Contract or License?

Humphreys, Noel nhumphreys at AkinGump.com
Thu Sep 13 23:12:21 UTC 2001


John Cowan wrote:


 "Consider RFC 1988 (http://www.ietf.org/rfc/rfc1988.txt)
which explicitly labels itself a conditional grant.  Although the grant is for patent rights rather than copyright rights, it seems to me essentially analogous to (but not an example of, of course) an OSL.  I see no reason to think that RFC 1988 is in any way a contract: no offer, no acceptance, no consideration."

This is the language it appears John must have been referring to.

"HP hereby covenants that it will not assert any claims in US Patents 5,293,635, 5,421,024, any continuations, divisions, or
continuations-in-part of either, or any non-US counterparts of any of the foregoing against any party that makes, uses, sells, imports, or offers for sale, an implementation of an IETF standards-track MIB module that includes HP's contributed search address technology, or any derivative of that contribution, provided that the MIB module is employed to implement the Internet-standard network management framework.  Such grant of rights is limited in that it does not include a right to incorporate
such HP search address technology into proprietary MIB modules."

   I disagree with John.  This is classic contract language.  For example, the first words are "HP hereby covenants..."  The words are not a grant of rights.  Instead, the words provide a promise not to assert certain rights that HP would otherwise have against certain persons if they behave in certain ways.  Grant language might be something like "HP hereby assigns, conveys, grants and transfers to..."  

Here's one way to analyze this as a contract, as I believe any US court would:  The offer consists of HP's promise not to sue under certain circumstances.  The acceptance consists of the behavior of the person who would otherwise be held an infringer.  HP's consideration is the promise to refrain from taking an otherwise lawful action under certain circumstances.  The infringer's consideration is the undertaking of the activities in reliance on HP's promise.  This style of analysis is
run-of-the-mill unilateral contract analysis.  Remember that consideration need not be monetary, and contracts (with some exceptions) need not be in writing to be enforced by courts.   A court would likely not find persuasive the self-labeling of the arrangement as a "grant" if by "grant" someone meant "not a contract."  In addition, note that this contract is in writing; both parties' obligations are spelled out.

This is not a grant of any rights in the patent, because the infringer doesn't get any rights in the patents.  Instead, the infringer gets HP's promise not to sue for behavior that infringes the patent.  If you're having trouble thinking of this as not a grant of patent rights, think of the situation where HP wanted to sell its patent rights.  If you think there's a "grant of patent rights," HP would then have to round up all the people who relied on HP's promise and get them to sign the
conveyance of the patent.  It's doubtful that that is what HP meant.  Or, think of the case where HP wanted to create a security interest in the patent rights in favor of a lender.  Would you think that all those individuals who relied on HP's promise would have to sign the security agreement that created the security interest?  It's doubtful that that is what HP meant.

You can bet the Patent and Trademark Office would be unhappy if dozens of unnamed persons were thought to be owners of patent rights in those patents.  What good would the PTO's ownership records be if dozens of unidentified persons claimed ownership interests in a patent?  The whole system depends upon the certainty of recorded documents that establish who owns these property rights.

In short, although this document calls itself a "grant," it's really a promise not to sue for infringement under particular circumstances, which is the fundamental nature of license. 

The foregoing does not constitute legal advice, and you are not entitled to rely on it.  You are not my client.




-----Original Message-----
From: John Cowan [mailto:jcowan at reutershealth.com]
Sent: Thursday, September 13, 2001 6:31 PM
To: lrosen at rosenlaw.com
Cc: license-discuss at opensource.org
Subject: Re: Contract or License?


Lawrence E. Rosen wrote:

>  I must admit that,
> even though I am an attorney, I have never understood the distinction
> between a software license and a contract. 

Certainly there can be no doubt that some software licenses, Microsoft
EULAs, for example, are contracts or they are nothing.  Whether a
EULA is a valid contract depends on whether {shrink,click}wrapping is a
valid form of acceptance.

No lawsuit has ever turned on violation of any Open Source license,
AFAIK, so anyone can have a theory of what they really are.  To me
(though IANAL) an OSL looks like a conditional grant: it permits
you (i.e. anyone at all) to do A, B, and C (which would otherwise be
forbidden by statute), provided that X, Y, and Z.

Most conditional grants are made by governmental bodies or officials,
but not all.  Consider RFC 1988 (http://www.ietf.org/rfc/rfc1988.txt)
which explicitly labels itself a conditional grant.  Although the grant
is for patent rights rather than copyright rights, it seems to me
essentially analogous to (but not an example of, of course) an OSL.  I
see no reason to think that RFC 1988 is in any way a contract: no offer,
no acceptance, no consideration.

Again, IANAL, TINLA.

-- 
Not to perambulate             || John Cowan <jcowan at reutershealth.com>
    the corridors               || http://www.reutershealth.com
during the hours of repose     || http://www.ccil.org/~cowan
    in the boots of ascension.  \\ Sign in Austrian ski-resort hotel

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