Opinion ID: 3013538
Heading Depth: 2
Heading Rank: 3

Heading: Baer’s Misappropriation Claim

Text: Baer next raises the issue of whether the district court erred in holding that the fact that the ideas he advanced existed in the public domain precluded those ideas, alone or in combination, from possessing the requisite novelty so that their use cannot be the basis for a claim for common law idea misappropriation. The cause of action of “misappropriation” is based on tort principles rather than on contract law. Restatement (Third) of Unfair Competition § 40, cmt. a. The premise behind the tort is that when a party misappropriates another’s confidential idea or some other type of property, the law imposes an obligation on that party to pay the other restitution for its improper use. Id.; Duffy, 124 F. Supp. 2d at 808. There is no dispute between the parties that this case is governed by the leading precedent on the misappropriation of ideas in New Jersey, Flemming v. Ronson Corp., 258 A.2d 153, 156-57 (N.J. Super. Ct. Law Div. 1969), aff’d, 275 A.2d 759 (N.J. Super. Ct. App. Div. 1971); see also Ahlert v. Hasbro, Inc., 325 F. Supp. 2d 509, 513 n.6 (D.N.J. 2004) (citing Flemming test in misappropriation claim); Johnson v. Benjamin Moore & Co., 788 A.2d 906, 914 (N.J. Super. Ct. App. Div. 2002) (same); The court in Flemming articulated the 6 We do not consider whether Baer was entitled to summary judgment with respect to the timeliness of his quasi-contract claim. In this regard we point out that Baer did not move for summary judgment in the district court. While it is not unusual for us when reversing a summary judgment for one party to direct that the district court grant summary judgment to the other party, ordinarily, at least, we do this in circumstances in which the parties made cross-motions for summary judgment in the district court. See, e.g., Nazay v. Miller, 949 F.3d 1323, 1327-28 (3d Cir. 1991); First Nat’l Bank v. Lincoln Nat’l Life Ins. Co., 824 F.2d 277, 281-82 (3d Cir. 1987). Accordingly, we go no further with respect to the statute of limitations issue than to hold that the district court should not have disregarded Baer’s certification and it should have considered the February 10, 1997 letter. Therefore our analysis in supra note 5, will not preclude the district court on a fuller examination of the facts from coming to a conclusion contrary to ours as we write on the point merely for the limited purpose of addressing Chase’s argument that we should affirm the summary judgment on a different basis than that of the district court. 25 test for determining whether the law will imply an obligation to pay for a confidentially submitted idea: When “a person communicates a novel idea to another with the intention that the latter may use the idea and compensate him for such use, the other party is liable for such use and must pay compensation if . . . (1) the idea was novel; (2) it was made in confidence [to the defendant]; and (3) it was adopted and made use of [by the defendant in connection with his own activities].” Flemming, 258 A.2d at 156-57 (citing Mitchell Novelty Co. v. United Mfg. Co., 199 F.2d 462 (7th Cir. 1952); De Filippis v. Chrysler Corp., 53 F. Supp. 977 (S.D.N.Y. 1944), aff’d, 159 F.2d 478 (2d Cir. 1947); Official Airlines Schedule Info. Serv., Inc. v. Eastern Air Lines, Inc., 333 F.2d 672 (5th Cir. 1964)). Thus, the misappropriation issue on appeal is whether the ideas Baer provided were novel. While novelty is clearly a prerequisite to establish a misappropriation claim in New Jersey, Johnson, 788 A.2d at 914-15, the courts have not articulated clearly the test for determining whether an idea is sufficiently novel to warrant protection. See Duffy, 123 F. Supp. 2d at 808. Two leading cases dealing with the parameters of New Jersey misappropriation law arose in federal courts deciding state law issues, Duffy, 123 F. Supp. 2d 802, and Bergin v. Century 21 Real Estate Corp., No. 98 Civ. 8075, 2000 WL 223833 (S.D.N.Y. Feb. 25, 2000), aff’d, 234 F.3d 1261 (2d Cir. 2000) (table). As the district court noted in Duffy, it is unclear whether the issue of novelty is “an issue of fact, for the fact finder, a question of law, for the jury or a mixed question of fact and law.” Duffy, 123 F. Supp. 2d at 808. The Flemming opinion followed a bench trial so such a determination was unnecessary. Flemming, 788 A.2d at 154. The district court in Bergin, though deciding the case under New Jersey law, looked to New York law and held that “[w]hether an idea is novel is an issue of law which may be decided on a motion for summary judgment.” Bergin, 2000 WL 223833, at . The Duffy court held that the “New Jersey Supreme Court would determine that although some of the factors relevant to a determination of novelty may be factual, the ultimate determination of whether an idea is novel is a question of law for the court.” 123 F. Supp. 2d at 809. Duffy relied on the similarities to a court’s role with respect to “obviousness” in patent cases, citing Ryko Mfg. Co. v. Nu-Star, Inc., 950 F.2d 714, 716 (Fed. Cir. 1991), and cases holding that the “novelty” determination is a matter of law. See Duffy, 123 F. Supp. 2d at 809 (citing extensive list of cases that hold that the determination of novelty is a question of law). Additionally, Duffy 26 indicated that “even courts holding that the question is a factual one have not hesitated to grant summary judgment on the basis of lack of novelty when the underlying facts do not support a finding of novelty.” Id. (citing Wilson v. Barton & Ludwig, Inc., 296 S.E.2d 74, 78 (Ga. Ct. App. 1982)). We believe that the district court here was correct in its conclusion as to how the New Jersey Supreme Court would decide this issue and it is therefore necessary to determine the “novelty” of Baer’s contribution. The predicates on which a property right in an idea may be based are novelty and originality. See Downey v. General Foods Corp., 286 N.E.2d 257, 259 (N.Y. 1974). A misappropriation claim, unlike a contract-based claim, only can arise from the taking of an idea that is original or novel because the law of property does not protect against the appropriation of that which is free and available to all. Nadel, 208 F.3d at 378. Therefore, anyone may use ideas in the public domain freely with impunity. See Ed Graham Prods., Inc. v. National Broad. Co., 347 N.Y.S.2d 766 (N.Y. Sup. Ct. 1973). The district court here acknowledged Duffy’s observation that the law of “unfair competition ‘is an amorphous area of jurisprudence’ and ‘knows of no clear boundaries.’” Baer, 2004 WL 350050, at  (citing Duffy, 123 F. Supp. 2d at 815). For example, the court in Duffy noted that the Flemming court, “did not discuss a specific test that should be used to determine whether an idea is novel.” Duffy, 123 F. Supp. 2d at 809. The present facts, however, do not compel us to set forth a broad description of what is novel in our disposition of Baer’s misappropriation claim. Though Flemming did not articulate a test for affirmatively determining when an idea is “novel,” the court did cite examples of ideas that would not be novel. The Flemming court recognized that even an otherwise novel idea would lose its novelty if it was “in the domain of public knowledge” before the defendant used it. Flemming, 258 A.2d at 157-58. The Duffy court expanded on this conclusion by noting “[a]n idea will not satisfy [the novelty requirement] if it is not significantly different from, or is an obvious adaptation or combination of ideas in the public domain.” Duffy, 123 F. Supp. 2d at 810. The Court of Appeals for the Second Circuit, applying New Jersey law, also noted in Bergin v. Century 21 Real Estate Corp., 234 F.3d 1261 (2d Cir. 2000) (table), available at 2000 WL 1678777, at , that “[s]ummary judgment is appropriate where the defendant knew of the idea or the idea was ‘a matter[] in the domain of public knowledge before the plaintiff disclosed it to the 27 defendant.’” Other jurisdictions have taken like positions. See Educational Sales Programs, Inc. v. Dreyfus Corp., 317 N.Y.S.2d 840, 844 (N.Y. Sup. Ct. 1970) (“The idea need not reflect the ‘flash of genius,’ but it must shown genuine novelty and invention, and not a merely clever or useful adaptation of existing knowledge.”); Oasis Music, Inc. v. 900 U.S.A., Inc., 614 N.Y.S. 2d 878, 882-84 (N.Y. Sup. Ct. 1994) (declining to attribute novelty where ideas were variations and adaptations of existing knowledge in the public domain). We conclude, similarly, that the New Jersey Supreme Court, if addressed with the issue, would hold that ideas lose their novelty if they are in the domain of public knowledge before use. Such ideas cannot be misappropriated. Baer admits that all of the locations he identified to Chase exist in the public domain.7 In addition, many of the stories and potential plot lines that Baer “provided” Chase existed in the public record.8 Moreover, as the district court noted, the additional ideas and stories that Baer claims were misappropriated were not his stories; “associates” of Baer actually told them to Chase: In particular, the Plaintiff seeks compensation for Spirito’s story of rivalry with his uncles in the aftermath of his father's death, that Koczur’s account to Chase that many waste management companies were alleged to be involved with organized crime, Spirito’s story of his experiences with a ‘loan shark’ and Jones’s description of the way in which organized crime uses loan shark debts to take over a business, 7 Baer “introduced” Chase to the City of Elizabeth, The Pulaski Skyway, and Centanni’s Meat Market. 8 For example, Baer relayed the following stories to Chase: the RCA and Morris Levy “scam,” which was the subject of a published book; information regarding the DeCavalcante family and organized crime which existed in public lure of New Jersey; and wire taps that were part of the public record having been played at a criminal trial. We note that Morris Levy, an individual Jones discussed, and who is a prominent figure in the parties’ briefs, is not unknown to this court. See United States v. Vastola, 915 F.2d 865, 868 (3d Cir. 1990). 28 Jones’s description of the operation of ‘cutout’ schemes used by organized crime, Koczur’s information regarding the involvement of the DeCavalcante crime family in Saint Anthony's Church in Elizabeth, and a story told to Chase by Jones about Morris Levy's horse farm. Baer, 2004 WL 350050, at  (emphasis added). It is clear that virtually all of Baer’s alleged contributions either existed in the public domain or concerned stories and facts he did not provide. Baer argues that he did not simply introduce these third-parties to Chase, but rather “the majority of ideas were suggested by Plaintiff prior to the meeting.” Appellant’s br. at 67. Baer alleges that his aggregating and combining of ideas was essential in “put[ting] it all together” and “creat[ing] the ‘template’ for The Sopranos.” Appellant’s br. at 66. Baer alleges that it is “their combination that gives these ideas originality.” Id. at 68. In other words, Baer’s contribution in essence was “choosing” which ideas, existing in the public domain, he would present to Chase. Aggregation of ideas and expression do not by themselves create novelty. In Duffy the plaintiff argued that “its idea was novel because [it] spent many months deciding the organization and layout of the data so its products could be readily understood by nonprofessional investors. . . . [It] stated that it was the format that made Duffy’s reports unique and proprietary to [it].” 123 F. Supp. 2d at 812. The plaintiff in Duffy took data, fields and information in the public domain and organized them to create a “mutual fund report card.” Id. The court held that, though the organization and layout of the data may involve some originality, this articulation of originality went more to an idea’s expression than to the idea itself. Id. It is well-established that an idea’s expression is not entitled to protection under a state’s misappropriation law. Id. As the court in Duffy recognized, “To the extent a state’s law purports to impose liability for the misappropriation of an idea’s expression, such a law would be preempted by federal copyright law.” Duffy, 123 F. Supp. 2d at 812 n.5 (citing 17 U.S.C. § 106; Wilson v. Mr. Tee’s, 855 F. Supp. 679, 684-85 (D.N.J. 1994); Rowe v. Golden W. Television Prods., 445 A.2d 1165 (N.J. Super. Ct. App. Div. 1982)). Despite Baer’s creativity in combining stories and facts existing in the public domain, New Jersey does not protect this mode of originality under its 29 misappropriation law. Thus, the district court correctly granted Chase summary judgment on Baer’s misappropriation claim.