Betty, Inc. v. PepsiCo., Inc.

Background

Betty, Inc., an advertising agency, sued PepsiCo, Inc., asserting copyright infringement and breach of contract. The dispute concerned Betty’s November 2015 pitch for Pepsi’s 2016 Super Bowl halftime commercial, titled “All Kinds/Living Jukebox.” Betty’s concept proposed a warehouse setting, a continuing version of “The Joy of Pepsi” performed in different musical genres, changes in clothing and atmosphere, and a final scene involving a doo-wop or acapella group around a trash-can fire.

Pepsi ultimately selected another agency’s concept. The commercial that aired featured Janelle Monáe moving through three brightly lit rooms and different historical eras, with changes in music, clothing, and dance. The commercial ended with the rooms forming the Pepsi globe. After the commercial aired, Betty obtained a copyright registration covering its written pitch materials and the text of its storyline. The registration excluded photographs, artwork, and the Pepsi name and logo.

Betty and Pepsi had previously entered into a 2014 Creative Agency Services Agreement. That agreement contemplated more specific project documents called Scopes of Work. Betty argued that the agreement was a Type II preliminary agreement—an agreement requiring the parties to negotiate unresolved terms in good faith—and that Pepsi breached that obligation.

Copyright claim

The court applied the summary-judgment standard, under which judgment is appropriate when the evidence shows no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment under the law.

The court stated that copyright infringement requires proof that the plaintiff owns a valid copyright and that the defendant copied original protected elements. The parties did not dispute that Betty had a valid copyright in its written presentation. The dispute was whether Pepsi copied protected expression. Pepsi had access to Betty’s presentation, but Betty offered no direct evidence of copying and instead relied on access and alleged substantial similarity.

The court held that the works were not substantially similar in their protected elements. Betty’s pitch had a darker mood, a warehouse setting, different musical genres, and performers associated with those genres. Pepsi’s commercial used bright rooms, popular music, and movement through different decades. The court also found the characters, pacing, and sequence meaningfully different.

The court ruled that some similarities were not protected by copyright. Changes in clothing and dance to match a musical genre or historical era followed naturally from the concepts and were therefore unprotected elements. The phrase “clean cuts” described an idea rather than a particularized expression. The title “Living Jukebox” was also an idea, not protected expression. In addition, Pepsi had used a jukebox in an earlier advertisement, so the court said that feature could not support an inference that Pepsi copied Betty’s work.

The court concluded that there were few, if any, similarities between Betty’s protected pitch materials and Pepsi’s commercial, and that any similarities involved ideas, elements that naturally arise from a theme or setting, or Pepsi’s prior work. It therefore held that Betty’s copyright-infringement claim failed as a matter of law.

Breach-of-contract claim

Applying New York law, the court explained that a breach-of-contract claim requires an agreement, adequate performance by the plaintiff, a breach by the defendant, and damages. The court also discussed Type II preliminary agreements, which can require parties to negotiate unresolved issues in good faith without committing them to their ultimate contractual objectives.

The court considered five factors: the language showing intent to be bound, the negotiation context, open terms, partial performance, and whether the parties needed a final agreement in the ordinary course of the transaction.

The court found no Type II preliminary agreement. The 2014 Agreement did not show an intent to bind Pepsi to negotiate over the halftime commercial. It contemplated a separate Scope of Work containing terms such as the engagement date, deliverables, and fee. Betty knew it was one of fourteen agencies making a pitch and that Pepsi would proceed only if it chose to move forward with Betty’s concept or concepts. Betty also did not partially perform under a preliminary agreement, and the parties’ prior dealings showed that a final Scope of Work was customary and necessary.

The court held that no contractual obligation to negotiate existed and that Betty’s breach-of-contract claim failed as a matter of law.

Disposition

The court granted Pepsi’s motion for summary judgment. The Clerk was instructed to terminate the motion and close the case. Judge Vincent L. Briccetti signed the opinion and order.