60 Pages Posted: 26 Jan 2014 Last revised: 22 May 2014
Date Written: April 24, 2014
Every copyright lawyer knows Effects Associates v. Cohen, the case of the exploding alien yogurt. The Ninth Circuit’s opinion raises — and doesn’t really answer — troubling doctrinal questions about the nature of an implied copyright license: Is it a kind of contract, and if so, what kind? What principles govern whether one exists and whether it can be terminated? Is it transferable by the licensee? Does it bind assignees of the copyright? And what sources of law should courts look to in deciding these matters?
Building on prior work about the nature of a license interest, I provide an account of implied copyright license doctrine that seeks to answer these questions while staving off two different misconceptions. One is the faulty premise that licenses are contractual obligations, and that therefore findings of implied license must be somehow justified in accordance with state contract law. The other is the view that implied license is an open-ended invitation for courts to override owners’ rights of control in service of various policy goals.
Distinguishing implied license from the adjacent doctrines of estoppel, exhaustion, and compulsory license, I show it to be rooted, not in contract, but in the same implied consent that is recognized as providing a defense to property and other torts. Implied license doctrine uses context-based default rules to allocate the burdens of seeking or disclaiming grants of permission, thereby discouraging opportunism and reducing transaction costs without harming copyright owners’ legitimate interests in control. In addition, I show how explaining implied license doctrine through a property framework resolves the problems of irrevocability, transferability, and choice of law that have long led to confusion in this part of the law.
Keywords: implied contract, property theory, Effects v. Cohen, Oddo v. Ries, Foad Consulting, choice of law, federal preemption, majoritarian default rule, penalty default rule, equitable estoppel, exhaustion, compulsory license, irrevocability, assignability, Erie, Unarco Industries, Clearfield Trust
JEL Classification: K11
Suggested Citation: Suggested Citation
Newman, Christopher M., 'What Exactly Are You Implying?': The Elusive Nature of the Implied Copyright License (April 24, 2014). Cardozo Arts & Entertainment Law Journal, Vol. 32, pp. 501-559, 2014; George Mason Law & Economics Research Paper No. 14-02. Available at SSRN: https://ssrn.com/abstract=2384945
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