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Re: 9th Cir. License Primer

From: Alexander Terekhov
Subject: Re: 9th Cir. License Primer
Date: Thu, 24 Mar 2011 15:51:29 +0100

As they say:

"The GPL Is a License, not a Contract." 


Seriously, I am very disappointed that Best Buy did not raise the issue
of copyright v. contract breach thus far. The language of Best Buy's
latest filing in 1:09-cv-10155-SAS Software Freedom Conservancy, Inc. v.
Best Buy Co., Inc. et al almost sounds that Best Buy buys into GPL
"condition" moronity... I suppose that they are sure that they can win
even under that "condition" so to speak. We'll see.

RJack wrote:
> The Ninth Circuit Court of Appeals published a decision on Dec. 10th,
> 2010, MDY INDUSTRIES v. BLIZZARD ENTERTAINMENT that could serve as an
> excellent primer for open source license drafters.
> This decision is *REQUIRED READING* for the Free Software Foundation!
> "... [7] “A copyright owner who grants a nonexclusive, limited
> license ordinarily waives the right to sue licensees for copyright
> infringement, and it may sue only for breach of contract.” Sun I, 188
> F.3d at 1121 (internal quotations omitted). However, if the licensee
> acts outside the scope of the license, the licensor may sue for
> copyright infringement. Id. (citing S.O.S., Inc. v. Payday, Inc., 886
> F.2d 1081, 1087 (9th Cir. 1989)). Enforcing a copyright license “raises
> issues that lie at the intersection of copyright and contract law.” Id.
> at 1122.
> [8] We refer to contractual terms that limit a license’s scope as
> “conditions,” the breach of which constitute copyright infringement. Id.
> at 1120. We refer to all other license terms as “covenants,” the breach
> of which is actionable only under contract law. Id. We distinguish
> between conditions and covenants according to state contract law, to the
> extent consistent with federal copyright law and policy. Foad Consulting
> Group v. Musil Govan Azzalino, 270 F.3d 821, 827 (9th Cir. 2001)..."
> [9] A Glider user commits copyright infringement by playing WoW while
> violating a ToU term that is a license condition. To establish copyright
> infringement, then, Blizzard must demonstrate that the violated term —
> ToU § 4(B) — is a condition rather than a covenant. Sun I, 188 F.3d at
> 1122. Blizzard’s EULAs and ToUs provide that they are to be interpreted
> according to Delaware law. Accordingly, we first construe them under
> Delaware law, and then evaluate whether that construction is consistent
> with federal copyright law and
> policy. A covenant is a contractual promise, i.e., a manifestation of
> intention to act or refrain from acting in a particular way, such
> that the promisee is justified in understanding that the promisor
> has made a commitment. See Travel Centers of Am. LLC v. Brog, No.
> 3751-CC, 2008 Del. Ch. LEXIS 183, *9 (Del. Ch. Dec. 5, 2008); see also
> Restatement (Second) of Contracts § 2 (1981). A condition precedent is
> an act or event that must occur before a duty to perform a promise
> arises. AES P.R., L.P. v. Alstom Power, Inc., 429 F. Supp. 2d 713, 717
> (D. Del. 2006) (citing Delaware state law); see also Restatement
> (Second) of Contracts § 224. Conditions precedent are disfavored
> because they tend to work forfeitures. AES, 429 F. Supp. 2d at 717
> (internal citations omitted). Wherever possible, equity construes
> ambiguous contract provisions as covenants rather than conditions. See
> Wilmington Tr. Co. v. Clark, 325 A.2d 383, 386 (Del. Ch. 1974). However,
> if the contract is unambiguous, the court construes it according to its
> terms. AES, 429 F. Supp. 2d at 717 (citing 17 Am. Jur. 2d Contracts §
> 460 (2006)).
> [10] Applying these principles, ToU § 4(B)(ii) and (iii)’s prohibitions
> against bots and unauthorized third-party software are covenants rather
> than copyright-enforceable conditions. See Greenwood v. CompuCredit
> Corp., 615 F.3d 1204, 1212, (9th Cir. 2010) (“[H]eadings and titles are
> not meant to take the place of the detailed provisions of the text,” and
> . . . “the heading of a section cannot limit the plain meaning of the
> text.” (quoting Bhd. of R.R. Trainmen v. Balt. & Ohio R.R.,
> 331 U.S. 519, 528—29 (1947))). Although ToU § 4 is titled, “Limitations
> on Your Use of the Service,” nothing in that section conditions
> Blizzard’s grant of a limited license on players’ compliance with ToU §
> 4’s restrictions. To the extent that the title introduces any ambiguity,
> under Delaware law, ToU § 4(B) is not a condition, but is a contractual
> covenant. Cf. Sun Microsystems, Inc. v. Microsoft Corp., 81 F. Supp. 2d
> 1026, 1031-32 (N.D. Cal. 2000) (“Sun II”) (where Sun
> licensed Microsoft to create only derivative works compatible with other
> Sun software, Microsoft’s “compatibility obligations”
> were covenants because the license was not specifically conditioned on
> their fulfillment).
> To recover for copyright infringement based on breach of a license
> agreement, (1) the copying must exceed the scope of
> the defendant’s license and (2) the copyright owner’s complaint
> must be grounded in an exclusive right of copyright (e.g., unlawful
> reproduction or distribution). See Storage Tech. Corp. v. Custom
> Hardware Eng’g & Consulting, Inc., 421 F.3d 1307, 1315-16 (Fed. Cir.
> 2005). Contractual rights, however, can be much broader..."
> Sincerely,
> RJack :)


(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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