Wrench LLC v. Taco Bell Corp.

United States Court of Appeals for the Sixth Circuit · 2001 · Contracts

ContractsCopyright preemptionImplied-in-fact contractNovelty§ 301 preemptionsubject matter of copyrightequivalencyextra element

Facts

Wrench LLC and its principals created the 'Psycho Chihuahua' character and presented Taco Bell with materials including art boards, scripts, drawings, clothing designs, and packaging, while discussing Taco Bell’s possible use of the concept in advertising. Plaintiffs also orally proposed using a live Chihuahua manipulated by computer graphics and discussed compensation, and Taco Bell’s representative understood that Taco Bell would have to pay plaintiffs if it used the concept. Taco Bell later aired Chihuahua commercials after receiving positive reactions to its own campaign, and plaintiffs claimed Taco Bell used their ideas without paying. The district court found sufficient evidence to create a genuine issue of material fact as to whether an implied-in-fact contract existed.

Issue

Whether plaintiffs’ Michigan implied-in-fact contract claim was preempted by § 301 of the Copyright Act, and whether Michigan law required plaintiffs to prove novelty to sustain that contract claim. A related issue was whether summary judgment could be affirmed on Taco Bell’s independent-creation defense.

Rule

A state-law claim is preempted by 17 U.S.C. § 301 only if (1) the work falls within the subject matter of copyright and (2) the state-law right is equivalent to an exclusive right under § 106. An implied-in-fact contract claim based on a promise to pay for use of creative work is not preempted when the extra element of a promise to pay makes the claim qualitatively different from copyright infringement; by contrast, a contract claim that amounts only to a promise not to reproduce, perform, distribute, or display the work is preempted. Under Michigan law, novelty is not required for an implied-in-fact contract claim seeking compensation for disclosure or development of an idea.

🔒

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

The court's holding and reasoning
Doctrine tests, pitfalls & exam hypotheticals
10 practice questions + 4 AI-graded essays on this case

Free sample · practice this case

Test yourself

One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Chicago, illustrator Nina Patel pitched a restaurant chain, Mesa Cove Foods, a quirky pigeon mascot for social media ads. She emailed character sketches and taglines, and during meetings Mesa Cove’s marketing director said the company would compensate her if it used the concept; months later, Mesa Cove launched the mascot campaign without paying.

If Nina sues in Michigan for breach of an implied-in-fact contract, is her claim most likely preempted by 17 U.S.C. § 301?

Explanation. Under the majority opinion, a state-law claim is preempted only if the work falls within copyright’s subject matter and the state-law right is equivalent to a § 106 exclusive right. An implied-in-fact contract claim based on a promise to pay for use is not equivalent, because the extra element of a promise to pay — along with proof of mutual assent and consideration — changes the nature of the action. The claim seeks recovery for failure to pay, not merely for unauthorized copying. (Derived from Wrench LLC v. Taco Bell Corp. (2001).)