[License-discuss] The CAL is NOT unilateral because...

Tue Jul 30 18:48:13 UTC 2019

Alexander Terekhov (pseudonymously) wrote:

> The CAL is NOT unilateral because in a unilateral license agreement a licensee/offeree has no contractual liability; there are no damages *and* no specific performance can possibly be imposed on a licensee/offeree in a unilateral license agreement.

I will step in to say that Alexander is wrong. He should please take his legal theories to court rather than bury this discussion list in such legal silliness. Citing court cases in this forum proves nothing. Please no longer answer him here.

/Larry

Lawrence Rosen

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This email is licensed under  <https://creativecommons.org/licenses/by/4.0/> CC-BY-4.0. Please copy freely.  

From: Alexander Terekhov <herr.alter at gmail.com> 
Sent: Tuesday, July 30, 2019 11:05 AM
To: license-discuss at lists.opensource.org
Cc: VanL <van.lindberg at gmail.com>; lrosen at rosenlaw.com
Subject: The CAL is NOT unilateral because...

Hello Van,

The CAL is NOT unilateral because in a unilateral license agreement a licensee/offeree has no contractual liability; there are no damages *and* no specific performance can possibly be imposed on a licensee/offeree in a unilateral license agreement.

The CAL stipulates, however:  

"... You agree that either the Licensor or a Recipient (as an intended third-party beneficiary) may enforce these conditions via specific performance."  

A licensee/offeree in a unilateral agreement can breach nothing because he is not obliged to abide anything; non-compliance by a licensee/offeree is impossible in a unilateral license agreement.

In a unilateral license agreement only a licensor/offeror has a contractual obligation, which becomes binding upon performance or fulfilment of a condition precedent (an act required by an offeror).

Assuming proper consideration, a licensor is a party with liability for damages arising from termination / breach, which BTW happens to "not terminate a licensee's right to use intellectual property", said Judge Easterbrook and the SCOTUS agreed:

https://www.lw.com/thoughtLeadership/supreme-court-clarifies-treatment-of-rejected-trademark-licenses-in-bankruptcy

Easterbrook:

https://caselaw.findlaw.com/us-7th-circuit/1605632.html

“Outside of bankruptcy, a licensor's breach does not terminate a licensee's right to use intellectual property. Lakewood had two principal obligations under its contract with CAM: to provide CAM with motors and cord sets (CAM was to build the rest of the fan) and to pay for the completed fans that CAM drop-shipped to retailers. Suppose that, before the bankruptcy began, Lakewood had broken its promise by failing to provide the motors. CAM might have elected to treat that breach as ending its own obligations, see Uniform Commercial Code § 2–711(1), but it also could have covered in the market by purchasing motors and billed Lakewood for the extra cost. UCC § 2–712. CAM had bargained for the security of being able to sell Lakewood-branded fans for its own account if Lakewood defaulted; outside of bankruptcy, Lakewood could not have ended CAM's right to sell the box fans by failing to perform its own duties, any more than a borrower could end the lender's right to collect just by declaring that the debt will not be paid.

What § 365(g) does by classifying rejection as breach is establish that in bankruptcy, as outside of it, the other party's rights remain in place. After rejecting a contract, a debtor is not subject to an order of specific performance. See NLRB v. Bildisco & Bildisco, 465 U.S. 513, 531, 104 S.Ct. 1188, 79 L.Ed.2d 482 (1984); Midway Motor Lodge of Elk Grove v. Innkeepers' Telemanagement & Equipment Corp., 54 F.3d 406, 407 (7th Cir.1995). The debtor's unfulfilled obligations are converted to damages; when a debtor does not assume the contract before rejecting it, these damages are treated as a pre-petition obligation, which may be written down in common with other debts of the same class. But nothing about this process implies that any rights of the other contracting party have been vaporized. Consider how rejection works for leases. A lessee that enters bankruptcy may reject the lease and pay damages for abandoning the premises, but rejection does not abrogate the lease (which would absolve the debtor of the need to pay damages). Similarly a lessor that enters bankruptcy could not, by rejecting the lease, end the tenant's right to possession and thus re-acquire premises that might be rented out for a higher price. The bankrupt lessor might substitute damages for an obligation to make repairs, but not rescind the lease altogether.”

Hope this helps.

regards,
alexander.

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