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Re: Copyright Misuse Doctrine in Apple v. Psystar

From: Alexander Terekhov
Subject: Re: Copyright Misuse Doctrine in Apple v. Psystar
Date: Sat, 28 Feb 2009 14:47:10 +0100

Rahul Dhesi wrote:
> Rjack <> writes:
> >There is no "automatic termination" in the Second Circuit:
> > . . rescission of the contract only occurs upon affirmative acts
> >by the licensor, and a breach by one party does not automatically
> >result in rescission of a contract....
> You are still mixing up the concepts of termination and rescission.

Stop being utterly silly, Rahul.

Finally, James argues that even if the nonpayment of royalties and the
removal of James's authorship credit amount to no more than breaches of
covenants, these breaches terminated the license. A material breach of a
covenant will allow the licensor to rescind the license and hold the
licensee liable for infringement for uses of the work thereafter. See
Rano v. Sipa Press, Inc. , 987 F.2d 580, 586 (9th Cir. 1993) ("[A]
material breach of a licensing agreement gives rise to a right of
rescission which allows the nonbreaching party to terminate the
agreement."); Costello Publ'g Co. , 670 F.2d at 1045 ("[E]ven if the
counterclaims asserted merely constitute a breach of contract, an action
for copyright infringement would lie if the breach is so material that
it allows the grantor power to recapture the rights granted so that any
further use of the work was without authority."); 3 Nimmer on Copyright
, supra , § 10.15[A], at 10-123- 10-125; see also Lulirama Ltd. v.
Axcess Broad. Servs., Inc. , 128 F.3d 872, 882-83 (5th Cir. 1997)
(holding that non-exclusive license is not revocable at will of
licensor). Under New York law, rescission is permitted if the breach is
"material and willful, or, if not willful, so substantial and
fundamental as to strongly tend to defeat the object of the parties in
making the contract." Septembertide Publ'g, B.V. v. Stein and Day, Inc.
, 884 F.2d 675, 678 (2d Cir. 1989) (internal quotation marks and
citation omitted). 

Even assuming Graham materially breached the licensing agreement and
that James was entitled to rescission, such rescission did not occur
automatically without some affirmative steps on James's part. 22A N.Y.
Jur. 2d Contracts § 497 (1996) ("The failure of a party to perform his
part of a contract does not per se rescind it. The other party must
manifest his intention to rescind within a reasonable time."); see also
Jacob Maxwell, Inc. , 110 F.3d at 753 ("Such a breach would do no more
than entitle [the composer] to rescind the agreement and revoke its
permission to play the song in the future, actions [the composer] did
not take during the relevant period. One party's breach does not
automatically cause [rescission] of a bilateral contract.") (emphasis
omitted). Similarly, although James sometimes characterizes the
licensing agreement as abandoned, abandonment of a contract can be
accomplished only through mutual assent of the parties, as demonstrated
by positive and unequivocal conduct inconsistent with an intent to be
bound. See Armour & Co. v. Celic , 294 F.2d 432, 435-36 (2d Cir. 1961).
New York law does not presume the rescission or abandonment of a
contract and the party asserting rescission or abandonment has the
burden of proving it. See id. at 436. 

We vacate the copyright infringement award because: (i) the record does
not show that James was permitted to and did rescind the license or that
Graham and James agreed to abandon the licensing agreement   


(GNG is a derecursive recursive derecursion which pwns GNU since it can 
be infinitely looped as GNGNGNGNG...NGNGNG... and can be said backwards 
too, whereas GNU cannot.)

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