Jacob Maxwell, Inc. v. Veeck

United States Court of Appeals,
Eleventh Circuit.
No. 96-2636.
JACOB MAXWELL, INCORPORATED, Plaintiff-Counter-Defendant-
Appellant, Cross-Appellee,
v.
Michael VEECK, Individually and as General Partner of the Fort
Myers Miracle Baseball Club Partnership, et al., Defendants,
John Kuhn, Movant,
Marvin Goldclang, Individually and as General Partner of the Fort
Myers Miracle Baseball Club Partnership, Greater Miami Baseball
Club Limited Partnership, Defendants-Appellees, Cross-Appellants,
Baseball Company of America, a Florida Limited Partnership,
Baseball Corp. of America, Inc., a New Jersey Corporation,
Defendants-Counter-Claimants-Appellees, Cross-Appellants.
April 18, 1997.
Appeal from the United States District Court for the Middle
District of Florida. (No. 93-372-CIV-FTM-24D), Susan C. Bucklew,
Judge.
Before CARNES, Circuit Judge, CAMPBELL* and CLARK, Senior Circuit
Judges.
LEVIN H. CAMPBELL, Senior Circuit Judge:
This appeal concerns an unhappy dispute between the composer
of a song entitled "Cheer! The Miracle Is Here" and a minor league
baseball team, known as the Miracle, for whose promotion the song
was written. After the parties' relations turned sour, the
composer sued the Miracle claiming that its playing of the song at
games had been a breach of copyright. Rejecting that contention,
the district court awarded summary judgment to the Miracle and
ruled that the Miracle had received an oral nonexclusive license
*
Honorable Levin H. Campbell, Senior U.S. Circuit Judge for
the First Circuit, sitting by designation.
authorizing the use that it made of the copyrighted song, and that
the composer's remedy, if any, lay in a state court contract action
for payment and damages. The composer has appealed, and the
Miracle has cross-appealed from the district court's denial of its
request for attorney's fees.
I.
We state the facts in the light most favorable to the
non-moving party, Plaintiff-Appellant Jacob-Maxwell, Inc. ("JMI").
In the spring of 1993, James Albion, president of JMI, agreed
to write a team song for the Miracle, a minor league baseball team.
Albion agreed to write the song free of charge, to provide the
Miracle with the Digital Audio Tape master, and to grant the
Miracle an exclusive license. In return, Albion asked only that
the Miracle pay his out-of-pocket production costs and that the
team credit him as the author any time the song was played at games
or distributed on cassette tapes. Albion told Michael Veeck, the
Miracle's Executive Director, that his production costs would be
somewhere between $800 and $1100.
Albion wrote and produced the song, incurring production
expenses of $1050, and assigned ownership rights to JMI. He
delivered a master tape (though not the Digital Audio Tape master)
to John Kuhn, the Miracle's Director of Marketing and Promotion, on
July 2, 1993, and requested payment. Kuhn told him he could not
issue a check immediately but asked if he could play the song at
the next day's game regardless. Albion agreed.
Over the course of the summer, the Miracle played the song
many times at games, never giving Albion the promised authorship
credit. Albion was present at many of these games. Albion
repeatedly demanded payment, and once communicated his expectation
that the lyrics and credits would be handed out to the fans, but
did not withdraw his permission to play the song at games. To the
contrary, in July 1993, Albion wrote to Kuhn urging the Miracle to
continue to perform the song publicly.
On August 9, Albion provided the Miracle with a written
invoice. On August 30, the Miracle tendered Albion a check for
$500, telling him the rest would be handled later. Because the
check was not marked "partial payment," Albion refused to accept
it. On September 21, 1993, JMI formally registered the song with
the United States Copyright Office, and on October 12th JMI's
attorney wrote to the Miracle, notifying the team that its use of
the song constituted copyright infringement. The team last played
the song on August 27, 1993.
JMI sued the owners and operators of the Miracle Baseball Club
of Ft. Myers, Florida, alleging copyright infringement and breach
of contract. The district court granted the defendants' motion for
summary judgment on the copyright claim, holding that Albion had,
by his conduct, granted the Miracle a nonexclusive license to play
the song at the times it did. The court dismissed the pendent
state law breach of contract claim without prejudice.1
II.
On appeal, JMI argues that because the oral agreement had
been for an exclusive license, the district court erred in finding
1
The defendants' state law counterclaim was likewise
dismissed without prejudice.
an implied nonexclusive license.
The Copyright Act provides, "A transfer of copyright
ownership, other than by operation of law, is not valid unless an
instrument of conveyance, or a note or memorandum of the transfer,
is in writing and signed by the owner of the rights conveyed or
such owner's duly authorized agent." 17 U.S.C. § 204(a). It is
undisputed that any arrangement between the parties for granting an
exclusive license to the Miracle was never written down and that,
therefore, no valid transfer to the team of copyright ownership
under the Copyright Act took place.
In contrast to an exclusive license, a nonexclusive license
to use a copyright " "may be granted orally, or may even be implied
from conduct.' " Effects Associates, Inc. v. Cohen, 908 F.2d 555,
558 (9th Cir.1990) (quoting 3 M. Nimmer & D. Nimmer, Nimmer on
Copyright § 10.03[A], at 10-36 (1989)), cert. denied sub nom.
Danforth v. Cohen, 498 U.S. 1103, 111 S. Ct. 1003, 112 L. Ed. 2d 1086
(1991). This is true because 17 U.S.C. § 101 excludes the
assignment of nonexclusive licenses from the definition of
"transfer of copyright ownership."
The district court, relying on the Ninth Circuit's decision in
Effects Associates, determined that Albion had impliedly granted
the Miracle a nonexclusive license by initially giving permission
to play the song at games and by failing to object despite his
knowledge that the team was continuing to play the song publicly.
In Effects Associates, the Ninth Circuit held that a special
effects company had granted a movie producer an implied
nonexclusive license to use the special effects footage it had
created. The court reasoned that because the special effects
company had "created a work at defendant's request and handed it
over, intending that defendant copy and distribute it," it had
impliedly granted the defendant a nonexclusive license. Id.
Similarly, in this case Albion created the song at the
Miracle's request and handed a master tape over, intending that the
Miracle play the song at its games. But, JMI sees an important
distinction between this case and Effects Associates. There, "no
one said anything about who would own the copyright in the
footage," id. at 556, but here the plaintiff orally indicated an
intention to grant to the defendant an exclusive license.
JMI argues that under Florida contract law,2 it was error for
the court to infer the creation of a nonexclusive license from the
parties' conduct when they had explicitly agreed, albeit in an
unenforceable oral exchange, to an exclusive license. See
Excelsior Insurance Company v. Pomona Park Bar & Package Store, 369
So. 2d 938, 942 (Fla.1979) (holding that courts may not "rewrite
contracts, add meaning that is not present, or otherwise reach
results contrary to the intentions of the parties"); Rigel v.
National Casualty Company, 76 So. 2d 285, 286 (Fla.1954) (holding
that courts should not add a meaning to clear contract language);
Indian Harbor Citrus, Inc. v. Poppell, 658 So. 2d 605, 606 (Fla. 4th
Dist.Ct.App.) (holding that custom or usage cannot be used to
2
As a general rule, state law governs the interpretation of
copyright contracts, unless a particular state rule of
construction would "so alter rights granted by the copyright
statutes as to invade the scope of copyright law or violate its
policies." Fantastic Fakes, Inc. v. Pickwick International,
Inc., 661 F.2d 479, 483 (5th Cir.1981). See also 3 M. Nimmer &
D. Nimmer, Nimmer on Copyright § 12.01[A], at 12-8 n. 19 (1996).
contradict an express contract), review denied, 666 So. 2d 144
(Fla.1995); Flagship National Bank v. Gray Distribution Systems,
Inc., 485 So. 2d 1336, 1340 (Fla. 3d Dist.Ct.App.1986) (holding that
when the express terms of a contract conflict with the practice of
the parties, the express terms of the contract control), review
denied, 497 So. 2d 1217 (Fla.1986).
We do not find these cases controlling here. They either
involve situations where parties seek to modify fully enforceable
contracts by reference to the rule of interpretation which holds
that an ambiguity in a contract is to be construed against the
drafter or deal with attempts by a party to modify a clear contract
term by reference to the parties' course of dealings or other
extrinsic matters. This case does not present an analogous
situation. Here federal copyright law renders the parties' oral
agreement unenforceable insofar as it provided for the transfer of
an exclusive copyright. In these circumstances, a court has no
choice but to look at alternatives beyond the parties' intended
arrangement.
Like the district court, we conclude that while it may well be
that the parties in their initial negotiations contemplated an
exclusive license, JMI cannot reasonably deny, given its subsequent
conduct here, that it granted to the Miracle the sort of lesser,
nonexclusive license to play the piece during the summer of 1993
that federal law recognizes may result from a purely oral
transaction.
Albion's approving conduct—his granting of permission to the
Miracle on July 2, 1993 to play his song at the next day's game
even though he had not yet been paid, his attendance without demur
at subsequent games at which the song was played, his letter to
Kuhn urging the Miracle to continue to play the song at games, and
his failure to withdraw permission until October—clearly expressed
Albion's permission for the Miracle to play the song when it did.
Implicit in that permission was a promise not to sue for copyright
infringement—a promise that at least one court has found to be the
essence of a nonexclusive license. See In re CFLC, Inc., 89 F.3d
673, 677 (9th Cir.1996) ("[A] nonexclusive patent license is, in
essence, "a mere waiver of the right to sue' the licensee for
infringement.") (quoting De Forest Radio Telephone & Telegraph Co.
v. United States, 273 U.S. 236, 242, 47 S. Ct. 366, 368, 71 L. Ed.
625 (1927)). We think it follows that until permission was
withdrawn in October, JMI granted to the Miracle a nonexclusive
license to play the song at games.
In so saying, we do not suggest that Albion and JMI waived
their rights to be compensated by the Miracle in accordance with
their oral understanding. What they waived was any right to sue
for breach of copyright on account of the playing of the song while
the license was in effect. As discussed in the following section,
the Miracle's failure to provide the agreed quid pro quo could not,
on the facts of this case, invalidate the legal effect of Albion's
permission to play.
III.
JMI argues that even assuming it gave the Miracle an oral,
nonexclusive license to play the song, that right should be treated
as having been cancelled in its entirety by the Miracle's material
breach of their oral understanding when it failed both to reimburse
JMI's costs and publicly to acknowledge Albion at games as the
song's creator. But even assuming arguendo that the Miracle's
conduct constituted a material breach of the parties' oral
understanding, this fact alone would not render the Miracle's
playing of the song pursuant to JMI's permission a violation of
JMI's copyright. Such a breach would do no more than entitle JMI
to rescind the agreement and revoke its permission to play the song
in the future, actions it did not take during the relevant period.
One party's breach does not automatically cause recision of a
bilateral contract. See Fosson v. Palace (Waterland), Ltd., 78
F.3d 1448, 1455 (9th Cir.1996) (recognizing "the rule applied in
other circuits that once a non-breaching party to an express
copyright license obtains and exercises a right of rescission by
virtue of a material breach of the agreement, any further
distribution of the copyrighted material would constitute
infringement") (emphasis added); Hyman v. Cohen, 73 So. 2d 393, 397
(Fla.1954) (" "A material breach, as where the breach goes to the
whole consideration of the contract, gives to the injured party the
right to rescind the contract or to treat it as a breach of the
entire contract....' ") (quoting 12 Am.Jur. Contracts § 389)
(emphasis added); 3 M. Nimmer & D. Nimmer, Nimmer on Copyright §
10.15[A], at 10-125-126 (1996) ("Upon such rescission, the
assignment or license is terminated and the copyright proprietor
may hold his former grantee liable as an infringer for subsequent
use of the work.") (emphasis added).
Since Albion on July 2, 1993 expressly gave his permission to
the Miracle to play his song at the next game, renewed this
permission by letter that same month, and did not thereafter
withdraw permission until some time after the Miracle had last
played the song publicly, the Miracle never played the song without
permission and is not liable for copyright infringement.
This is not a case where payment of JMI's costs and public
recognition of authorship were made conditions precedent to the
granted right to play. See Restatement (Second) of Contracts § 225
(1981). In such a case, absent performance of the conditions, the
"license" would not have issued and the Miracle's public
performances of the song would have violated JMI's copyright. See
Fantastic Fakes, 661 F.2d at 483; 3 M. Nimmer & D. Nimmer, Nimmer
on Copyright § 10.15[A], at 10-121 (1996).
But Albion did not make payment and recognition conditions
precedent to the permission he gave to play the song. "A condition
is an event, not certain to occur, which must occur, unless its
non-occurrence is excused, before performance under a contract
becomes due." Restatement (Second) of Contracts § 224 (1981).
"Conditions precedent are disfavored and will not be read into a
contract unless required by plain, unambiguous language." Effects
Associates, 908 F.2d at 559 n. 7. On July 2, 1993, JMI, through
its president, Albion, expressly granted the Miracle permission to
play the song before payment was tendered or recognition received.
Thereafter, Albion did not withdraw permission although he attended
many games and heard the song played, still without payment or
recognition, on various occasions. Indeed, he wrote to Kuhn
encouraging the Miracle to continue to play the song. Under these
circumstances, we cannot say that JMI's permission to play was
conditioned on prior payment and public recognition.
IV.
While for the above reasons, JMI cannot recover breach of
copyright damages from the Miracle for the latter's playing of the
song, this does not end the matter.
JMI asserts that the Miracle made and broke its promise to pay
JMI's expenses and to give public recognition and credit to the
song's composer. While payment and recognition were not conditions
precedent to playing the song, the district court recognized that
JMI may be entitled to recover in a state action its damages from
the Miracle's failure to perform these promises. Nothing herein is
intended to suggest that the Miracle's treatment of JMI and Albion
was either legally correct or such as to shield them from liability
for their conduct. The only issue before the district court was
JMI's right to recover under federal law for copyright
infringement.
V.
In its cross-appeal, the Miracle contends that the district
court abused its discretion in declining to award it attorney's
fees under 17 U.S.C. § 505. That section states, in relevant part,
"Except as otherwise provided by this title, the court may also
award a reasonable attorney's fee to the prevailing party as part
of the costs." Under this statute, attorney's fees are at the
court's discretion. Fogerty v. Fantasy, Inc., 510 U.S. 517, 534,
114 S. Ct. 1023, 1033, 127 L. Ed. 2d 455 (1994).
The Supreme Court has provided a nonexclusive list of factors
which district courts may take into account when determining
whether or not to award a prevailing party attorney's fees under §
505. "These factors include "frivolousness, motivation, objective
unreasonableness (both in the factual and in the legal components
of the case) and the need in particular circumstances to advance
considerations of compensation and deterrence.' " Id. (quoting
Lieb v. Topstone Industries, Inc., 788 F.2d 151, 156 (3d
Cir.1986)). After considering these factors, we are unable to say
that the district court abused its discretion in refusing to award
attorney's fees.
AFFIRMED.