# Opposition Brief — Taco Bell Corp. v. Wrench LLC

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0734%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2002
- **Citation:** 534 U.S. 1114

## Text

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

i
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
copyright subject matter?

ii
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

Vv

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
Copyright Act. The Sixth Circuit ruled against preemption and
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).

2

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

3

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

5

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

6

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
copyright infringement claim,” the qualitative difference being “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
[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

7

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
Copyright Act, Congress cannot have intended to grant authors
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.

8

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
Copyright Act to implied-in-fact contracts under state law. Such
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.

9

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

10

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.

1]
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.

12

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

13

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.

14

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
Copyright Act. No other court of appeals has opined on 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
copyright and contract remedies. It is this dictum and only this
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.

15

A. The Sixth Circuit Correctly Held that § 301 Does Not
Preempt Implied-in-Fact Promises to Pay for the Use of
Copyright Subject Matter.

The Sixth Circuit correctly interpreted and appiicu § 301 of the
Copyright Act. The analysis starts with the text of the statute.

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

16

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.”

17

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
Copyright Act and held that a contractual right to be paid for use of
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

18

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

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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
Copyright Act, on the other hand. See Rodrigue v. Rodrigue, 218
F.2d 432, 439 (Sth Cir. 2000) (“[T]he preemptive effect of federal
copyright law extends only to this explicitly-enumerated, lesser-
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

20

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
copyright infringement to be measured by the reasonable value of

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.

21

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
copyright infringement claim, actual damages under § 504 may
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

22

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 |

23

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. }

24

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

25

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.
copyright law are premised on two erroneous assumptions:
(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
copyright subject matter are easy claims to prove, creating liability
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
Copyright Act for over 22 years. Yet there has been no
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).

26

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,
Copyright Preemption: Is This the End of Desny v. Wilder?,
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

27

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).

28
CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted,

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

DECEMBER 2001

706703-1

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0734%3A2. Public record. Not legal advice.