Apfel v. Prudential-Bache Securities, Inc

In Apfel v. Prudential-Bache Securities, Inc., 81 N.Y.2d 470 (1993), the Court of Appeals discussed the type of novelty an idea must have in order to sustain a contract-based or property-based claim for its uncompensated use. Specifically, Apfel clarified an important distinction between the requirement of "novelty to the buyer" for contract claims, on the one hand, and "originality" (or novelty generally) for misappropriation claims, on the other hand. Under the facts of Apfel, the plaintiff disclosed his idea to the defendant pursuant to a confidentiality agreement and, subsequent to disclosure, entered into another agreement wherein the defendant agreed to pay a stipulated price for the idea's use. See id. at 474. The defendant used the idea but refused to pay plaintiff pursuant to the post-disclosure agreement on the asserted ground that "no contract existed between the parties because the sale agreement lacked consideration." Id. at 475. The defendant argued that an idea could not constitute legally sufficient consideration unless it was original or novel generally and that, because plaintiff's idea was not original or novel generally (it had been in the public domain at the time of the post-disclosure agreement), the idea provided insufficient consideration to support the parties' post-disclosure contract. See id. at 474-75. In rejecting defendant's argument, the Court of Appeals held that there was sufficient consideration to support plaintiff's contract claim because the idea at issue had value to the defendant at the time the parties concluded their post-disclosure agreement. See id. at 476. The Apfel court noted that "traditional principles of contract law" provide that parties "are free to make their bargain, even if the consideration exchanged is grossly unequal or of dubious value," id. at 475, and that, so long as the "defendant received something of value" under the contract, the contract would not be void for lack of consideration, id. at 476. See also id. at 478 ("The buyer knows what he or she is buying and has agreed that the idea has value, and the Court will not ordinarily go behind that determination."). The Apfel court explicitly rejected defendant's contention that the court should carve out "an exception to traditional principles of contract law" for submission-of-idea cases by requiring that an idea must also be original or novel generally in order to constitute valid consideration. Id. at 477.