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Re: Psystar's legal reply brief in response to Apple

From: Alexander Terekhov
Subject: Re: Psystar's legal reply brief in response to Apple
Date: Wed, 08 Dec 2010 15:57:58 -0000

ZnU wrote:
> OK, I understand your argument. But I'm not sure I buy it. Are you
> saying if I sign a contract with someone that says I can make as many
> copies of their software as I want for $5 each, and then go and make a
> bunch of copies and don't pay for them, I have merely breached a
> contract and not committed copyright violation? 


"Third, James argues that the license was voided when Graham breached
its conditions by nonpayment of royalties and removal of James's
copyright notice. This argument turns--and fails--on the distinction
in contract between a condition and a covenant. Generally, "[i]f the
[licensee's] improper conduct constitutes a breach of a covenant
undertaken by the [licensee] . . . and if such covenant constitutes an
enforcible contractual obligation, then the [licensor] will have a
cause of action for breach of contract," not copyright infringement. 3
Nimmer on Copyright , supra , § 10.15[A], at 10-120. However, "[i]f
the nature of a licensee's violation consists of a failure to satisfy
a condition to the license . . ., it follows that the rights dependant
upon satisfaction of such condition have not been effectively
licensed, and therefore, any use by the licensee is without authority
from the licensor and may therefore, constitute an infringement of
copyright." Id. at 10-121 (citations omitted); see also Fantastic
Fakes, Inc. v. Pickwick Int'l, Inc. , 661 F.2d 479, 483-84 (5th Cir.
1981). A condition has been defined as "any fact or event which
qualifies a duty to perform." Costello Publ'g Co. v. Rotelle , 670
F.2d 1035, 1045 n.15 (D.C. Cir. 1981) (citing Corbin, Conditions in
the Law of Contract , 28 Yale L.J. 739 (1919)).

We think that the payment of royalties and the inclusion of a notice
crediting James's authorship are to be considered covenants, not
conditions. The construction of the licensing agreement is governed by
New York law. See Bartsch v. Metro-Goldwyn-Mayer, Inc. , 391 F.2d 150,
153 (2d Cir. 1968). Generally speaking, New York respects a
presumption that terms of a contract are covenants rather than
conditions. See Grand Union Co. v. Cord Meyer Dev. Co. , 761 F.2d 141,
147 (2d Cir. 1985) ("In the absence of more compelling evidence that
the parties intended to create a condition, the negotiation provision
must be construed as a promise or covenant."); Warth v. Greif , 106
N.Y.S. 163, 165 (2d Dep't 1907) ("The law favors covenants, rather
than conditions precedent."), aff'd , 193 N.Y. 661 (1908). Graham and
James orally agreed to the licensing agreement and did not clearly
delineate its conditions and covenants. Further, it is important that
James turned over the C version for use before any royalties were
paid, and that the first version of PDSI-004-1 was published with the
proper notice of authorship, because contract obligations that are to
be performed after partial performance by the other party are not
treated as conditions. 22 N.Y. Jur. 2d Contracts § 265 (1996); see
also Jacob Maxwell, Inc. , 110 F.3d at 754 (holding that payment of
royalties and crediting of author were covenants because "[the
composer] expressly granted [the licensee] permission to play the song
before payment was tendered or recognition received"); I.A.E., Inc. ,
74 F.3d at 778 (holding that full payment was not a condition
precedent when the licensee received the copyrighted drawings after
tendering only half the required payment).

Guided by that analysis, together with New York's presumption favoring
covenants over conditions and the district court's clear finding that
a licensing agreement came into existence, we conclude that the notice
and royalty obligations would likely be considered covenants, and
cannot be relied upon by James as conditions. "


(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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