A License Is Not a 'Contract Not To Sue': Disentangling Property and Contract in the Law of Copyright Licenses

• Author: Christopher M. Newman
• Position: Assistant Professor, George Mason University School of Law
• Pages: 1101-1162

1101

A License Is Not a “Contract Not To Sue”:

Disentangling Property and Contract in

the Law of Copyright Licenses

Christopher M. Newman

I. INTRODUCTION .................................................................................... 1103

II. LICENSES AS PROPERTY INTERESTS ....................................................... 1110

A. PRELIMINARY DISTINCTIONS: TITLE, LICENSE, AND OWNERSHIP ....... 1111

B. CREATION OF LICENSES THROUGH PROPERTY FORMALITIES ............. 1118

1. Bare Licenses ........................................................................ 1119

2. Irrevocable Licenses ............................................................. 1120

3. Exclusive Licenses and Divisibility of Ownership .............. 1123

III. LICENSES AS CONTRACTUAL RIGHTS ................................................... 1124

A. CONTRACT AND CONTRACT FORMALITIES........................................ 1124

B. CONTRACT FORMALITIES AND THE CREATION OF LICENSE

INTERESTS ..................................................................................... 1127

1. Licenses Are Not Contracts, Though They May Arise

from Acts of Contracting ..................................................... 1127

2. Contractual Irrevocability .................................................... 1131

3. Exclusive Rights by Contract ............................................... 1136

IV. THE LAW OF COPYRIGHT INTERESTS .................................................... 1137

A. PROPERTY VERSUS CONTRACT FORMALITIES IN THE CREATION OF

COPYRIGHT PRIVILEGES .................................................................. 1141

B. IRREVOCABLE COPYRIGHT PRIVILEGES ............................................. 1144

1. Creation of Irrevocable Copyright Privileges by Deed ...... 1144

2. Creation of Irrevocable Copyright Privileges by Contract 1150

 Assistant Professor, George Mason University School of Law. I wish to thank all of the

following for critical input or support: Henry Smith, Oren Bracha, Robert Bone, Eric Claeys,

Adam Mossoff, Eric Goldberg, Michael Carroll, Brett Frischmann, Joseph Miller, Henry Butler,

T.J. Chiang, Jeff Parker, Ilya Somin, Rebecca Tushnet, James Grimmelman, and all the

participants in workshops at the 2011 Henry Manne Forum, the 2011 Intellectual Property

Scholars Conference, the Levy Workshop at George Mason University School of Law, and the

2012 Junior Scholars in Intellectual Property Workshop at Michigan State University College of

Law. I would also like to thank Melissa Alfano for her diligent research assistance.

1102 IOWA LAW REVIEW [Vol. 98:1101

C. CONDITIONS VERSUS COVENANTS: WHAT DOES IT MEAN TO

“ENFORCE A LICENSE”? ................................................................... 1151

V. CONCLUSION ....................................................................................... 1158

A. SUMMARY RESTATEMENT ............................................................... 1158

B. FURTHER IMPLICATIONS ................................................................. 1159

1. Irrevocability of Implied Copyright Licenses ..................... 1159

2. Transferability of Exclusive Copyright Licenses ................ 1160

2013] A LICENSE IS NOT A “CONTRACT NOT TO SUE” 1103

I. INTRODUCTION

“Whether express or implied, a license is a contract ‘governed by

ordinary principles of state contract law.’”1

Statements to this effect are commonplace in commentary and case law

concerning both patent and copyright.2 Rarely, though, does anyone spell

out exactly what they mean. If “license” is intended to mean “license

agreement,” then the assertion is straightforward and unremarkable.

Certainly, there exists a subset of contracts in which the consideration

offered by one side (or perhaps both) includes the grant of a license, and

such contracts are no different from contracts involving other sorts of

consideration. The statement that a “license is a contract,” however, seems

to assert more than this. It seems to assert that the grant of a license itself

amounts to nothing more than the assumption of a contractual duty, that a

license may be defined as “a contract not to sue.”3

To assert that a license is a contract is to assert that licensor–licensee

relationships and their effects should be identified, construed, and enforced

within a particular universe of legal doctrines and formalities. And yet,

despite seemingly unquestioned acceptance of the premise that a license is

simply a type of contract (I shall refer to this as “the contract theory of

license”), no one seems inclined to follow it through to all of its logical

consequences. If they did, one would expect them to adopt (or feel

compelled to explain why they do not adopt) a number of fairly

straightforward implications.

Imagine, for example, that Anne is the author and owner of a

copyrighted play. One day, Larry asks her for permission to stage a

production of the play at his local nonprofit theater, and Anne readily

1. McCoy v. Mitsuboshi Cutlery, Inc., 67 F.3d 917, 920 (Fed. Cir. 1995) (quoting Power

Lift, Inc. v. Weatherford Nipple-Up Sys., 871 F.2d 1082, 1085 (Fed. Cir. 1989)).

2. See, e.g., Aronson v. Quick Point Pencil Co., 440 U.S. 257, 262 (1979); Cincom Sys. v.

Novelis Corp., 581 F.3d 431, 437 (6th Cir. 2009) (citing Everex Sys., Inc. v. Cadtrak Corp. (In re

CFLC, Inc.), 89 F.3d 673, 677 (9th Cir. 1996)); McCoy, 67 F.3d at 920 (quoting Power Lift, Inc.,

871 F.2d at 1085); A. Natterman & Cie GmbH v. Bayer Corp., 428 F. Supp. 2d 253, 258 (E.D.

Pa. 2006) (quoting State Contracting & Eng’g Corp. v. Florida, 258 F.3d 1329, 1339 (Fed. Cir.

2001)).

3. See, e.g., Harris v. Emus Records Corp., 734 F.2d 1329, 1334 (9th Cir. 1984) (“[A]

license has been characterized as an agreement not to sue the licensee for infringement.”

(citing United States v. Studiengesellschaft Kohle, m.b.H., 670 F.2d 1122, 1127 (D.C. Cir.

1981); W. Elec. Co. v. Pacent Reproducter Corp., 42 F.2d 116, 118 (2d Cir. 1930))); STAFF OF

S. COMM. ON THE JUDICIARY, 86TH CONG., DIVISIBILITY OF COPYRIGHTS 1 (Comm. Print 1960)

[hereinafter DIVISIBILITY OF COPYRIGHTS] (“An assignment carries all rights; a license is really a

contract not to sue the licensee . . . .”) (committee print is primarily the work of Abraham L.

Kaminstein); 1 RAYMOND T. NIMMER & JEFF C. DODD, MODERN LICENSING LAW § 10:8 (2010–

2011 ed. 2010) (“Licensing law is fundamentally a species of contract law, broadly

understood.”); 3 MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT § 10.01[C][5]

& n.73.1 (Matthew Bender rev. ed. 2010) (“A license is, in legal contemplation, merely an

agreement not to sue the licensee for infringement.”).