Whether the Copyright Act, 17 U.S.C. 301, preempts state claims for implied covenant of good faith and fair dealing, or interference with advantageous business relations, where the alleged wrongful conduct supporting each theory is copyright infringement.

The plaintiff, Harold Curtis, made distinctive advertisements for car dealerships, selling the designs to a limited number of geographically diverse dealers to preserve their value. Curtis provided advertisements to defendant Herb Chambers for about seven months. Chambers was then approached by defendant Globe Specialty Products, which provided advertisements with a similar design at a reduced price. Chambers ended its relationship with Curtis, and the resulting customer confusion diluted the value of Curtis’s products for other car dealers.

Curtis filed copyright claims in federal court, which were dismissed because of a technical defect. Curtis then filed claims in state court for breach of the implied covenant of good faith and fair dealing; interference with advantageous business relations; and associated c. 93A claims. A Superior Court judge dismissed the claims on a 12(b) motion, finding them preempted by federal copyright law. The Appeals Court reversed, 75 Mass. App. Ct. 662, and the SJC granted further appellate review.

Federal copyright law preempts state claims where the right asserted in state court is “equivalent” to a right protected under federal law. See Lee v. Mt. Ivy Press, L.P., 63 Mass. App. Ct. 538, 548 (2005). Where extra elements render the state claim qualitatively different from the rights protected by federal copyright, the state claim is not preempted. Id.

1. Implied covenant of good faith and fair dealing. The Appeals Court found that Curtis was essentially alleging that Chambers violated an implied promise to pay in exchange for using Curtis’s designs. The right to receive payment was separate from the right to control copies, and therefore not preempted. On appeal, Chambers offers what is essentially a factual argument — that the complaint does not in fact allege a promise to pay for future use.
2. Interference with advantageous business relations. To be liable for interference, the defendant (in this case Global) must know of a business relationship with a third party (Chambers) and interfere with that relationship through improper means, causing losses to the plaintiff. The Appeals Court found that those elements were sufficiently distinct to escape preemption. Global argues that, where the “improper means” consist solely of copyright infringement, this cause of action is simply a special case of copyright infringement, citing the legislative history of the copyright act. H. R. Rep. No. 94-1476 (“to the extent that the unfair competition concept known as ‘interference with contractual relations’ is merely the equivalent of copyright protection, it would be preempted.”).

1. Implied covenant of good faith and fair dealing. This claim falls somewhere between two relatively established cases. On the one hand, when a party simply refuses to make a payment it promised to make, the claim sounds in contract, and can be heard in state court even if the payment is in exchange for a copyright. On the other hand, claims such as unjust enrichment, which essentially import a duty to comply with copyright law into business torts, are preempted. The Appeals Court put the present claim in the first category, while the defendants argue it should fall in the second; the precise language of the pleading may push it one way or the other.
2. Interference with advantageous business relations. This claim turns on whether the extra elements of interference make it different in kind from copyright infringement, or just more precise. Where the “improper means” consist solely of copyright infringement, the claim is likely preempted.