[License-discuss] Conditions and Covenants

[Alexander Terekhov]

I've got a question off-band regarding conditions vs. covenants. Here's
really good explanation apart from conditions concurrent***:

"Conditions in no way create obligations. They simply outline various
limitations. If a certain condition does not occur, this doesn't
necessarily entitle a party to compensation for damages. Conditions can be
one of the two types: precedent or subsequent. When a condition precedent
is put into place, this means it must occur before a right to a piece of
real estate is gained. When a condition subsequent is put into place, this
outlines how the piece of property can be lost if a certain obligation is
not carried out."

- and -

"Covenants are unconditional promises found in contracts, and the failure
of a party who makes such an agreement to abide by its terms will entitle
the other contracting party to damages for breach of contract. Such damages
are usually calculated on the basis of how much it will cost the
non-breaching party to be in the same position as such party would have
been had the breach not occurred. That a party has made a covenant can
often be seen by the use of words such as “promise,” “undertake,” or
“agree.”

A “condition,” on the other hand, is a contingency, the happening of which
may either excuse or trigger the obligation of a party to do something.
Conditions can be either precedent or subsequent. A condition precedent is
something that must occur before an obligation exists. A common example of
such a condition is a loan contingency found in a purchase and sale
agreement, whereby if the buyer is unable to obtain a loan, the buyer is
not obligated to complete the purchase of the property. A condition
subsequent is something that may occur after a promise is made, which will
excuse the obligation of a party. An example of such a condition is that
the obligation of a buyer to complete a purchase may be excused if a
property is damaged by a natural disaster or fire before the close of
escrow. That a condition, as opposed to a covenant, exists can often be
seen by the use of words such as “if,” “when,” “unless,” “subject to,” or
“conditional upon.”

Unlike the failure of a covenant, which will create liability on the part
of the non-performing contracting party, the failure of a condition merely
creates the possibility of the contract being terminated without there
being any liability resulting from such failure. Using the above examples,
if a buyer cannot obtain a loan in satisfaction of the loan contingency,
the buyer can terminate the contract without liability. Likewise, if the
property is damaged before the close of escrow, typically either party can
terminate the contract without liability. Whereas the failure of a
condition does not give rise to damages, it typically will excuse any
future performance."

http://www.jaburgwilk.com/news-publications/covenants-conditions-contracts

***) https://definitions.uslegal.com/c/concurrent-condition/

"A concurrent condition is an act that the parties to a contract are under
duties to perform concurrently and the act of each party is separately
operative as a condition precedent. "

Am Sa., 20. Juli 2019 um 11:27 Uhr schrieb Alexander Terekhov <
herr.alter at gmail.com>:

> BTW: BOWMAN v. MONSANTO actually sort of confirms both 17 USC 109 and 17
> USC 117:
>
> "Our holding today is limited—addressing the situation before us, rather
> than every one involving a selfreplicating product. We recognize that such
> inventions are becoming ever more prevalent, complex, and diverse. In
> another case, the article’s self-replication might occur outside the
> purchaser’s control. Or it might be a necessary but incidental step in
> using the item for another purpose. Cf. 17 U. S. C. §117(a)(1) (“[I]t is
> not [a copyright] infringement for the owner of a copy of a computer
> program to make . . . another copy or adaptation of that computer program
> provide[d] that such a new copy or adaptation is created as an essential
> step in the utilization of the computer program”). We need not address here
> whether or how the doctrine of patent exhaustion would apply in such
> circumstances. In the case at hand, Bowman planted Monsanto’s patented
> soybeans solely to make and market replicas of them, thus depriving the
> company of the reward patent law provides for the sale of each article.
> Patent exhaustion provides no haven for that conduct. We accordingly affirm
> the judgment of the Court of Appeals for the Federal Circuit.   "
>
> So here we have pretty direct confirmation of 17 USC 117. Now just try to
> imagine what would the court say if Monsanto would had copylefted the
> reproduction right and sued BOWMAN in patent (tort/infringement) rather
> than contract (breach) for failure to fulfill some "conditions" (factually
> contractual covenants) while distributing beans lawfully made under some
> patentlefted license...
>
> Am Do., 18. Juli 2019 um 19:20 Uhr schrieb Alexander Terekhov <
> herr.alter at gmail.com>:
>
>> You don't seem to grok 17 USC 109. Here's what Lee Hollaar who worked
>> with the Chief Judge and the Chief Intellectual Property Counsel to the
>> Senate Judiciary Committee on Internet, copyright, and patent issues  as a
>> Committee Fellow (see
>> http://digital-law-online.info/lpdi1.0/treatise2.html) had to say about
>> the line of reasoning akin to your misreading of 17 USC 109 ("right to
>> resell the one physical copy that you bought, and not lawful reproductions
>> of it" so to speak):
>>
>>
>> http://groups.google.com/group/misc.legal.computing/msg/cbd9e083622b1c1f?dmode=source
>>
>> ------
>> In article <cedhdt$2l9... at toad.stack.nl> galac... at stack.nl (Arnoud
>> "Galactus" Engelfriet) writes:
>> >I had always understood first sale to be restricted only to the
>> >copy you acquire (buy) from the copyright holder. Not to copies
>> >you make yourself.
>>
>> And your understanding is wrong, at least if you are talking about
>> United States copyright law.  The question under 17 USC 109 is
>> simply whether the copy was "lawfully made," not who made it or
>> what made it lawful.
>>
>> In the Committee Report that accompanied the passage of the Copyright
>> Act of 1976 (House Report 94-1976), there is this explaination:
>>
>>        To come within the scope of section 109(a), a copy or
>>      phonorecord must have been "lawfully made under this title,"
>>      though not necessarily with the copyright owner's authorization.
>>      For example, any resale of an illegally "pirated" phonorecord
>>      would be an infringement, but the disposition of a phonorecord
>>      legally made under the compulsory licensing provisions of section
>>      115 would not.
>> ------
>>
>>
>> http://groups.google.com/group/gnu.misc.discuss/msg/a35d280e83f196a2?dmode=source
>>
>> ------
>> In article <x5wu25ouhr.... at lola.goethe.zz> David Kastrup <d... at gnu.org>
>> writes:
>> >First sale applies if there is a sale.  It doesn't if there isn't.
>> >Copyright defines the minimum set of rights that can be _sold_ to you.
>> >It does not apply to items to which you have no right in the first
>> >place, but to which you are unilaterally granted a conditional license
>> >to use and redistribute, without any exchange of consideration from
>> >your side.
>>
>> Wrong, wrong, wrong, at least under United States copyright law.
>>
>> "First sale" is just a shorthand for the judicially-created doctrine
>> that is now codified in 17 USC 109.  It does not require a "sale"
>> but applies to anyone who is "the owner of a particular copy or
>> phonorecord lawfully made under this title".
>>
>> I can become the lawful owner of a copy by gift or similar things
>> that are not a sale.
>>
>> And if I am the lawful owner, I can dispose of it in any way I want,
>> except for rental in the case of phonorecords or most computer
>> programs.
>> ------
>>
>>
>> http://groups.google.com/group/gnu.misc.discuss/msg/54e86da699867eab?dmode=source
>>
>> ------
>> In article <x5k6y5otfo.... at lola.goethe.zz> David Kastrup <d... at gnu.org>
>> writes:
>> >holl... at faith.cs.utah.edu (Lee Hollaar) writes:
>> >
>> >> In article <x5wu25ouhr.... at lola.goethe.zz> David Kastrup
>> <d... at gnu.org> writes:
>> >> >First sale applies if there is a sale.  It doesn't if there isn't.
>> >> >Copyright defines the minimum set of rights that can be _sold_ to you.
>> >> >It does not apply to items to which you have no right in the first
>> >> >place, but to which you are unilaterally granted a conditional license
>> >> >to use and redistribute, without any exchange of consideration from
>> >> >your side.
>> >>
>> >> Wrong, wrong, wrong, at least under United States copyright law.
>> >>
>> >> "First sale" is just a shorthand for the judicially-created doctrine
>> >> that is now codified in 17 USC 109.  It does not require a "sale"
>> >> but applies to anyone who is "the owner of a particular copy or
>> >> phonorecord lawfully made under this title".
>> >
>> >What about "made under this title" don't you understand?
>>
>> I seem to understand it a bit more than you do, it appears.
>>
>> The phrase essentially means that the copy is not infringing, either
>> because it was made with the permission of the copyright owner or
>> it falls within one of the exceptions to the copyright owner's
>> reproduction rights.
>>
>> >> I can become the lawful owner of a copy by gift or similar things
>> >> that are not a sale.
>> >
>> >Which then is not obtained "under this title".
>>
>> More nonsense.  If the owner of the copyright gives me a copy, then
>> I am the owner of a copy "made" (not "obtained") "under this title."
>> ------
>>
>>
>> http://groups.google.com/group/misc.int-property/msg/0e12f3571b78d7bd?dmode=source
>>
>> ------
>> In article <nm9fyovbw4b.... at mass-toolpike.mit.edu> Bruce Lewis
>> <brle... at users.sourceforge.net> writes:
>> >Alexander Terekhov <terek... at web.de> writes:
>> >> And what's the point of "and distribute"? As an owner of a copy
>> >> lawfully made I'm free to distribute it.
>> >
>> >US copyright statute, chapter 1, section 106(1) and (3) defines copying
>> >and distrubution as separate exclusive rights.
>> >
>> >http://www.copyright.gov/title17/92chap1.html#106
>> >
>> >I don't know why these rights are listed separately either, but it seems
>> >prudent that if you want to grant both rights you should be explicit
>> >about it, rather than assuming right (1) implies right (3).
>>
>> Because it was felt that both somebody who reproduces works but does
>> not distribute them to the public, and somebody who distributes works
>> to the public that were reproduced by another, should both be
>> infringers?
>>
>> As for the reproduction right (1) implying the distribution right (3),
>> it's not an implication, but a special rule in United States copyright
>> law spelled out in Section 109.  (It is commonly called "first sale,"
>> but the actual parameters of the rule are specified in the statute
>> and not some lay reading of "first," "sale," or even "first sale.")
>>
>> The heart of the provision is its first sentence:
>>
>>      Notwithstanding the provisions of section 106(3), the owner of a
>>      particular copy or phonorecord lawfully made under this title, or
>>      any person authorized by such owner, is entitled, without the
>>      authority of the copyright owner, to sell or otherwise dispose
>>      of the possession of that copy or phonorecord.
>>
>> But it goes on to state exceptions to this rule (primarily for the
>> rental of phonorecords and software) and exceptions to these exceptions,
>> not part of the original Copyright Act of 1976.
>>
>> But if one has permission to make lawful copies, one does not need any
>> additional permission to distribute those copies to the public.
>> ------
>>
>> Hope this helps.
>>
>> Am Do., 18. Juli 2019 um 17:46 Uhr schrieb Smith, McCoy <
>> mccoy.smith at intel.com>:
>>
>>> Plus, you’re not even doing it right.  You’re excluding the most
>>> relevant case, more recent than the cases you cite, from the highest court
>>> in the US:
>>>
>>>
>>> But as already explained, we have always drawn the boundaries of the
>>> exhaustion doctrine to exclude that Activity [reproduction], so that the
>>> patentee retains an undiminished right to prohibit others from making the
>>> thing his patent protects. See, e.g., Cotton-Tie Co. v. Simmons, 106 U. S.
>>> 89, 93–94 (1882) (holding that a purchaser could not “use” the buckle from
>>> a patented cotton-bale tie to “make” a new tie). That is because, once again*,
>>> if simple copying were a protected use, a patent would plummet in value
>>> after the first sale of the first item containing the invention*. The
>>> undiluted patent monopoly, it might be said, would extend not for 20 years
>>> (as the Patent Act promises), but for only one transaction. And that would
>>> result in less incentive for innovation than Congress wanted. *Hence
>>> our repeated insistence that exhaustion applies only to the particular item
>>> sold, and not to reproductions.*
>>>
>>> BOWMAN v. MONSANTO CO. ET AL. (U.S. 2013)
>>>
>>> *From:* License-discuss [mailto:
>>> license-discuss-bounces at lists.opensource.org] *On Behalf Of *Pamela
>>> Chestek
>>> *Sent:* Thursday, July 18, 2019 6:19 AM
>>> *To:* license-discuss at lists.opensource.org
>>> *Subject:* Re: [License-discuss] Essential step defense and first sale
>>>
>>>
>>>
>>> No matter how long you beat your drum, or under how many email aliases
>>> and pseudonyms, no one is buying your arguments here or on any other list.
>>>
>>> Pam
>>>
>>> Pamela S. Chestek
>>> Chestek Legal
>>> PO Box 2492
>>> Raleigh, NC 27602
>>> 919-800-8033
>>> pamela at chesteklegal.com
>>> www.chesteklegal.com
>>>
>>> On 7/17/2019 11:32 PM, Alexander Terekhov wrote:
>>>
>>> See, e.g., SoftMan Prods. Co. v. Adobe Sys. Inc., 171 F. Supp. 2d 1075,
>>> 1083 (C.D. Cal. 2001).
>>>
>>>
>>>
>>>
>>> https://www.linuxjournal.com/files/linuxjournal.com/linuxjournal/articles/056/5628/softman-v-adobe.html
>>>
>>>
>>>
>>>
>>> I've collected most relevant stuff here:
>>>
>>>
>>>
>>> https://groups.google.com/d/msg/gnu.misc.discuss/jd7DiFRiH98/MaCxHL-lfpkJ
>>>
>>>
>>>
>>> Such as:
>>>
>>>
>>>
>>> "...the following factors require a finding that
>>> distributing software under licenses transfers individual copy
>>> ownership: temporally unlimited possession, absence of time
>>> limits on copy possession, pricing and payment schemes that are
>>> unitary not serial, licenses under which subsequent transfer is
>>> neither prohibited nor conditioned on obtaining the licensor’s
>>> prior approval (only subject to a prohibition against rental and
>>> a requirement that any transfer be of the entity), and licenses
>>> under which the use restrictions principal purpose is to protect
>>> intangible copyrightable subject matter, and not to preserve
>>> property interests in individual program copies. Id. at 172. "
>>>
>>>
>>>
>>> Unless you deliberately confuse ownership of copyright with ownership of
>>> copies it must be clear to you that all copies of copylefted works falls
>>> under 17 USC 109 and 17 USC 117.
>>>
>>>
>>>
>>> Am Mi., 17. Juli 2019 um 15:50 Uhr schrieb Pamela Chestek <
>>> pamela at chesteklegal.com>:
>>>
>>> Your citations to cases that aren't analogous aren't convincing.
>>>
>>> Pam
>>>
>>> Pamela S. Chestek
>>> Chestek Legal
>>> PO Box 2492
>>> Raleigh, NC 27602
>>> +1 919-800-8033
>>> pamela at chesteklegal.com
>>> www.chesteklegal.com
>>>
>>> On 7/16/19 3:20 PM, Alexander Terekhov wrote:
>>>
>>> Story end:
>>>
>>> https://www.itassetmanagement.net/2016/10/31/secondary-software-2016/
>>>
>>> https://www.usedsoft.com/en/lawyer-christian-ballke-on-the-legal-basis-for-the-trade-in-used-software/
>>>
>>> Funny:
>>>
>>> http://www.groklaw.net/articlebasic.php?story=20110929014241932
>>> ("Psystar Loses its Appeal; Licensees Have No First-Sale Rights; Costs
>>> Awarded to Apple ~ pj")
>>>
>>> "But there is one more important result here. Do you remember all the
>>> predictions on message boards all over the web by anti-GPL activists like
>>> Alexander Terekhov that someone could get a copy of Linux, under the GPL,
>>> and then make copies and sell them under another license, under the first
>>> sale doctrine? That fantasy has just died a permanent death. It was never
>>> true that one can do that. But now we can prove it with this Psystar
>>> ruling. Yes, Psystar can ask the US Supreme Court to review this. But
>>> seriously, what are the odds?"
>>>
>>>
>>>
>>> Am So., 14. Juli 2019 um 19:55 Uhr schrieb Alexander Terekhov <
>>> herr.alter at gmail.com>:
>>>
>>> BTW, after Vernor v. Autodesk there was UMG vs. Augusto:
>>>
>>>
>>> http://www.phphosts.org/blog/2011/01/court-rules-that-its-legal-to-sell-promotional-cds/
>>>
>>>
>>>
>>>
>>> See also:
>>>
>>>
>>>
>>>
>>> https://www.pcworld.com/article/258720/eu_court_rules_resale_of_used_software_licenses_is_legal_even_online.html
>>>
>>>
>>>
>>> Am So., 14. Juli 2019 um 16:01 Uhr schrieb Pamela Chestek <
>>> pamela at chesteklegal.com>:
>>>
>>> On 7/13/2019 6:58 AM, Alexander Terekhov wrote:
>>>
>>> The thing is that 17 USC 117 makes the act of running/using software
>>> unrestricted and 17 USC 109 also severely impedes ability to control
>>> distribution as far as copyright is concerned. So, you'll have to stick to
>>> contractual covenants and fight against
>>> https://en.wikipedia.org/wiki/Efficient_breach ... good luck with that
>>> :)
>>>
>>>
>>> In both cases, only if you are the owner of a copy. "Licensees are not
>>> entitled to the essential step defense." *Vernor v. Autodesk, Inc.*,
>>> 621 F.3d 1102, 1111 (9th Cir. 2010). It is a rare decision that holds that
>>> a party is an owner of a copy of software rather than a licensee.
>>>
>>> Pam
>>>
>>> Pamela S. Chestek
>>> Chestek Legal
>>> PO Box 2492
>>> Raleigh, NC 27602
>>> 919-800-8033
>>> pamela at chesteklegal.com
>>> www.chesteklegal.com
>>>
>>> _______________________________________________
>>> License-discuss mailing list
>>> License-discuss at lists.opensource.org
>>>
>>> http://lists.opensource.org/mailman/listinfo/license-discuss_lists.opensource.org
>>>
>>>
>>>
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>>
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