Dunn v. DreamWorks Animation SKG, Inc.

California Court of Appeal affirms judgment in favor of defendant DreamWorks Animation on plaintiff’s breach of implied-in-fact contract claim concerning blockbuster animated film Kung Fu Panda, finding that trial court properly instructed jury on substantial similarity and correctly answered jury’s question on what constitutes use of an idea.

Plaintiff Terence Dunn, a writer with a background in martial arts, brought suit against defendant DreamWorks Animation (DWA), asserting a claim for breach of an implied-in-fact contract for defendant’s alleged use of his idea in creating the blockbuster animated motion picture Kung Fu Panda. After a judgment entered on a jury verdict in favor of DWA, plaintiff appealed, contending that the trial court erred in refusing his jury instructions on substantial similarity and in answering the jury’s question on what constitutes use of an idea. The Court of Appeal affirmed, finding that the trial court properly instructed the jury on the substantial similarity standard and that the court correctly answered the jury’s question.

In the early 1990s, plaintiff created an animated character he called Zen-Bear, a panda that was a master of tai chi and martial arts. Over the following years Dunn registered with the Writers Guild of America certain story outlines of Zen-Bear’s adventures. Dunn claimed that he met DreamWorks executive Lance Young at a holiday party on November 21, 2001, and pitched to Young a movie idea based on Zen-Bear. In a subsequent phone conversation, Young allegedly notified Dunn that DreamWorks already had a “martial arts panda project,” and Dunn said that he expected to be compensated and receive credit if DreamWorks used his ideas.

In January 2000, about two years before Dunn pitched his idea to Young, DWA founder and CEO, Jeffrey Katzenberg, had suggested that DWA explore pandas as a possible subject for a movie. In response, DWA assigned Michael Lachance, an employee in DWA’s development department, to work on the project. In March 2000, Lachance drafted outlines for a story based on pandas. He also enlisted a DWA writer to work on potential storylines about a panda in the martial art genre, and in September 2000, received a storyline about a panda that performed kung fu. In November 2000, Lachance discussed with Katzenberg his idea for an animated film called Kung Fu Panda and drafted a story outline of the same name, dated November 27, 2001, one week after Dunn claimed he had pitched his ideas to Young. Lachance later testified that Young did not provide him with any of the elements for the story outline and he had never heard of Dunn before drafting the outline. In June 2008, DWA released the animated blockbuster film Kung Fu Panda.

In June 2010, Dunn filed an action for breach of implied-in-fact contract against DreamWorks, alleging that DWA agreed it would not use his ideas in Kung Fu Panda without compensating him and giving him credit. At trial, the jury found that Dunn and DWA had entered into an implied-in-fact contract, but that DWA had not actually used Dunn’s idea in Kung Fu Panda. Following a judgment entered after the jury’s verdict in favor of DWA, Dunn appealed, contending that the trial court erred (1) in refusing to instruct the jury with his specially prepared instructions on substantial similarity and (2) in answering the jury’s question on what constitutes use of an idea. The Court of Appeal disagreed and affirmed the lower court’s judgment.

Dunn argued that the trial court erred in refusing to instruct the jury with his proposed instruction that provided: “Differences between the movie and the pitch do not necessarily mean they are not substantially similar. You may find that differences between the movie and Plaintiff’s pitch were deliberately contrived to disguise the fact that Plaintiff’s ideas were being used.” In finding that the trial court did not err in refusing the jury instruction, the appellate court explained that the first sentence of the proposed instruction unnecessarily highlighted an obvious point—that Dunn need not prove his pitch was identical to the film—because the phrase “substantially similar,” as used in the instruction given to the jury, clearly indicated that differences between Dunn’s pitch and the movie did not preclude a verdict for Dunn. The court also explained that the second sentence of Dunn’s proposed instruction “amount[ed] to an argument to the jury in the guise of a statement of law,” and improperly stressed Dunn’s view of the evidence—that any differences were the result of DWA’s efforts to hide its use of Dunn’s ideas. The court concluded that Dunn’s proposed instruction was unnecessary because the jury had been properly instructed by the trial court.

Dunn also argued that the trial court erred in responding to the jury’s question on what constitutes use of an idea. The jury had asked: “If an idea is expressed by Dunn to DreamWorks, incorporated in an intermediate work, and abandoned before the movie is made, does this constitute use ... ?” The trial court answered: “No.” The Court of Appeal agreed that was the correct answer, reasoning that a finding that DWA abandoned Dunn’s idea before it made the film would necessarily require the jury to find that Dunn’s pitch and the film were not substantially similar. Dunn also argued that the jury’s question should have prompted the trial court to give additional instructions on substantial similarity. In rejecting this argument, the Court explained that a further instruction on substantial similarity would not have been an appropriate response to the jury’s question because the jury asked about abandonment of Dunn’s idea, not differences between Dunn’s idea and the film. The question did not indicate that the jury was seeking clarification on the substantial similarity standard, so further instruction was not necessary.