Case Summary: I.A.E., Inc. v. Shaver, 74 F.3d 768 (C.A.7 (Ind.), 1996)

Category : Case Summaries, Contract, Copyright Infringement

Key Holdings: Affirming the U.S. District Court for the Northern District of Indiana, the Seventh Circuit holds that, as stated under 17 U.S.C. §204(a) of the Copyright Act, an exclusive license may be granted only through a written agreement. Conversely, under 17 U.S.C. §101 a non-exclusive license is explicitly exempted from the writing requirement imposed by §204(a). Thus, it is possible for a licensee to obtain an implied, non-exclusive license through either oral statements or the conduct of the copyright holder. Conditions precedent are not favored and will not be read into a license absent plain and unambiguous language.

Background: Shaver, an architect, entered into a letter agreement with I.A.E./BEMI Joint Venture (“Joint Venture”) for Shaver to prepare a series of schematic design drawings for various airport buildings at a total cost of $10,000 plus out-of-pocket expenses. While Shaver’s contract with Joint Venture only concerned the preparation of the building schematics, Shaver expected, as was industry standard, that he and Joint Venture would execute further written contracts for the remaining phases of the architectural work. Thereafter, Shaver prepared and delivered the schematic drawings to the airport, Joint Venture and several other parties involved in the project. When the airport approved one of the schematic drawings, Joint Venture paid Shaver $5,000 of his $10,000 fee. Joint Venture then entered into a contract with a third party to perform the remaining architectural work. Continue Reading

Case Summary: Effects Associates, Inc. v. Cohen, 908 F.2d 555 (C.A.9 (Cal.), 1990)

Category : Case Summaries, Contract, Copyright Infringement

Key Holdings: Ninth Circuit holds that: i) 17 U.S.C. § 204(a) requires that an assignment of a copyright must be in writing to be effective; ii) a non-exclusive license may be granted orally, or may even be implied from conduct; iii) conditions precedent are disfavored and will not be read into a contract unless required by plain, unambiguous language.

Background: Defendant Larry Cohen wrote, directed and produced a “B” horror movie called “The Stuff”. Cohen orally requested that Effects Associates (“Effects”), a small special effects company, create footage for certain sequences in the film. Effects created and delivered the requested footage to Cohen. Cohen paid Effects approximately $56,000 of the original contract price of $62,335. However, Cohen was dissatisfied with one of the scenes and unilaterally decided to pay only half the promised amount for that scene. Continue Reading

Case Summary: Graham v. James, 144 F.3d 229 (C.A.2 (N.Y.), 1998)

Category : Case Summaries, Contract, Copyright Infringement

Key Holdings: Second Circuit holds that: i) a requirement to pay royalties and include an attribution notice (crediting authorship to author) are to be considered covenants rather than conditions precedent; ii) when the contested issue is the scope of the license rather than its existence, the copyright owner bears the burden of proving that the copying or distribution was unauthorized under the license and the license need not be pleaded as an affirmative defense; iii) even if licensee’s breach entitles licensor to rescind the license, rescission does not occur automatically but requires affirmative steps by licensor.

Background: Graham bundled and marketed various packages of freeware, shareware and public domain software. To further this business Graham orally contracted with James, a software programmer, for the creation of a file-retrieval program. Continue Reading

Case Summary: In re Bubble Up Delaware, Inc., 684 F.2d 1259 (C.A.9 (Cal.) 1982)

Category : Case Summaries, Contract

Key Holding: Ninth Circuit held that Courts will not construe contractual stipulations as conditions precedent unless required to do so by the plain, unambiguous language of the contract.

Background: Bubble Up Delaware, Inc. (‘Bubble Up’) filed for bankruptcy in 1970. The US Dept. of Labor (“DOL”) filed a proof of claim for damages arising from breach of contract in the amount of $700,000. The contract in question required DOL to provide Bubble Up with $1,000,000 in exchange for Bubble Up’s employment of 300 unemployed residents of Los Angeles, CA for a period of nine months. Continue Reading