Control Without Interest: State Law of Assignment, Federal Preemption, and the Intellectual Property License

Abstract:     
In Gardner v. Nike, Inc., the U.S. District Court for the Central District of California granted summary judgment in a case of first impression and great potential significance regarding the law of copyright licensing. No previously published U.S. case squarely addresses the issue of whether an assignee or exclusive licensee of limited rights under a copyright may assign or sublicense those rights without express permission of the original copyright owner. The controversiality of the case is heightened by a circuit split on whether, as a general matter, federal law applies to the entire interpretation of any licenses of a federally granted intellectual property monopoly, and judicial disagreement on whether federal or state law applies specifically to the question of assignability.

This article analyzes the issue of whether a licensee of federally-granted intellectual property rights may freely transfer its rights to a third party in the absence of a contractual prohibition against such transfer. The issue of licensing has assumed increasing importance in commercial law, the common law of contracts, and federal intellectual property law in general. The article examines the arguments presented in Gardner v. Nike, and the district court’s holding in that case. This article also discusses the constitutional issues relating to whether state contract law or federal intellectual property law should determine whether a license is assignable, the effects on federal policy of applying state law to determine the assignability of a license agreement, and the general policy issues relating to license assignments.

Keywords: copyright, license, assignment

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