IP Law Daily, COPYRIGHT—9th Cir.: Wozzup: Steve Wozniak’s online university comes out on top in appeal, (Jan 11, 2023)

By Matthew Hersh, J.D.

No right to payment for educator who allegedly shared the idea with Wozniak.

Tech entrepreneur and personal computing pioneer Steve Wozniak will not have to compensate a business school professor who allegedly gave him the idea for an online tech university, the U.S. Court of Appeals for the Ninth Circuit has held. The court, in an unpublished decision, also found that the professor’s state law claim was preempted and that the district court properly imposed attorney fees after a federal jury rejected his copyright infringement claim (Reilly v. Wozniak, January 10, 2023, Collins, D.).

The lawsuit arises out of Woz U, an online platform that offers educational programs in software development, cyber security, data science, and the like. The school, one of several so-called “coding boot camps” around the country, opened its doors in 2017 and has since formed partnerships with several universities, trade schools, and enterprise partners.

But the founding of the school raised the ire of Ralph Reilly, a professor of Management Information Systems at University of Hartford’s business school. The professor, claiming the idea to be his, contended that he suggested the concept of a “high tech university” to Wozniak in 2010 and that he worked with the Apple cofounder over the next two years to develop the idea. His lawsuit, filed in the Arizona district court in 2018, alleged claims of breach of an implied-in-fact contract, money had and received, copyright infringement, declaratory relief, and accounting.

The lawsuit went through several rounds in the Arizona court. In a 2020 ruling,the court found that the claim for money had and received as well as the demand for an accounting were preempted by the Copyright Act, but that the claim for declaratory relief and implied-in-fact contract—as well as the copyright infringement claim—would remain for the time being. In a 2021 ruling, the court granted summary judgment in Wozniak’s favor on the implied-in-fact contract, but again left the copyright infringement action and the declaratory judgment action in the case. Finally, after a jury ruled in favor of Wozniak on the copyright infringement action, the trial court granted the Apple cofounder attorney fees under the Copyright Act’s fee shifting provision.

The business school professor appealed several aspects of the rulings below, leading to this appeal.

Implied in fact contract. The court of appeals agreed with the district court that the evidence did not support an implied in fact contract. Under California law, under which the professor’s claim arose, an implied in fact contract may be implied where the person disclosing the idea hopes to gain compensation for the idea, but not where the idea has been disclosed merely for the purpose of inducing a future business relationship. Here, the court of appeals noted, the professor, by his own admission, expected that Wozniak would “jointly market,” and be his “partner[] in exploiting” the idea. Thus, the court noted, the claim was correctly dismissed.

Preemption. The court also agreed with the district court that the claim for money had and received was preempted by the Copyright Act. The professor’s claim for money, the court noted, “can rest only on his contention that [Wozniak] improperly made use of tangible materials that embodied his ideas.” Although the right to exploit ideas is not a right made exclusive by the Copyright Act, the court noted, it does fall within the general subject of the Act. Thus, the court found, it was properly found to be preempted.

Attorney fees. Finally, the court of appeals concluded that the district court acted within its discretion in awarding attorney fees under Section 505 of the Copyright Act. Most importantly, the court of appeals observed, the professor’s copyright claim was objectively unreasonable because he claimed protection for his idea and not the protected elements of his copyrighted work, despite it being “[h]ornbook law that ideas are not copyrightable subject matter.”

Controversy. The lawsuit against Woz U was not the first time the Wozniak-founded institution has faced controversy. A CBS News piece in 2018 aired a wide range of student complaints about the quality of the institution. A year later, according to press reports,the school was forced by Arizona higher education regulators to relinquish its state license in order “to focus on its business and higher education partnerships through its education-as-a-service model.”

The Case is No. 21-16140 & 21-17047.

Attorneys: Raymond J. Markovich (U.S. Law Group) for Ralph T. Reilly. Yusra B. Bokhari (Gallagher & Kennedy) for Steve Wozniak.

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