Famous Last Words February09

DISCLAIMER: This column is intended for general educationaland entertainment purposes and is not legal advice. Every situation is unique. Anyone entering into a contract should have a lawyer who can provide counsel.

Jim Charne,

Attorney at Law

Ideas, NDA's and Getting Ripped Off (February 2009)

Dear Jim:

I know ideas are not protectable, but what can I do if I have been ripped off?

Not happy

 

Dear Happy (Not):

One of the most fundamental principals of copyright law is that an idea is not protectable – but the tangible expression of the idea is.

This has been discussed in this column, as recently as last month.

So if ideas are not protectable, how can someone be protected from their concepts being taken, while they are kicked to the curb?

The most basic means is through an NDA. A good NDA will provide for confidential treatment of information – with the receiving party agreeing not to use the disclosure without a further agreement being entered into.

But not all so-called “NDAs” say that. It is important to read your document before it is signed, make sure you really understand what is being treated as confidential, and what restrictions are being placed on the recipient and the recipient's use of what is being disclosed. This also has been recently discussed.

Issues relating to ownership and the value of ideas, and whether unauthorized use has consequences, have been litigated in Hollywood for at least half a century.

The underlying theme of these Hollywood cases (and they have been decided every which-way) is that while ideas can not be protected under copyright, ideas may be contracted for. The circumstances of the disclosure may show there was a tacit or implied agreement that lead to the disclosure. And use of an idea that is the subject of such an agreement (even a verbal or unspoken agreement that may be pieced together from the facts), without an appropriate level of compensation, may have economic consequences.

Not all contracts have to be written. The circumstances under which ideas are presented may have some bearing on whether confidential treatment is required, and whether unauthorized use or expropriation may be subject to compensation.

For example, an idea that is tossed out during a cocktail party or happy hour conversation, when several people are all part of the discussion, may be less likely to be seen as confidential, proprietary, and protected than ideas discussed during a formal pitch session in the offices of a game studio or publisher.

Courts have, in the past, looked at whether the circumstances of the disclosure are of a kind that the parties had a reasonable expectation that use would lead to compensation.

A recent example shows the danger of expropriating an idea.

On January 24, 2009 , the Los Angeles Times reported that a federal court ruled that Taco Bell is responsible for a $42 million judgment arising from its use of the talking Chihuahua character in its memorable ads.

Television commercials featuring the dog were very popular in the 1990's.

According to the Times, Taco Bell had been in discussions with the Grand Rapids, MI-based creators of a “psycho Chihuahua” cartoon to adapt the character for its television ads. It broke off discussions, and took the idea to another ad agency. These ads ran until 2000. In 1998, the Michigan-based “psycho Chihuahua ” creators filed suit.

In June 2003, a federal jury ordered Taco Bell to pay the creators $30 million, with a further $12 in interest being added to that amount.

In the current action, Taco Bell tried to pass off responsibility to pay the judgment to the agency to which it took the Chihuahua idea. But the Federal 9th Circuit Court of Appeals, in Taco Bell Corp. vs. TBWA, said that Taco Bell alone is responsible for the judgment.

We always hope for good faith and fair dealing in relationships between creators and their contracting partners.

But the best way to provide for protection is through a good NDA. The Taco Bell case, and the movie studio cases, show that while ideas are not protectable, their proprietors are not necessarily left out in the cold if unfair use is made of them.

Is there language in your contract that has you scratching your head? Found something confusing or worse? Submit a question to Jim for developer-oriented analysis in this Famous Last Words column (IGDA members only).

Jim's Bio

Jim Charne practices law in Santa Monica, CA (www.charnelaw.com) where he represents developers, designers, and other clients in the games industry. Jim was the proud recipient of an IGDA M.V.P. Award at GDC 2006, is chair of the annual GDC legal and business tutorial, and a member of the Advisory Board of G.A.N.G. From 1998 to 2001, Jim served as President of the Academy of Interactive Arts and Sciences.

© 2009 Jim Charne. All rights reserved.