Implied Contracts: When Actions Speak Louder Than Words

Artists struggle with protecting ideas because ideas are much broader than specific expressions, like scripts, paintings, and sheet music. In the film and music context, it is difficult to create art without first discussing broad ideas that a film or song might represent. With ideas lacking protection under copyright or trade secret, implied contracts are left as the next best alternative for protecting ideas.

How do we protect our creatives?

Copyright law incentives production of creative works by providing exclusive rights to creators.[1] In contrast, trade secret law protects secrecy, when information derives economic value by remaining generally unknown.[2] An implied-in-fact contract (“implied contract”) claim protects information that lies somewhere in-between and may not qualify for either—copyright or trade secret. Implied contracts arise out of agreements that are proved through parties’ conduct, rather than through words.[3]

A. Copyright Protection

Copyright protects human-made, original creative works that are fixed in a tangible form of expression.[4] For example, copyright generally protects films, music, paintings, written works, and photographs.[5] Copyright does not protect ideas or conversations; in part, because they are not fixed, and partially because they are too general to grant exclusive rights to.[6] Copyright owners have the exclusive right over their creative work—to reproduce it, make derivatives, distribute copies, and to perform or display the work publicly.[7] Additionally, copyright owners have the exclusive right to allow others to use their work—an agreement that is often executed through a paid license.[8]

To satisfy the originality requirement, a work must be human-made and should be created without copying a pre-existing work.[9] To satisfy the fixation requirement, a work should be expressed in a medium that allows the work to be perceived, reproduced, or communicated for longer than a brief period of time.[10] Thus, a copyright owner could be the photographer who clicks the camera’s button, or a company, such as a film production studio.[11] In the latter example, a film studio owns the films it produces as a “work for hire,” meaning the film was created for the studio, by studio employees, during the scope of their employment.[12]

Fixation is extremely important in copyright law because tangible mediums serve as evidence during legal disputes.[13] Most importantly, fixation functions as a way of creating value for a non-physical works by making the works permanent.[14] If making the works tangible is what creates value for the works, an idea without fixation faces a major problem: No copyright protection because the idea lacks permanence.[15]

Even if a work is original and fixed, the scope of copyright protection does not extend to the idea represented in the work; this is known as the idea-expression dichotomy.[16] In other words, copyright only applies to the tangible form of an idea, and not the general themes represented in a work.[17] In the film example above, copyright would protect the content of the film, without extending to ideas discussed by the film studio during pre-production.

When applying the idea-expression dichotomy to a book-keeping method, the U.S. Supreme Court held that copyright protects the expression of an idea, but not the idea itself.[18] In Baker v. Selden, Selden had copyrighted a book detailing a bookkeeping system he developed.[19] The book included compositions of ruled lines and headings, showing how the system should be used.[20] Later, Baker published a book depicting compositions on how to arrange an accounting system.[21] Selden may have had exclusive rights in the specific tables and art his book illustrates. However, Baker’s book did not infringe Selden’s copyright because copyright does not protect a system of arranging ideas, such as through organizational tables.[22] Rather, copyright only protects the specific expressions of that system.

The Supreme Court established four tests to distinguish between ideas and expressions.[23]

First, under the use test, infringement looks to whether an expression was copied. Here, infringement depends on a copy’s intended purpose.[24] The critical analytical factor is whether a copy was made for use or for explanation (of how to use a work).[25] Thus, this approach is criticized and seldom applied because the focus is on the purpose of a copy rather than scope of protection for the original work.[26]

Second, under the merger test, infringement depends on whether the original work is utilitarian or practical in nature.[27] Under this approach, copying is allowed for works whose nature merges idea and expression, even when the copier uses someone else’s original art.[28] This includes charts like in Baker, fashion designs, and architectural works.[29]

Third, under the categorical test, blank account books cannot be copyrightable because Baker held this category of works to be utilitarian in nature.[30] Further, blank account books do not possess a sufficient expression of originality to be considered copyrightable.[31]

Fourth, under the exclusive rights test, the scope of an author’s exclusive rights is limited to their specific expression.[32] As applied in Baker, Selden had exclusive rights to his book’s arrangement of accounting methods, he did not have the exclusive right to make accounting books.[33] According to Professor Nimmer from the UCLA School of Law, the exclusive rights test is the main rule set forth by Baker.[34]

In Baker, Baker’s accounting charts were not substantially similar to Selden’s bookkeeping charts.[35] So, the Supreme Court reasoned there was no copyright infringement because of the absence of similarity in expression.[36] The Court’s approach to the idea-expression dichotomy illustrates the importance of the fixation requirement in copyright, as a way to provide evidence for creative work. All the tests focus on expression, and none address protection of ideas without expression. Despite establishing traditional tests for copyright protection, these tests remain ineffective for artists, such as filmmakers, who must discuss their ideas with others before executing a specific expression.

B. Trade Secret Protection

In contrast to copyright law, trade secret law significantly widens the breadth of legal protection for creators by removing the fixation requirement. In short, while trade secret law does not inherently protect artistic works, it does protect business information deriving economic value by remaining secret. Examples of trade secrets include Google’s search algorithm, Coca Coca’s formula, Porsche’s engine design process, and specific arrangements of contact information.[37]

A trade secret must:

1.     Have independent economic value because it is

2.     Not generally known in the same industry,

3.     Not readily ascertainable through limited time and effort, and

4.     It is kept secret through reasonable efforts.[38]

Under the Uniform Trade Secret Act (“UTSA”), a trade secret can be in the form of “a formula, pattern, compilation, program, device, method, technique or process.”[39] The Defend Trade Secrets Act (“DTSA”) specifies “trade secret” refers to “all forms and types of financial, business, scientific, technical, economic, or engineering information.”[40]

Under both the UTSA and the DTSA, trade secret protection is much broader than copyright protection, because trade secrets do not have copyright’s fixation requirement.[41] This broadness comes from trade secret’s origin, which arose out of disputes between competitors, or employees and former employers, where broad protection was necessary to protect business secrets.[42]

Copyright incentivizes disclosure to the public by providing economic incentives to authors via a licensing fee.[43] In contrast, a trade secret incentivizes non-disclosure to the public if information can derive economic value by remaining generally unknown.[44] For example, information may be a trade secret if the information holder simply asserts its confidentiality.[45] Still, trade secret law cannot protect ideas if they are not proven to derive economic value from remaining unknown. For example, a film script idea cannot be a lucrative hit until the film is released, long after initial discussions of ideas in pre-production. Like copyright, trade secret falls short of protecting artists, like filmmakers, who must pitch their ideas to studio executives to even have their film considered for production.

In Between Copyright and Trade Secret

In the film and music context, it is difficult to create art without first discussing broad ideas that a film or song might represent. For situations where someone pitches an idea to a studio, copyright law likely would not protect a plaintiff, because the fixation requirement is not satisfied. Similarly, trade secret law would likely not protect a plaintiff’s idea because their pitch could include reasonably ascertainable information. Nonetheless, in order to make a living, authors and other creatives must disclose their ideas to production executives.[46] For such artists, implied contracts act as an in-between of copyright and trade secret. Through implied contract claims, authors could successfully protect their creative ideas, so long as the conduct between the author and executive leaves no room to doubt protection of the author’s idea.[47]

A Desny (implied contract) claim falls between copyright’s innovation incentive and trade secret’s broad protection. Implied contract claims may arise in idea submission cases, such when someone pitches a film or TV show to a studio executive.[48] In these situations, the plaintiff might argue the studio misused valuable business information provided by the plaintiff, without permission or compensation.[49]

In Desny v. Wilder, the California Supreme Court addressed what came to be known as a “Desny claim.” There, Desny shared a film idea, based on historical facts, with a studio executive’s secretary over the phone.[50] During the call, Desny stated he would not give permission to the studio to produce his film idea, unless he received compensation.[51] Soon after the call, there was release of a film closely resembling Desny’s film idea.[52] Desny could not make a successful copyright infringement claim because his film idea was too broad (in being based on historical facts) and not fixed (in a tangible medium).[53] However, Desny had sufficiently communicated with the secretary to establish an implied-in-fact contract with the studio.[54] Because the secretary did not reject Desny’s statement that his film idea may not be used without compensation, the California Supreme Court held that a contract may be implied through conduct, despite no express promise to pay.[55]

‍ ‍Desny claims provide a pathway to copyright protection. Leading up to the production of an artwork, Desny claims take into account the necessary discussions between artist and producer. For filmmakers and songwriters, this includes pitch meetings with studio executives, where copyright cannot protect exchange of ideas because conversations are not fixed in a tangible medium. Trade secret also would likely not protect such exchanges. Audience reception of an artwork, such as a film or script, can only happen once the artwork is published. Without knowing how the audience would receive a film or song idea, it is difficult to prove the idea derives economic value from remaining generally unknown. Still, some artists must simultaneously protect and pitch their creative ideas. For such artists, Desny claims provide a strong argument in favor idea protection.

[1] Laura A. Heymann, How to Write a Life: Some Thoughts on Fixation and the Copyright/Privacy Divide, 51 Wm. & Mary L. Rev. 825, 826 (2009).

[2] See Charles Tait Graves & Sonia K. Katyal, From Trade Secrecy to Seclusion, 109 Geo. L. J. 1337, 1350-1 (2021).

[3] Lionel S. Sobel, The Law of Ideas, Revisited, 1 UCLA Ent. L. Rev. 9, 28 (1994).

[4]What is Copyright?, U.S. Copyright Office, https://www.copyright.gov/what-is-copyright/.

[5]Id.

[6]Id.

[7]What is Copyright?, supra note 4.

[8]Id.

[9]Id.

[10] 17 U.S.C. § 101.

[11] What is Copyright?, supra note 4.

[12]Cinema Law: What Does “Work For Hire” Mean in Moviemakers?, MovieMaker (Aug. 14, 2024), https://www.moviemaker.com/work-for-hire-moviemakers/.

[13] Megan Carpenter and Steven Hetcher, Function over Form: Bringing the Fixation Requirement into the Modern Era, 82 Fordham L. Rev. 2221, 2239 (2014).

[14]Id. at 2245.

[15]Id. at 2256.

[16] Amy B. Cohen, Copyright Law and the Myth of Objectivity: The Idea-Expression Dichotomy and the Inevitability of Artistic Value Judgments, 66 Ind. L. J. 175, 205 (1990).

[17] Leeron Hoory, What Is A Copyright? Everything You Need To Know, Forbes (Jul. 24, 2025), https://www.forbes.com/advisor/business/what-is-copyright/.

[18] Edward Samuels, The Idea-Expression Dichotomy in Copyright Law, 56 Tenn. L. Rev. 321, 326 (1989).

[19]Id. at 326.

[20]Id.

[21]Id.

[22] Samuels, supra note 18, at 326-7.

[23]Id. at 327.

[24]Id.

[25]Id. at 327-8.

[26]Id.

[27]Samuels, supra note 18, at 329.

[28]Id.

[29]Id.

[30]Id. at 329-30.

[31]Id. at 330.

[32]Id.

[33]Id.

[34]Id.

[35]Id.

[36]Id.

[37]Famous Examples of Trade Secrets, Amir Abidi SF Bay Area Patent Attorney (Jun. 5, 2025), https://patentlawyer.io/famous-examples-of-trade-secrets/; Eric Barton & Alex Meier, Are My Customer Lists a Trade Secret, Trading Secrets (Apr. 17, 2017), https://www.tradesecretslaw.com/2017/04/articles/trade-secrets/are-my-customer-lists-a-trade-secret/.

[38] Graves & Katyal, supra note 2, at 1350-1.

[39] Graves & Katyal, supra note 2, at 1348. See Unif. Trade Secrets Act § 1(4) (amended 1985), 14 U.L.A. 538 (2005).

[40] Graves & Katyal, supra note 2, at 1347. See 18 U.S.C. § 1839(3).

[41] Graves & Katyal, supra note 2, at 1350.

[42] Amy Kapczynski, The Public History of Trade Secrets, 55 UC Davis L. Rev. 1367, 1383 (2022).

[43]Copyright Basics, USPTO, https://www.uspto.gov/ip-policy/copyright-policy/copyright-basics.

[44]See Graves & Katyal, supra note 2, at 1350-1.

[45]Id. at 1351.

[46] Rebecca Girolamo, Twenty-Five Words or Less: How Hollywood’s Pitch Process Has Changed the Law of Idea Protection, 22 S. Cal. Interdisc. L.J. 463, 476 (2013).

[47] Girolamo, supra note 46, at 491.

[48] Charles Tait Graves, Should California’s Film Script Cases Be Merged into Trade Secret Law?, 44 Colum. J.L. & Arts 21, 27 (2020).

[49]Id. at 27.

[50] Desny v. Wilder, 46 Cal. 2d 715, 726-27 (1956).

[51]Id.at 727.

[52]Id.

[53]Id. at 741.

[54]Id. at 745-26.

[55]Id.‍ ‍