[License-discuss] Consideration stewardship

Alexander Terekhov herr.alter at gmail.com
Wed Jun 19 03:35:08 UTC 2019

It has come to my mind that the problem of consideration (lack thereof) in
FLOSS licensing can be solved by accepting consideration in form of
registration so that authors can keep track of executions for later
https://www.copyright.gov/recordation/termination.html / revocation.

Would OSI be willing to provide such a service?


Can a copyright owner revoke exclusive rights unilaterally? Even if such
revocation were to constitute a breach of contract, would the end result be
that the owner revokes the exclusive license but is then liable for breach
of contract?

Great question. It's a complicated issue, and I can't really catch all the
nuances without writing what amounts to a law review article�but I'll give
you the broad strokes. Licenses can be either revocable or irrevocable.
Irrevocability can be created through either contract law or property law.
Contractual irrevocability creates in the licensor a duty not to revoke.
The licensor still has the power to revoke, but he also has the duty not to
exercise that power. A violation of that duty is a breach of contract.
Irrevocability via property law creates in the licensee an immunity from
revocation. The licensor in this case has no power to revoke, and he
instead has a disability preventing revocation. Since this immunity is a
function of property law (and not contract law), there is no breach of
duty. There is only the inability of the licensor to revoke at all. The
differences here are academic to a large extent, but both types of
irrevocability are possible. I�m using duty, power, immunity, and
disability in their Hohfeldian sense. See, e.g.,

License are presumptively revocable at will. Nimmer and several courts
state that a license can only become irrevocable if there's consideration
(such as money) given by the licensee to the licensor. See, e.g., Avtec
Sys., Inc. v. Peiffer, 21 F.3d 568, 574 n.12 (4th Cir. 1994) ("[A]n implied
license is necessarily nonexclusive and revocable absent consideration.")
(citing Nimmer); Keane Dealer Servs., Inc. v. Harts, 968 F. Supp. 944, 947
(S.D.N.Y. 1997) ("An implied license is revocable, however, where no
consideration has been given for the license."). In other words, this view
holds that a license is revocable at will by the licensor unless there's a
contract supported by consideration from the licensee wherein the licensor
takes on the duty not to revoke the license. For proponents of Creative
Commons licenses, this view should be alarming for it means that such
licenses are revocable at will absent consideration (since the licensee has
paid no consideration).

Irrevocability via property law requires no consideration�but it does
require a written deed wherein the licensor unilaterally grants an
irrevocable use privilege to the licensee. This need not be supported by
consideration. While under property law a revocable license can be granted
orally or implied from conduct, an irrevocable license requires a signed
writing to be effective. See Christopher M. Newman, A License Is Not A
"Contract Not to Sue": Disentangling Property and Contract in the Law of
Copyright Licenses, 98 Iowa L. Rev. 1101, 1124 (2013) ("To create an
irrevocable use-privilege, the parties must adhere to the formality of a
written deed. Execution of such a deed is sufficient to create the
privilege and render it irrevocable, which means that the titleholder now
lacks any power to revoke unless and until the occurrence of any triggering
conditions that were expressly incorporated into the grant."). For
proponents of Creative Commons licenses, this view is also alarming since
such licenses are not typically granted via a signed writing.

The difference between the contract method and the property method is that
the former acts merely in personam, meaning that it only operates between
the licensor and the licensee. If the licensor thereafter transfers his
ownership interest to another, the licensee�s contractual irrevocability
will not create in the new owner a duty not to revoke. The new owner can
then revoke the license at will since he is not bound by the prior
licensor�s in personam obligations. Irrevocability via property law creates
instead in rem rights that travel with the copyright. A new owner takes
ownership of the copyright subject to whatever irrevocable in rem interests
have been created. The new owner of the license is bound by the licensee�s
immunity from revocation because the immunity attaches to the copyright
itself and not to the parties. Thus the new owner has the same disability
preventing revocation as the old owner did. But for such in rem
irrevocability to take hold, it must be evidenced in a signed writing. See,
e.g., 17 U.S.C. � 205(e) ("A nonexclusive license, whether recorded or not,
prevails over a conflicting transfer of copyright ownership if the license
is evidenced by a written instrument signed by the owner of the rights
licensed or such owner's duly authorized agent . . . .");

To answer your question, if the license is irrevocable via contract law and
the licensor nevertheless revokes, that would give rise to a breach of
contract claim. The court could either award damages or enforce the
contract via specific performance, i.e., force the licensor to honor the
license. Typically courts award damages instead of enforcing the broken
promise, so the former seems more likely to occur. If, on the other hand,
the license is irrevocable under property law because the licensor has a
disability to revoke, then the license cannot be revoked at all. There is
no breach of contract here since the license sounds in property and not
contract. But the reality is that courts are sloppy with the theoretical
stuff, and most will just quote Nimmer (much like the Ninth Circuit did
here with Righthaven, unfortunately) for the contractual view and then
treat the license as one of contract�even though the privilege contracted
for sounds exclusively in property. Like I said, it�s complicated (but I
love this stuff!).
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