Reeves v. Alyeska Pipeline Service Company

Supreme Court of Alaska
926 P.2d 1130 (1996)

ELI5:

Rule of Law:

The disclosure of an idea can constitute valid consideration for an express or implied contract, and can support claims for recovery under theories like quasi-contract or promissory estoppel, regardless of whether the idea itself is novel or original. Protection for such ideas arises not from their status as property, but from the contractual relationship or promises made between the parties.

Facts:

In 1985, Alyeska Pipeline Service Company (Alyeska) created a visitor turnout with a view of the Trans-Alaska Pipeline.
In January 1991, John Reeves, a local tourism business owner, contacted Alyeska manager Keith Burke to discuss a tourism idea.
Reeves only disclosed his idea after Burke assured him their conversation was confidential, stating it was 'between us.'
Reeves then orally proposed that he build and operate a visitor center at the turnout, leasing the land from Alyeska in exchange for a percentage of profits.
Burke expressed enthusiasm for the idea, requested a written proposal from Reeves, and later told him, 'We’re going to do this deal, and I’m going to have my Anchorage lawyers draw it.'
A few months later, Burke informed Reeves that Alyeska considered the idea so good that it was going to implement it without Reeves' involvement.
Alyeska subsequently built a visitor center at the turnout, operated it through an employee club, and displayed items similar to those Reeves had proposed.

Procedural Posture:

John Reeves filed a lawsuit against Alyeska Pipeline Service Company in the Alaska Superior Court (the trial court of first instance).
By amended complaint, Reeves alleged a variety of tort and contract claims.
Alyeska moved for summary judgment on all claims.
The Superior Court granted Alyeska's motion for summary judgment, dismissing the entire case.
Reeves, as appellant, appealed the grant of summary judgment to the Supreme Court of Alaska, the state's highest court, with Alyeska as appellee.

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Issue:

Does the disclosure of a business idea that is not novel or original constitute sufficient grounds for a claim based on express contract, implied contract, promissory estoppel, or quasi-contract when the recipient of the idea uses it after soliciting the disclosure and making promises of confidentiality and future partnership?

Opinions:

Majority - Per Curiam

Yes, the disclosure of a business idea, even if not novel, can support various contract and quasi-contract claims. The court distinguished between property-based and contract-based theories for protecting ideas. A property theory, such as a claim for the idea itself under quasi-contract, requires the idea to be novel and original to have property-like traits. However, contract-based claims—including express contract, implied-in-fact contract, and promissory estoppel—do not require novelty because the consideration is not the idea as property, but the service of disclosing the idea in a bargained-for exchange. The court adopted the California approach, holding that parties are free to bargain for an idea, and its value may lie in its timing or presentation, not just its novelty. Here, Reeves presented sufficient evidence that Alyeska solicited his idea, made promises of confidentiality and partnership that induced disclosure, and was potentially unjustly enriched by his services. Therefore, genuine issues of material fact exist for Reeves' claims related to the disclosure agreement, precluding summary judgment on those counts.

Analysis:

This case establishes a key precedent in Alaska for the protection of business ideas under contract law, aligning the state with the more flexible California doctrine over the stricter New York rule requiring novelty. The decision clarifies that the focus in such disputes should be on the parties' conduct and promises rather than the inherent originality of the idea itself. This lowers the barrier for individuals to protect their ideas in commercial negotiations, shifting the legal risk to recipients who must be clear about their intentions to avoid creating enforceable obligations through their words and actions. It reinforces the principle that the 'bargain' is what contract law protects, even if the subject of the bargain is an intangible, non-novel idea.

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