'Rounders' lawsuit results in broader protection for writers.

It's become the Hollywood cliche: a screenwriter claims that his script or treatment that's rejected by producers is eventually turned into a movie.

The studios have been relatively successful in defending such claims by either proving that the lawsuit has no merit or that the script differs too much from the movie to be protected under U.S. copyright laws.

But that might become harder after a federal appellate panel published a decision earlier this month giving writers a second recourse in pursuing intellectual property claims.

As a result, entertainment attorneys are advising studios to include even more legal protections and disclosures in their agreements and to keep better records on how they develop story ideas.

"What this does is open up any studio to a possible claim that they never would have expected to be filed," said Aaron Moss, an entertainment attorney at Greenberg Glusker Fields Claman Maehtinger & Kinsella LLP. "What the court is doing here is essentially saying you can, even if your copyright claim fails, have a second chance to recover for the use of the ideas that were embodied in the script."

In its published decision on Sept. 8, a three-judge panel in the 9th Circuit Court of Appeals ruled that a writer who claims a producer copied his script may allege the producer breached an implied contract, even if he cannot prove the producer violated his copyright.

Previously, writers suing about scripts typically fell under the jurisdiction of the U.S. Copyright Act of 1976, while the breach of contract claim, a California law, applied primarily to artists who submit ideas in pitch meetings and expect payment if a producer uses the idea.

Copyright requirements

Claims alleging breach of implied contract have steadily increased since writer and humorist Art Buchwald won a similar case against Paramount Pictures Corp. in 1990 regarding the 1988 movie, "Coming To America." In that case, Buchwald sought net profits from the movie he claimed was based on a treatment he wrote for Paramount.

However, few cases have ended in favorable verdicts, in part because studios have successfully removed cases to federal court, where the U.S. Copyright Act predominates.

The strict requirements of protection under U.S. Copyright law have given studios an effective method in dismissing claims that mimic the Buchwald case, which was settled for an undisclosed sum after the newspaper columnist won in California appeals court.

Most federal judges have ruled that writers with scripts or other written ideas may not sue under the California breach of contract claims. But some judges have challenged those decisions. The 9th Circuit's ruling is the first published opinion on the issue.

"The main exchange of ideas and production are going on every day and no one knows the rules," said John Marder, a partner at Manning & Marder Kass Ellrod Ramirez LLP representing Jeff Grosso, a former poker player who filed the suit that was subject to the recent ruling. "You have a great idea worth $1 million but you have no protection."

In 1996, Grosso sent a screenplay called "The Shell Game" to Gotham Entertainment Group's principal shareholder, Patrick McDarrah, a former executive of Miramax Film Corp., the brief says.

Grosso said he mailed a copy of his script to Gotham, which publicly announced it accepted unsolicited scripts. He was responding to a solicitation by Gotham on the Internet, Marder said.

Grosso claims that Gotham, located two floors below Miramax in the same building, had a "first look" deal with Miramax and that 20 projects had been passed from Gotham to Miramax during the time he submitted his script.

Grosso also claims that Miramax, owned by Walt Disney Co., produced the 1998 movie "Rounders" based on his screenplay. Both the movie and his script revolve around high stakes poker and a protagonist who loses his tuition money on a full house hand Of Texas Hold 'em, his brief says. Both also include a bad guy who wears a jogging suit, a character named "Worm," a blonde girlfriend and an appearance by Johnny Chan, a real-life poker player, the brief says.

"Rounders," starring Matt Damon and Edward Norton, wound up with $23 million in U.S. box office receipts.

Grosso, now a restaurant manager on the East Coast, expected payment for his script, Marder said. "He wrote it, mailed it to himself and registered it with the Writers Guild," he said. "The implied rule is you get paid."

Miramax denial

Grosso originally sued in 1999 in Los Angeles Superior Court, alleging that Miramax and its executives breached a contract with him under state laws. The case was removed to U.S. District Court, Central District of California, because it fell under the purview of U.S. Copyright laws. In November 2001, a judge granted summary judgment in favor of Miramax.

In the ruling, U.S. District Court Judge Audrey Collins wrote, "the purpose of this state law claim is to protect those plaintiffs whose interest in literary property is not concrete enough to be protected under the copyright laws. The complaint makes it clear that plaintiff's 'ideas' are fully embodied in a concrete form of written expression, his script, and that this script was submitted to defendants."

Richard Charnley, an attorney of counsel at Nelsen Thompson Pegue & Thornton PC in Santa Monica representing Miramax, maintained "Rounders" is based on the experiences of one of its writers as a poker player and a law student. Further, he said Gotham was never required to submit "The Shell Game" to Miramax.

Grosso appealed, claiming in legal briefs that, "'such a ruling would destroy the entertainment industry. A producer would be flee to promise to pay another for the disclosure of a movie plot, game show format, reality-based programming, or any other commercially viable property and then blatantly breach the agreement, openly steal the product."

In its opinion, the 9th Circuit granted Miramax summary judgment on the copyright claim but ruled that Grosso may pursue a separate claim in California court because he includes the separate issue of payment expectation, which is a contract issue rather than a copyright claim.

Charnley said he is considering whether to request a re-hearing in the 9th Circuit. If he doesn't, the case will go to trial in L.A. Superior Court.