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Re: license issue: calling a GPLv2 library

From: Alexander Terekhov
Subject: Re: license issue: calling a GPLv2 library
Date: Fri, 23 Jun 2006 12:04:03 +0200

More from Nimmer (Ray Nimmer):

In transactional relationships, property rights (including intellectual
property rights) may furnish background or default rules that govern the
transaction unless otherwise agreed. From a contract law standpoint (as
compared to contracting practice), setting out background principles is
the primary function of intellectual property law. More generally, the
essence of any property right is that the owner can transfer or withhold
transfer of its property. Transfers, to be effective, implicate contract
law as the basis for defining the value received and the interests

Perhaps more than in any other property rights regime, the statutory
rules of copyright law (and, to a lesser extent, patent law) support and
explicitly relate to this role in reference to contractual
relationships. This is due to the central role that contracting has in
achieving the basic goals of the copyright. The so-called intellectual
property bargain, arguably struck in the political choices made by
statute in federal patent, copyright, and trademark law, presumes the
transfer and transferability of the information and rights created by
these laws.

The Copyright Act enumerates the rights of copyright holders in Title 17
of the United States Code. The range of rights associated with the five
fundamental rights enumerated in 17 U.S.C. ยง106(1-5) have dramatically
grown since the promulgation of the 1976 Act.51 The Copyright Act
recognizes that the copyright owner can separately transfer (or
withhold) any of the exclusive rights. As a result, a contract
("license") that gives the grantee the right to reproduce and distribute
copies does not give the grantee a license to use the other exclusive
rights held by the copyright owner (e.g., the rights of public
performance or display, the right to make "derivative works" from the

There are many illustrations of this type of interaction.

a) Revision Right

One economically significant illustration arose in the case of Tasini v.
New York Times.53 That case dealt with the rights of the freelance
authors of magazine articles in reference to on-line reproductions of
the magazines by the magazine publishers.54 Nominally, the case turned
on a property law issue: does on-line reproduction fall within the
"revision right" granted to authors of collective works.55 Actually, the
case involved the creation and interpretation of a contract default or
background rule with great significance in the convergence of
information industries.

The district court held that the electronic version was a revision of
the original work, rather than a new work.56 As a revision, it fell
within the rights of the author of the collective work under the
Copyright Act.57 The ruling on whether the electronic version was a mere
revision can be debated as a matter of copyright law. But for
understanding the relationship of property law with contract law, we can
put that issue aside and assume for purposes of argument that the court
was correct.

The most important issue for our purpose then concerns the court's
treatment of the agreement under which the articles were submitted.
Predictably, these were not elaborate written documents. While not fully
clear, it is doubtful that they were negotiated by parties of equal
bargaining leverage.58

One contract granted a right of first publication in the magazine.59 The
court held that this language did not cover a later electronic
publication because, by its own terms, it covered only the "first
publication."60 An electronic publication, while in the court's view
satisfied the statutory reference to a revision, was clearly not the
same as the original magazine.61 This, however, did not completely
vitiate the publisher's right to make an electronic revision because
other general language in the contract referred to a right to "republish
the Story or any portions thereof in or in connection with the
Magazine."62 This language could cover revisions.

Faced with these arguably conflicting interpretations in the language of
the contract, the court reverted to the section 201 presumption. The
court's comments are telling:

Just as it is a publisher's burden to demonstrate that it has acquired
rights greater than the presumed [statutory] privileges, it is an
author's burden to demonstrate that any agreement between the parties
limits a publisher to fewer than those privileges. [This] is a burden
that plaintiffs failed to meet .... Section 201(c) [suggests] that the
specified privileges represent a floor: i.e., a minimum level of
protection which, if unenhanced by express agreement, publishers are
generally presumed to possess.63

This places the copyright rule in a proper context equivalent to a
default rule in contract law. The court recognized that the rights in
the statute can be waived, restricted, or enhanced between the parties
by contract. In a transactional setting, that means simply that the
revision right states a default rule. This rule indicates that, unless
otherwise agreed, the author of the collective work controls the initial
version and any revision or new edition. The rule applies in the absence
of other contractual treatment. Indeed, the so-called revision right
only applies when a contract exists. It only creates a right when and if
a submission occurs under circumstances in which the submitting party
allows the other to reproduce its work. In short, the rule applies to
licenses. It is a default rule against which bargains are structured.

b) Transferability of Licenses

Under established federal case law, a licensee's rights under a
non-exclusive license are not transferable without the consent of the
licensor.64 This rule flows from the fact that a nonexclusive license is
a personal, non-assignable privilege, representing less than a property
interest, and conveying less extensive rights to the licensee than other
forms of transfer. Also, as described by the Ninth Circuit, allowing
"free assignability ... would undermine the reward that encourages
invention because a party seeking to use the patented invention could
either seek a license from the patent holder or seek an assignment of an
existing patent license from a licensee."65

The rule preempts contrary state law. But, as with the revision right,
it is a default rule. It proscribes the effect of an over-riding
intellectual property right in a transaction, but allows for a contrary
agreement (consent). Express contractual terms on transferability
supplant the default rule.

c) Author's Termination Right

The Copyright Act provides that a license of indefinite duration can be
terminated by the copyright owner during an interval thirty-five years
into the contract.66 One court has held that this rule precludes
application to copyright licenses of the common law (and UCC) default
rule which makes indefinite term contracts subject to termination at
will.67 The decision was couched in terms of federal preemption of the
underlying common law default.68

Importantly, however, the copyright rule only applies where the parties
have not contracted for a specific termination date, and at least one
court has held that a "perpetual" license is enforceable where evidence
establishes an intent to convey renewal rights in the copyrighted work
notwithstanding the federal rule.69 The rule thus establishes a property
law default rule applicable to particular contracts (copyright license
of indefinite duration) in the absence of contrary contract terms (e.g.,
an express choice on the term of the license). The express terms obviate
the default rule.


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