Implied license

Last updated March 30, 2021

An implied license is an unwritten license which permits a party (the licensee) to do something that would normally require the express permission of another party (the licensor). Implied licenses may arise by operation of law from actions by the licensor which lead the licensee to believe that it has the necessary permission.

Examples

A person who purchases a record album does not explicitly purchase a right to perform that album by playing it on a record player, but this right is implied.^[1]
A person or entity that purchases computer software in a suite. Software that is individually purchased, or not included in the suite is protected by a single license & and not part of a implied license.
A person who posts a lengthy comment to an internet forum may claim copyright to that post. However, if posters in that forum commonly copy the entire text to which they are responding into a later post, the original poster will be deemed to have given an implied license for his text to be copied into the later post.^{[ citation needed ]}
In a non-IP context, a person who holds a party on their house gives all of the invited guests an implied license to enter their property, and to enter those parts of the property that would usually be made available to guests, such as the bathrooms.^{[ citation needed ]}
In patent law, where an employee invents something while on company time, the employer receives an implied license to use the invention, even if no contract exists to assign rights to the employer. This is sometimes referred to as shop right.^[2] In copyright law, the work for hire provision would grant the employer copyright to the work, provided the invention is within the employee's job description.^[3]
In 2008, the Ninth US Circuit held that a non-exclusive license to use copyrighted material can be granted by implied license, but not an exclusive license. Further, if the creator has received consideration for the work, the non-exclusive grant is irrevocable.^[4]
Where a copyrighted work has been commissioned, the law in the United Kingdom is that the creator retains rights in the commissioned work. Unauthorised use of the work would therefore infringe the creator's copyright. Nevertheless, the commissioner may have an implied license to use the commissioned work, although only for the particular purpose under which the commission was originally agreed.^[5]^[6]
A U.S. court has ruled in Jan 19th 2006 that Web caching does not constitute a copyright violation, because of fair use and an implied license. Was the "Field vs Google, US District Court, District of Nevada, CV-S-04-0413-RCJ-LRL". In that context implied license refers to a de facto standard: if the copyright holder does not use any no-archive tags and robot exclusion standards to prevent caching.^{[ citation needed ]}
A Holocaust-victims who created and concealed materials documenting war atrocities gave implied consent for the distribution of such copyrighted material, and often amounts to fulfillment of their explicit wishes. In such cases following the letter of US copyright law, which protects unpublished anonymous works for 120 years since the year of their creation would go directly against their intentions. ^[7]

Implication: from surrounding circumstances or by operation of law?

In the United States, implied licenses are usually considered to be of two kinds: either they reflect the intention of the parties, which is inferred from a fact-specific inquiry into the surrounding circumstances, or else they are constructive agreements, in which case the intention of the parties is likely to be immaterial. In reality, there is a continuum between these kinds of implied license and it may be difficult to determine whether the license or contract in question is one which the law implies, irrespective of any protests by the unwilling licensor, or instead one inferred from the whole pattern of factual circumstances including the evidence of intent.

In England, there is more of a tendency to regard all implied licenses as matters of fact and intent, while what would be a license implied by law in the US is treated under some other branch of substantive law such as the doctrine of non-derogation from grants.^[8]

In both countries, the exhaustion doctrine has the effect of creating an implied license to use a product sold under the "authority" of the patentee. It is controversial whether and to what extent contractual expedients can successfully limit the scope of such implied licenses.

Express license

The opposite of an implied license is an express license, which, for some forms of intellectual property, must be in writing. Oral exclusive licenses were permitted, however, under US copyright law before 1978.^[9] Oral nonexclusive copyright licenses remain valid under US law.^[10] Patent licenses may be oral.^[11] Licenses under the Semiconductor Chip Protection Act must be in writing.^[12]

Related Research Articles

A royalty is a payment made by one party to another that owns a particular asset, for the right to ongoing use of that asset. Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset or a fixed price per unit sold of an item of such, but there are also other modes and metrics of compensation. A royalty interest is the right to collect a stream of future royalty payments.

In United States patent law, patent misuse is a patent holder's use of a patent to restrain trade beyond enforcing the exclusive rights that a lawfully obtained patent provides. If a court finds that a patent holder committed patent misuse, the court may rule that the patent holder has lost the right to enforce the patent. Patent misuse that restrains economic competition substantially can also violate United States antitrust law.

The doctrine of assignor estoppel is a doctrine of United States patent law barring a patent's seller (assignor) from attacking the patent's validity in subsequent patent infringement litigation. The doctrine is based on the doctrine of legal estoppel, which prohibits a grantor from challenging the validity of his/her/its grant.

A compulsory license provides that the owner of a patent or copyright licenses the use of their rights against payment either set by law or determined through some form of adjudication or arbitration. In essence, under a compulsory license, an individual or company seeking to use another's intellectual property can do so without seeking the rights holder's consent, and pays the rights holder a set fee for the license. This is an exception to the general rule under intellectual property laws that the intellectual property owner enjoys exclusive rights that it may license – or decline to license – to others.

The exhaustion doctrine, also referred to as the first sale doctrine, is a U.S. common law patent doctrine that limits the extent to which patent holders can control an individual article of a patented product after a so-called authorized sale. Under the doctrine, once an authorized sale of a patented article occurs, the patent holder's exclusive rights to control the use and sale of that article are said to be "exhausted," and the purchaser is free to use or resell that article without further restraint from patent law. However, under the repair and reconstruction doctrine, the patent owner retains the right to exclude purchasers of the articles from making the patented invention anew, unless it is specifically authorized by the patentee to do so.

Limitations and exceptions to copyright are provisions, in local copyright law or Berne Convention, which allow for copyrighted works to be used without a license from the copyright owner.

Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700, is a decision of the United States Court of Appeals for the Federal Circuit, in which the court appeared to overrule or drastically limit many years of U.S. Supreme Court precedent affirming the patent exhaustion doctrine, for example in Bauer & Cie. v. O'Donnell.

Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), is a decision of the United States Supreme Court in which the Court reaffirmed the validity of the patent exhaustion doctrine, and in doing so made uncertain the continuing precedential value of a line of decisions in the Federal Circuit that had sought to limit Supreme Court exhaustion doctrine decisions to their facts and to require a so-called "rule of reason" analysis of all post-sale restrictions other than tie-ins and price fixes. In the course of restating the patent exhaustion doctrine, the Court held that the exhaustion doctrine is triggered by, among other things, an authorized sale of a component when the only reasonable and intended use of the component is to practice the patent and the component substantially embodies the patented invention by embodying its essential features. The Court also overturned, in passing, the part of decision below that held that the exhaustion doctrine was limited to product claims and did not apply to method claims.

The doctrine of non-derogation from grants is a principle of the law of England and Wales. As the House of Lords explained in British Leyland Motor Corp. v. Armstrong Patents Co., it states that a seller of realty or goods is not permitted to take any action that will lessen the value to the buyer of the thing sold.

United States v. General Electric Co., 272 U.S. 476 (1926), is a decision of the United States Supreme Court holding that a patentee who has granted a single license to a competitor to manufacture the patented product may lawfully fix the price at which the licensee may sell the product.

A post-sale restraint, also termed a post-sale restriction, as those terms are used in United States patent law and antitrust law, is a limitation that operates after a sale of goods to a purchaser has occurred and purports to restrain, restrict, or limit the scope of the buyer's freedom to utilize, resell, or otherwise dispose of or take action regarding the sold goods. Such restraints have also been termed "equitable servitudes on chattels".

<i>Vernor v. Autodesk, Inc.</i> United States district court case

Vernor v. Autodesk, Inc. was a case in the United States District Court for the Western District of Washington regarding the applicability of the first-sale doctrine to software sold under the terms of so-called "shrinkwrap licensing." The court held that when the transfer of software to the purchaser materially resembled a sale it was, in fact, a "sale with restrictions on use" giving rise to a right to resell the copy under the first-sale doctrine. As such, Autodesk could not pursue an action for copyright infringement against Vernor, who sought to resell used versions of its software on eBay. The decision was appealed to the United States Court of Appeals for the Ninth Circuit, which issued a decision on September 10, 2010, reversing the first-sale doctrine ruling and remanding for further proceedings on the misuse of copyright claim. The Ninth Circuit's decision asserted that its ruling was compelled by Ninth Circuit precedent, but observed that the policy considerations involved in the case might affect motion pictures and libraries as well as sales of used software.

Bowers v. Baystate Technologies, 320 F.3d 1317, was a U.S. Court of Appeals Federal Circuit case involving Harold L. Bowers and Baystate Technologies over patent infringement, copyright infringement, and breach of contract. In the case, the court found that Baystate had breached their contract by reverse engineering Bower's program, something expressly prohibited by a shrink wrap license that Baystate entered into upon purchasing a copy of Bower's software. This case is notable for establishing that license agreements can preempt fair use rights as well as expand the rights of copyright holders beyond those codified in US federal law.

Adams v. Burke, 84 U.S. 453 (1873), was a United States Supreme Court case in which the Court first elaborated on the exhaustion doctrine. According to that doctrine, a so-called authorized sale of a patented product liberates the product from the patent monopoly. The product becomes the complete property of the purchaser and "passes without the monopoly." The property owner is then free to use or dispose of it as it may choose, free of any control by the patentee. Adams is a widely cited, leading case. A substantially identical doctrine applies in copyright law and is known as the "first sale doctrine".

Ethyl Gasoline Corp. v. United States, 309 U.S. 436 (1940), was a decision of the United States Supreme Court that limited the doctrine of the Court's 1938 decision in General Talking Pictures Corp. v. Western Electric Co. Beginning with the 1926 decision in United States v. General Electric Co., the Supreme Court made a sharp distinction between (i) post-sale restraints that a patentee imposed on purchasers of a patented product and (ii) restrictions (limitations) that a patentee imposed on a licensee to manufacture a patented product: the former being illegal and unenforceable under the exhaustion doctrine while the latter were generally permissible under a lenient "rule of reason." Thus, under the General Talking Pictures doctrine, a patent holder may permissibly license others to manufacture and then sell patented products in only a specified field (market), such as only a particular type of product made under the patent or only a particular category of customer for the patented product. The Ethyl decision held, however, that a patent licensing and distribution program based on both the sale of a patented product and licenses to manufacture a related product was subject to ordinary testing under the antitrust laws, and accordingly was illegal when its effect was to "regiment" an entire industry.

The Button-Fastener Case, Heaton-Peninsular Button-Fastener Co. v. Eureka Specialty Co., also known as the Peninsular Button-Fastener Case, was for a time a highly influential decision of the United States Court of Appeals for the Sixth Circuit. Many courts of appeals, and the United States Supreme Court in the A.B. Dick case adopted its "inherency doctrine"—"the argument that, since the patentee may withhold his patent altogether from public use, he must logically and necessarily be permitted to impose any conditions which he chooses upon any use which he may allow of it." In 1917, however, the Supreme Court expressly overruled the Button-Fastener Case and the A.B. Dick case, in the Motion Picture Patents case.

Impression Products, Inc. v. Lexmark International, Inc., 581 U.S. ___ (2017), is a decision of the Supreme Court of the United States on the exhaustion doctrine in patent law in which the Court held that after the sale of a patented item, the patent holder cannot sue for patent infringement relating to further use of that item, even when in violation of a contract with a customer or imported from outside the United States. The case concerned a patent infringement lawsuit brought by Lexmark against Impression Products, Inc., which bought used ink cartridges, refilled them, replaced a microchip on the cartridge to circumvent a digital rights management scheme, and then resold them. Lexmark argued that as they own several patents related to the ink cartridges, Impression Products was violating their patent rights. The U.S. Supreme Court, reversing a 2016 decision of the Federal Circuit, held that the exhaustion doctrine prevented Lexmark's patent infringement lawsuit, although Lexmark could enforce restrictions on use or resale of its contracts with direct purchasers under regular contract law. Besides printer and ink manufacturers, the decision of the case could affect the markets of high tech consumer goods and prescription drugs.

Leitch Manufacturing Co. v. Barber Co., 302 U.S. 458 (1938), is a 1938 decision of the United States Supreme Court extending the tie-in patent misuse doctrine to cases in which the patentee does not use an explicit tie-in license but instead relies on grants of implied licenses to only those who buy a necessary supply from it.

The Mercoid cases—Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661 (1944), and Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., 320 U.S. 680 (1944)—are 1944 patent tie-in misuse and antitrust decisions of the United States Supreme Court. These companion cases are said to have reached the "high-water mark of the patent misuse doctrine." The Court substantially limited the contributory infringement doctrine by holding unlawful tie-ins of "non-staple" unpatented articles that were specially adapted only for use in practicing a patent, and the Court observed: "The result of this decision, together with those which have preceded it, is to limit substantially the doctrine of contributory infringement. What residuum may be left we need not stop to consider." The Court also suggested that an attempt to extend the reach of a patent beyond its claims could or would violate the antitrust laws: "The legality of any attempt to bring unpatented goods within the protection of the patent is measured by the antitrust laws, not by the patent law."

National Lockwasher Co. v. George K. Garrett Co., 137 F.2d 255, is one of the earliest or the earliest federal court decision to hold that it is patent misuse for a patentee to require licensees not to use a competitive technology. Such provisions are known as "tie-outs."

References

↑ "An incident to the purchase of any article, whether patented or unpatented, is the right to use and sell it...." United States v. Univis Lens Co., 316 U.S. 241, 249 (1942); see also Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476, 484 (1964) ("[I]t is fundamental that sale of a patented article by the patentee or under his authority carries with it an 'implied license to use.'") (quoting Adams v. Burke, 84 U.S. (17 Wall.) 453, 456 (1873)).
↑ United States v. Dubilier Condenser Corp., 289 U.S. 178 (1933); Lariscey v. United States, 949 F.2d 1137 (Fed. Cir. 1991).
↑ Section 101, Copyright Act of 1976 (USC 17 §101)
↑ Asset Marketing Systems, Inc. v. Gagnon, 542 F.3d 748 (9th Cir. 2008)
↑ Blair v Osborn and Tomkins [1971] 2 WLR 503
↑ David Bainbridge, Intellectual Property, 1999 (4th ed.), pp.84-85
↑ Pessach, Guy; Shur-Ofry, Michal (April 28, 2019). "Copyright and the Holocaust". Yale Journal of Law & the Humanities. 30 (2): 42. ISSN 1041-6374 . Retrieved July 4, 2020.
↑ An illustrative case is British Leyland Motor Corp. v. Armstrong Patents Co., [1986] A.C. 577, [1986] All E.R. 850 (H.L.). The opinion by Lord Templeman in that case pointed out that an implied license might be negatived by express language, under principles of freedom of contract, but that was not so when non-derogation instead is involved: “The right cannot be withheld by the manufacturer of the car by contract with the first purchaser and cannot be withheld from any subsequent owner.” That is, the nature of property makes the right inherent and not a matter of freedom of contract. It is thus seen that the effect is comparable to the US license that is implied by operation of law.
↑ See Davis v. Blige, 505 F.3d 90, 108 (2d Cir. 2007).
↑ See Vincent v. City Colleges of Chicago, 485 F.3d 919, 922 (7th Cir. 2007); Bateman v. Mnemonics, Inc., 79 F.3d 1532, 1538 n.12 (11th Cir. 1996).
↑ Waymark Corp. v. Porta Systems Corp., 334 F.3d 1358, 1364 (Fed. Cir. 2003); Enzo APA & Son v. Geapag A.G., 134 F.3d 1090, 1093 (Fed. Cir. 1998).
↑ Section 903(b) of the Act, 17 U.S.C. § 903(b), provides: "The owner of the exclusive rights in a mask work may transfer all of those rights, or license all or less than all of those rights, by any written instrument signed by such owner or a duly authorized agent of the owner."