petitioner’s favor and remanded the case for further proceedings.

Pet. App. 27a. The case is thus not ripe for review, and this Court

should follow its normal practice and deny certiorari.

Significantly, at least three possible scenarios on remand will

render Petitioner’s preemption issue moot, evidencing that Supreme

Court review at this stage of the case is premature. First, Petitioner

concedes that § 301 does not preempt a state law contract having

specific terms, “whether the contract is express or implied by the

actions of the part[ies].” Pet. 12. Respondents made a written

proposal to Petitioner in this case, containing specific terms

governing Petitioner’s use of Respondents’ Chihuahua concept.

Pet. App. 4a. On remand, the jury will be entitled to find that

Petitioner became bound by the specific terms of this written

proposal.’ Second, the jury may find that the parties’ conduct did

not evidence an implied-in-fact contract at all. Finally, the jury may

find that Petitioner independently created its Chihuahua-based

marketing campaign. In short, upon a complete presentation of the

evidence and evaluation by the finders of fact, the preemption issue

may disappear. This Court should thus deny certiorari here and

wait for a case with a complete factual record before addressing the

issue of § 301 preemption of state law implied-in-fact contracts.

Il. THE DECISION BELOW DOES NOT CONFLICT WITH

A DECISION OF ANY OTHER COURT OF APPEALS.

Petitioner asserts a conflict between the Sixth Circuit here and

other courts of appeals. But three points strip the asserted conflict

of all relevance to the question of certiorari. First, as discussed in

“An offeree who does any act inconsistent with the

offeror’s ownership of offered property is bound in accordance with

the offered terms.” Restatement (Second) of Contracts § 69(2). See

Landham v. Galoob Toys, Inc., 227 F.3d 619, 624 (6th Cir. 2000)

(“[P]arties may be bound by the terms of an unsigned contract when

their actions demonstrate assent to the agreement.”). For example,

a buyer who goes into a market and asks and is told the price of an

orange cannot take the orange and say “I will not pay your price,

but will pay something less.” The buyer, by taking the orange,

becomes liable for the stated price. Desny v. Wilder, 299 P.2d 257,

268 (Cal. 1956). Here, Respondents presented Petitioner with a

written proposal for Petitioner’s use of their ideas, including price

terms. Pet. App. 4a. Petitioner did not expressly accept or reject

the proposal. /d. But Petitioner thereafter used Respondents’ ideas

in its television commercials, thereby becoming bound by

Respondents’ written proposal.

section II.A. below, the Sixth Circuit correctly interpreted § 301 of

the Copyright Act, concluding that the crux of the contract claim

here, Petitioner’s failure to make contractual payment, is

qualitatively different than the crux of a copyright claim, a violation

of one of the five exclusive rights set forth in § 106 of the

relationship between a contractual right of payment, on the one

hand, and the exclusive § 106 rights, on the other hand, for

purposes of § 301 preemption. There is, therefore, no conflict

among the courts of appeals.

Second, as discussed in section II.B. below, Petitioner attempts

to manufacture a circuit split based not on the Sixth Circuit’s

holding regarding the qualitative difference between § 106 and state

contract rights, but on the Sixth Circuit’s discussion in dictum of

dictum that Petitioner points to as creating a conflict. But dictum

cannot create the actual and direct conflict necessary for a grant of

certiorari.

Third, as discussed in section II.C. below, the remedies issue

referenced in the Sixth Circuit’s dictum, and relied on by Petitioner

exclusively in asserting a circuit conflict, is entirely irrelevant to the

outcome of this case. Section 301 mandates a comparison of the

state law right with the five § 106 rights, not a comparison of state

law remedies with the remedy provisions of the Copyright Act.

This case thus fails to raise the issue on which Petitioner relies in

requesting certiorari.

A. The Sixth Circuit Correctly Held that § 301 Does Not

Preempt Implied-in-Fact Promises to Pay for the Use of

The Sixth Circuit correctly interpreted and appiicu § 301 of the

Section 301(a) preempts only legal or equitable rights under

state law “that are equivalent to any of the exclusive rights . . .

specified by Section 106.” 17 U.S.C. § 301(a) (emphasis added).

Section 106 grants the copyright owner five exclusive rights: the

rights to (1) reproduce, (2) prepare derivative works from, (3)

distribute, (4) perform, and (5) display the copyrighted work. 17

U.S.C. § 106(1)-(5). If a state law claim is based on violation of a

legal or equitable right that is not equivalent to one of § 106’s

specified quintet of rights, § 301 does not preempt it. 17 U.S.C.

§ 301(b)(3). Thus, if a state law claim involves a right that is not

equivalent to the rights of reproduction, adaptation, distribution,

performance, or display, it is not preempted.

To determine whether a legal or equitable right asserted under

state law is equivalent to one of the quintet of rights specified by

§ 106, the courts use an “extra element” test:

Equivalency exists if the right defined by stat: law may be

abridged by an act which in and of itself would infringe one

of the exclusive rights. Conversely, if an extra element is

required instead of or in addition to the acts of reproduction,

performance, distribution or display in u7¢er to constitute a

state-created cause of action, there is no preemption,

provided that the extra element changes the nature of the

action so that it is qualitatively different from a copyright

infringement claim.

Pet. App. 14a (citing Harper & Row Publishers, Inc. v. Nation

Enters., 723 F.2d 195, 200 (2d Cir. 1983), rev'd on other grounds,

471 U.S. 539 (1985); Rosciszewski v. Arete Assocs., Inc., 1 F.3d

225, 230 (4th Cir. 1993); and Nat’! Car Rental Sys., 991 F.2d at

431). Accord Computer Assocs. Int'l, Inc. v. Altai Inc., 982 F.2d

693, 716 (2d Cir. 1992); Del Madera Props. v. Rhodes & Gardner,

Inc., 820 F.2d 973, 976-77 (9th Cir. 1987), overruled on other

grounds by Fogerty v. Fantasy, Inc., 570 U.S. 517 (1994);

1 Nimmer § 1.01[B}, at 1-14 - 1-15.

The Sixth Circuit concluded correctly that, under the parties’

implied-in-fact contract, Respondents’ contractual right to payment

cannot be abridged by an act that, in and of itself, infringes one of

§ 106’s exclusive rights. Pet. App. 15a. The only act that abridges

the contractual right to payment—failure to pay—does not infringe

the § 106 rights, and the only acts that infringe the § 106 rights—

reproduction, adaptation, distribution, performance, or display of

the work—do not abridge the contractual right to payment. Unlike

a copyright claim, which involves an allegation that the infringer

violated a § 106 right by “using” the copyrighted work without

authorization, a contract claim involves authorized use and a failure

to make contractual payment: “It is not the use of the work alone

but the failure to pay for it that violates the contract and gives rise

to the right to recover damages.” Pet. App. 15a. Thus,

Respondents’ contract right is not equivalent to the quintet of rights

specified by § 106 and is not preempted. /d.

The Sixth Circuit also concluded correctly that Respondents’

contract claim requires an extra element “in addition to the acts of

reproduction, performance, distribution or display” specified by

§ 106. Pet. App. 15a. “The extra element is the promise to pay.”

Id. And the court correctly recognized that the promise to pay

makes the contract claim qualitatively different from 2 copyright

claim: “The qualitative difference includes the requirement of

proof of an enforceable promise and a breach thereof which

requires, inter alia, proof of mutual assent and consideration, as

well as proof of the value of the work and appellee’s use thereof.”

Id.

In sum, the Sixth Circuit correctly construed § 301 of the

a work is not equivalent to any of the exclusive § 106 rights—the

rights to reproduce, adapt, distribute, perform, or display the work.

No other court of appeals has opined on this issue. There is thus no

conflict between the Sixth Circuit and any other court of appeals on

the issue actually presented and decided in this case.

B. Petitioner’s Alleged Conflict Rests Solely on Sixth

Circuit Dictum.

Inconsistency in courts of appeals’ dicta, rather than a direct and

intolerable conflict between their holdings, does not warrant a grant

of certiorari. Robert L. Stern, et al., Supreme Court Practice 167

(7th ed. 1993) (To justify certiorari, “there must be a real and

‘intolerable’ conflict . . ., not merely an inconsistency in dicta.”).

And, here, Petitioner’s alleged conflict rests solely on dictum in the

Sixth Circuit’s opinion below.

After holding that Respondents’ contractual right to payment is

not equivalent to § 106’s quintet of rights, and is thus not

_ preempted, the Sixth Circuit in dictum compared Copyright Act and

Michigan contract remedies and indicated they too are not

equivalent, a fact that “further reflected” the qualitative difference

between the state contract and federal statutory rights. Pet. App.

15a-16a. Even a cursory reading of the Sixth Circuit’s opinion

demonstrates that its passing reference to remedies is immaterial to

the core holding. The court’s focus is the “extra element” test,

through which the court concludes that the contractual promise to

pay makes Respondents’ implied-in-fact contract claim

qualitatively different than a copyright claim. /d. at 15a. The court

then “piles on” its analysis, noting the qualitative difference created

by the promise to pay is “further reflected” by the difference in

remedies. /d. (emphasis added). But if one were to delete entirely

the two-paragraph remedy discussion, id. at 15a-16a, the opinion

would read seamlessly and reach the same conclusion.

The Sixth Circuit underscored the immateriality of its remedies

discussion less than two months later in Murray Hill Publications,

Inc. v. ABC Communications, Inc., 264 F.3d 622 (6th Cir. 2001).

Distinguishing the contract here from one the court found

preempted in Murray Hill, the Sixth Circuit explained explicitly

why the contract in this case is not preempted:

The contract claimed in Taco Bell included the extra

element of a promise to pay, requiring proof of an

enforceable promise, which in turn would require proof of

the mutual assent of the parties, and a breach of that

promise.

264 F.3d at 638. The Murray Hill opinion does not mention

remedies at all.

Petitioner points solely to the remedies dictum in the Sixth

Circuit’s opinion below as creating the circuit split in this case. See

Pet. 9-11. The asserted conflict thus provides an insufficient basis

on which to grant certiorari. Petitioner, of course, attempts to

bootstrap the remedies discussion into something more than bare

dictum, claiming if the Sixth Circuit had concluded that § 504 of

the Copyright Act allows one “to recover the reasonable value of

the use of the work, it could not have reached the result it did.” Jd

at 11. But, again, a simple reading of the Sixth Circuit opinion

belies that claim. The Sixth Circuit’s remedies discussion did not

drive the ultimate holding that a contractual promise to pay is not

equivalent to the rights specified by § 106. Accordingly, there is no

merit in the primary basis on which Petitioner claims certiorari

should be granted.

C. The Remedies Issue Is Entirely Irrelevant to § 301

Preemption—the Issue Actually Presented by this Case.

Petitioner’s discussion of contract and copyright remedies is a

complete red herring because § 301 preemption analysis requires a

comparison of rights, not remedies. Petitioner’s remedies

discussion is therefore entirely irrelevant to the preemption issue

presented by this case. That preemption issue, as previously set

forth, is one of first impression, and there is thus no circuit split

justifying a grant of certiorari.

The Copyright Act itself makes clear that rights, not remedies,

must be compared. Section 301’s text requires a comparison of

state law rights to § 106’s exclusive rights; it does not require or

even suggest a comparison of state law remedies to the remedies

specified by §§ 502 to 505 of the Copyright Act. The mandated

comparison is between the right being asserted under state law, on

the one hand, and the quintet of rights specified by § 106 of the

F.2d 432, 439 (Sth Cir. 2000) (“[T]he preemptive effect of federal

included quintet [of rights found in § 106].”). Remedies are

immaterial. See Nat'l Car Rental Sys., 991 F.2d at 435 (“We

cannot conclude that this [breach of contract] action is preempted

simply because the parties’ contract provides a remedy for breach

identical to a remedy provided in copyright.”). And the quintet of

rights specified by § 106 clearly do not deal with the commercial

exploitation of a work, the- subject matter of this case. See

Rodrigue, 218 F.3d at 440 (“Notably absent from the Copyright

Act’s exclusive sub-bundle of five rights [specified by § 106] is the

right to enjoy the earnings and profits of the copyright.”).”

Completely ignoring § 301’s text, Petitioner fabricates from

whole cloth a brand new preemption test, citing the-opinion below

and four cases for the proposition that the “extra element” analysis

“requires a comparison of the state and federal remedies to enforce

the rights at issue.” Pet. 8 (emphasis added). But the Sixth

Circuit’s opinion does not say remedies are to be compared, and

neither do the cited cases. They each follow the text of § 301 and

compare the state law rights to the quintet of rights specified by

§ 106. See Pet. App. 14a (“Equivalency exists if the right defined

by state law may be abridged by an act which in and of itself would

infringe one of the exclusive rights.” (emphasis added)). Accord

Rosciszewski, 1 F.3d at 229; Nat'l Car Rental Sys., 991 F.2d at 431;

Altai, 982 F.2d at 716; Del Madera, 820 F.2d at 977.

Petitioner creates its unprecedented test for § 301 preemption,

comparing state and federal remedies rather than state and § 106

rights, as a bridge to reach an issue entirely irrelevant to this case—

whether § 504 of the Copyright Act permits actual damages for

The Fifth Circuit clarified this point in its Rodrigue

opinion: “[Section] 106[ ] is a finite bundle of but five fundamental

rights, being the exclusive rights of reproduction, adaptation,

publication, performance, and display. Notably, none of these

rights either expressly or implicitly include the exclusive right to

enjoy income or any of the other economic benefits produced by or

derived from copyright.” 218 F.3d at 435.

an infringer’s use of a work. Pet. 9-11 It then asserts that the Sixth

Circuit’s dictum suggesting that actual damages under § 504 cannot

be measured by the value of the infringer’s use is in conflict with

other courts of appeals’ holdings on that issue, citing as its lead

case Davis v. Gap, Inc., 246 F.3d 152 (2d Cir. 2001). Pet. 9. The

only appropriate response to this asserted conflict, however, is “so

what?” Section 301 requires a comparison of rights, not remedies,

and no court of appeals has held that a contractual right to be paid

is equivalent to any of the exclusive § 106 rights. There simply is

no conflict among the courts of appeals on the issue actually

presented by this case and decided by the Sixth Circuit.

Cases from the Seventh Circuit illustrate that § 504 remedies

are irrelevant to § 301 preemption. In Deltak, Inc. v. Advanced

Systems, Inc., 767 F.2d 357 (7th Cir. 1985), cited by Petitioner in

support of its asserted circuit split, Pet. 10, the Seventh Circuit

concluded that value of the use is a permissible way to calculate

§ 504 damages in a copyright infringement action. The Seventh

Circuit has also held, however, that § 301 does not preempt state

law contracts because contracts do not create exclusive rights, but

rather affect only their parties. ProCD, Inc. v. Zeidenberg, 86 F.3d

1447, 1454-55 (7th Cir. 1996). Thus, in the Seventh Circuit, a

contract claim seeking the reasonable value of the defendant’s use

of a work will not be preempted under § 301, even though, in a

include the reasonable value of the infringer’s use. Furthermore,

Respondents’ state law implied-in-fact contract in this case would

clearly not be preempted in the Seventh Circuit, notwithstanding

Deltak and its progeny.

Accordingly, while it is true that courts and commentators have

debated whether the reasonable value of a use should be implied as

a measure of actual damages under § 504‘, this academic debate

does not affect the outcome in this case or the Sixth Circuit’s

holding that Respondents’ right to contractual payment is not

equivalent to the quintet of rights specified by § 106. Moreover,

because its conclusion regarding remedies is pure dictum, if the

Sixth Circuit were itself presented with the question of whether the

reasonable value of an infringer’s use is a possible measure of

§ 504 damages, it may very well reach the same conclusion as its

sister circuits. The issue actually decided by the Sixth Circuit and

the issue discussed by Petitioner simply have nothing to do with

each other.’

“Compare Bus. Trends Analysts, Inc. v. Freedonia Group,

Inc. , 887 F.2d 399, 406-07 (2d Cir. 1989) (denying “use” damages),

and 4 Nimmer § 14.02[A], at 14-13 to 14-19 (advocating for result

reached in Freedonia), with Deltak, 767 F.2d at 360-61 (allowing

“use” damages), and Davis, 246 F.3d at 172 (agreeing with Deltak).

The Sixth Circuit noted the debate here by contrasting Freedonia

and Nimmer with Deltak. Pet. App. 16a & n.5.

‘The illogical outcomes that result when applying

Petitioner’s “comparison of the remedies” test demonstrates its

irrelevancy to proper preemption analysis. First, imagine an

express author/publisher contract that provides an injunctive

remedy in case of breach. Because that remedy is specified by

§ 502 of the Copyright Act, the contract will be preempted

according to Petitioner. Next, imagine a lawsuit based on a state

law copyright act that provides fixed damages of $100,000 for

every violation of the act. Because such a remedy is not specified

by §§ 502 to 505 of the Copyright Act, the cause of action will not

be preempted. Such results are the natural application of

Petitioner’s unfounded test.

iid |

II. THE PETITION CONTAINS MISSTATEMENTS OF

FACT AND LAW.

The Petition contains numerous misstatements of fact and law,

in addition to its misleading discussion of remedies and § 301

preemption. Examples include the following.

First, Petitioner states that “the act alleged to have violated

[Respondents’] rights under state law was Petitioner’s improper use

of material within the subject matter of the Copyright Act.” Pet. 11.

But that is not Respondents’ claim; Respondents’ claim is that the

contractual bargain was authorized use in exchange for a promise

to pay. What is at issue is Petitioner’s failure to pay under the

contract, as the Sixth Circuit held: “It is not the use of the work

alone but the failure to pay for it that violates the contract and gives

rise to the right to recover damages.” Pet. App. 15a.

Second, Petitioner states that the “rights created by [express]

agreements . . . arise from a meeting of the minds of the parties and

are not equivalent to the exclusive rights granted by the Copyright

Act.” Pet. 12. But Petitioner fails to acknowledge that the parties’

implied-in-fact contract similarly arises from a meeting of the

minds. Pet. App. 15a (An “implied in fact [contract] . . . ‘does not

exist, unless the minds of the parties meet.’” (quoting Cascaden v.

Magryta, 225 N.W. 511, 512 (Mich. 1929)).

Third, Petitioner states that Respondents “are not seeking to

vindicate a specific right to which assent was manifested in conduct

rather than words.” Pet. 13. But Respondents are seeking to

vindicate a specific right—a contractual right to payment—to which

Petitioner’s assent was manifested in conduct. Respondents’

implied-in-fact contract requires a meeting of the minds. There is

thus “an actual promise to pay for [Respondents’] creative work.”

Pet. App. 15a. }

Finally, Petitioner claims that an implied-in-fact contract

lacking an express price term is the same as a contract implied-in-

law, and, thus, “the right claimed by respondents is no different

from a right to reasonable compensation under an implied-in-law

contract or ‘quasi contract.’” Pet. 13. But Petitioner errs here for

several reasons. First, the statement ignores the long-standing

distinction between implied-in-law and implied-in-fact contracts.

See Baltimore & Ohio R.R. v. United States, 261 U.S. 592, 597

(1923) (An implied-in-law contract is a “fiction of law,” while an

implied-in-fact contract is “founded upon a meeting of minds. . .

inferred, as a fact, from conduct of the parties.”).

Second, by definition, an implied-in-fact contract does not have

express terms. It is thus well-settled that a promise can be “inferred

wholly” from conduct, Restatement (Second) of Contracts § 4,

including a promise of compensation, 4 Nimmer § 16.05[E]}, at

16-44.1.

Third, as the Sixth Circuit recited, Pet. App. 19a-20a, Professor

Nimmer opines it is the mutual expectation of compensation, not an

express price term, that distinguishes implied-in-fact from implied-

in-law contracts. And it is this mutual expectation of compensation

that removes contracts implied-in-fact from § 301 preemption. See

1 Nimmer § 1.01[B][{1][g], at 1-38 n.166.

rourth, as stated in section I.B. above, Petitioner received a

written licensing proposal from Respondents and thereafter used

Respondents’ concept and ideas. A jury will thus be entitled to find

that Petitioner is bound by the express price terms contained in

Respondents’ written proposal.

_ Finally, contrary to Petitioner’s suggestions, Pet. 13, 14, the

specific terms of an implied-in-fact contract are not derived by

default from a state court judgment of fairness, which is the basis

of quasi-contract recovery. Rather, the terms are derived by the

finder of fact from evidence of the parties’ course of dealing,

including any express negotiations; the surrounding circumstances,

including industry customs and practices serving as the context for

the parties’ mutual expectation of compensation; and expert

testimony regarding the value of the matter at issue. Such evidence

proves the specific, in fact terms of the parties’ agreement.

IV. PETITIONER’S POLICY ARGUMENTS DO NOT

WITHSTAND SCRUTINY.

Petitioner’s policy arguments regarding national uniformity ir.

(1) implied-in-fact contracts arising under state law “unsettle

commercial expectations,” “impair the free exchange of creative

ideas,” Pet. 17, and threaten “the predictability and certainty” of

“those who participate in the exchange of ideas and expression,” id.

at 16; and (2) state law implied-in-fact contracts involving

based on “even casual conversations or explorations,” id. at 17.

History disproves the first assumption. The Copyright Act

became effective in 1978 and, since that date, no court of appeals

has held that § 301 preempts a state law implied-in-fact contract.®

Such contracts have existed under state law concurrently with the

unpredictability or uncertainty in the exchange of ideas and

‘The first district court preemption of an implied-in-fact

contract did not occur until 1997. See Worth v. Universal Pictures,

Inc., 5 F. Supp. 2d 816 (C.D. Cal. 1997) (confusing implied-in-fact

with implied-in-law contracts).

expression, commercial expectations have not become unsettled,

and the free exchange of creative ideas has not been impaired.

Litigation realities disprove the second assumption. To prevail

ona claim for breach of an implied-in-fact contract involving ideas,

a “plaintiff must prove a specific series of rigid facts that are

difficult to prove even in the best of cases.” Glen L. Kulik,

21 Loy. L.A. Ent. L.J. 1 (2000). In the real world, implied-in-fact

contracts arise only under limited circumstances, see

4 Nimmer § 16.05 (concluding that an implied-in-fact promise to

pay for use of an idea usually requires direct solicitation by the

defendant); accord Reeves v. Alyeska Pipeline Serv. Co.,

926 P.2d 1130, 1140-41 (Alaska 1996), such as those present here,

where Petitioner solicited Respondents’ ideas for one year pursuant

to a mutual understanding of compensation.

The Sixth Circuit’s recent ruling in Murray Hill demonstrates

the difficulty in proving an implied-in-fact contract. There, the

Sixth Circuit distinguished the facts of the present case and

preempted the plaintiffs’ claim because the extra element of a

contractual promise to pay was missing. The facts showed merely

a quasi-contract claim:

We think that [plaintiffs’] allegations that WJR knew of

[plaintiffs’] intention to be paid for the use of [plaintiffs’]

work is not an allegation that WJR promised to pay, and

does not purport to raise a claim of an implied-in-fact

contract. A claim that one party was aware of the

expectations of the other is a far cry from a claim that the

first party agreed to a course of conduct that would fulfill

those expectations.

Murray Hill, 264 F.3d at 638 (emphasis added).’

The Sixth Circuit’s decision here merely confirms the legal

status quo that has existed for over 22 years—implied-in-fact

contracts involving commercial exploitation of copyright subject

- matter are not preempted by § 301 of the Copyright Act. The

decision does not threaten or interfere with the purposes and

objective of the Copyright Act. Accordingly, policy considerations

do not warrant a grant of certiorari in this case.

’Petitioner’s attempt to drive a wedge between Michigan

and Illinois law regarding the proof required for an implied-in-fact

contract, Pet. 17 n.5, is unavailing. The 50-year old case cited by

Petitioner, Mitchell Novelty Co. v. United Mfg. Co.,94 F. Supp. 612

(N.D. Ill. 1950), does not involve a contract implied-in-fact.

Moreover, it is clear that Illinois courts, like those in Michigan and

the other 48 states, will recognize an implied-in-fact contract even

where the parties have not expressly agreed to a compensation term.

See, e.g., Ekl v. Knecht, 585 N.E.2d 156, 162 (Ill. App. 1991)

(finding an implied-in-fact contract despite no express agreement

as to price).

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted,