[License-discuss] CAL Termination for Non-Compliance and New York law

[Alexander Terekhov]

The problematic wording is this:

"This License terminates automatically if You fail to comply with any of
the conditions in section 2."

Two problems:

1. New York law does not allow automatic termination.

"Even assuming Graham materially breached the licensing agreement and that
James was entitled to rescission, such rescission did not occur
automatically without some affirmative steps on James's part. 22A N.Y.
Jur.2d Contracts § 497 (1996) (“The failure of a party to perform his part
of a contract does not per se rescind it. The other party must manifest his
intention to rescind within a reasonable time.”); see also Jacob Maxwell,
Inc., 110 F.3d at 753 (“Such a breach would do no more than entitle [the
composer] to rescind the agreement and revoke its permission to play the
song in the future, actions [the composer] did not take during the relevant
period. One party's breach does not automatically cause [rescission] of a
bilateral contract.”) (emphasis omitted). Similarly, although James
sometimes characterizes the licensing agreement as abandoned, abandonment
of a contract can be accomplished only through mutual assent of the
parties, as demonstrated by positive and unequivocal conduct inconsistent
with an intent to be bound. See Armour & Co. v. Celic, 294 F.2d 432, 435-36
(2d Cir.1961). New York law does not presume the rescission or abandonment
of a contract and the party asserting rescission or abandonment has the
burden of proving it. See id. at 436."

2. As I've previously mentioned, calling something "condition" does not
make it so.

"... because contract obligations that are to be performed after partial
performance by the other party are not treated as conditions. 22 N.Y.
Jur.2d Contracts § 265 (1996); see also Jacob Maxwell, Inc., 110 F.3d at
754 (holding that payment of royalties and crediting of author were
covenants because “[the composer] expressly granted [the licensee]
permission to play the song before payment was tendered or recognition
received”); I.A.E., Inc., 74 F.3d at 778 (holding that full payment was not
a condition precedent when the licensee received the copyrighted drawings
after tendering only half the required payment)."

Both points are reflected in the following C++ code:

#include <algorithm>

// see  https://caselaw.findlaw.com/us-2nd-circuit/1011522.html

bool a_license_agreement::is_licensee_chargeable_as_ infringer(a_person &
licensee) {

  // blacklisted bad guy or 17 U.S. Code § 203 scenario
  if (this->has_been_irrevocably_terminated(licensee))
    return true;

  // I am not yet bound by my covenant not to sue for infringement?
  if (std::any_of(this->conditions.begin(),
                  this->conditions.end(),
                  unsatisfied_condition_precedent(licensee))
    return true;

  // I am bound by my covenant not to sue for infringement
  return false;

}
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