†1998 Raymond T. Nimmer.
† Leonard Childs Professor of Law, University of Houston Law Center; Counsel, Weil, Gotschal & Manges.
1. Compare Jerome Reichman,
Privately Legislated Intellectual Property Rights: The Limits of Article 2B
of the U.C.C. (Apr. 4, 1998) (unpublished manuscript) and David Nimmer
et al., The Metamorphosis of Contract into Expand, 87
CALIF. L. REV.
19 (forthercoming 1999), with Maureen A. O'Rourke, Rethinking Remedies
at the Intersection of Intellectual Property and Contract: Toward a Unified
Body of Law, 82 IOWA L. REV.
1137 (1997).
2. The copyright paradigm is both
over-inclusive and under-inclusive in the on-line world. It is hugely over-inclusive
in that because technology operates the on-line world, virtually every action
taken with respect to information in that context entails the making of copies
and most information placed into the on-line world is copyrightable. Thus, the
anomaly is that copyright might be said to give exclusive rights to the copyright
owner over every action taken on-line with respect to its information. It is
under-inclusive because many of the critical rights that might define value
on-line, such as the right to allow or deny access to an information repository,
are not covered directly under the copyright regime.
3. See, e.g., Digital Millenium
Copyright Act, Pub. L. No. 105-304, 112 Stat. 2860 (1998). See generally
Raymond T. Nimmer & Patricia A. Krauthaus, Information as Property:
Databases and Commercial Property, 1 INT'L
J.L. & INFO. TECH.
3 (1990).
4. See generally Nimmer, supra
note 1. That view, as we see here, of course, ignores the dynamic interaction
that has always existed with respect to property law, contract law and technology.
That interaction, changing over time, in any event is an inevitable consequence
of the intellectual property rights system placed in a dynamic market economy.
5. See, e.g., Playboy Enter.,
Inc. v. Webbworld, Inc., 968 F. Supp. 1171, 1175-77 (N.D. Tex. 1997) (holding
that an operator of an Internet web-site was directly liable to a magazine publisher
for infringement when it provided its subscribers with copyrighted adult images
that were stored on its computers. Operator obtained material from adult news
groups and had no control over the persons posting the infringing images to
those news groups; it only had control over the images it chose to sell on its
Web site.); Micro Star v. Formgen, Inc., 942 F. Supp. 1312, 1317-18 (S.D. Cal.
1996) (holding that author of a computer game did not waive copyright protection
by allowing users to trade scenes and create new levels in game and to upload
them to other users on the Internet. No implied license where game file contained
restrictive license).
6. See Leatherman Tool Group,
Inc. v. Cooper Indus., Inc., 131 F.3d 1011, 1014-15 (Fed. Cir. 1997).
7. This right not to distribute, of
course, is part of the so-called intellectual property bargain and, indeed,
a fundamental element of the right of free speech. See Bonito Boats,
Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 149 (1989).
8. Winter v. G.P. Putnam's Sons, 938
F.2d 1033, 1035 (9th Cir. 1991) (citation omitted).
9. See RESTATEMENT
(SECOND) OF
TORTS § 552 (1977) ("One
who ... supplies false information for the guidance of others in their business
transactions, is subject to liability for pecuniary loss caused to them by their
justifiable reliance on the information, if he fails to exercise reasonable
care or competence in obtaining or communicating the information.").
10. 520 N.Y.S.2d 334 (N.Y. Civ.
Ct. 1987).
11. See id. at 337-38. On a
related issue, a federal district court similarly insulated the on-line provider
in reference to liability for defamatory material made available through its
service: "Technology is rapidly transforming the information industry.
A computerized database is the functional equivalent of a more traditional news
vendor, and the inconsistent application of a lower standard [enabling] liability
[for] an electronic news distributor ... than that which is applied to a public
library, book store, or newsstand would impose an undue burden on the free flow
of information." Cubby, Inc. v. CompuServe, Inc., 776 F. Supp. 135, 140
(S.D.N.Y. 1991).
12. Daniel, 520 N.Y.S.2d
at 337-38 (citation omitted).
13. 636 N.E.2d 665 (Ill. App. Ct.
1993).
14. See id. at 666.
15. See id..
16. See id. at 672.
17. See Lockwood v. Standard
& Poor's Corp., 682 N.E.2d 131, 135 (Ill. App. Ct. 1997).
18. See U.C.C. § 2B-404(b)
(Apr. 15, 1998 Draft).
19. Many court decisions place software
licensing in Article 2 even though software is licensed and not sold and even
though the focus of the transaction centers not on the acquisition of tangible
property, but on transfer of capability and rights intangibles. See Advent
Sys. Ltd. v. Unisys Corp., 925 F.2d 670, 676 (3d Cir. 1991); RRX Indus., Inc.
v. Lab-Con, Inc., 772 F.2d 543, 546-47 (9th Cir. 1985); Triangle Underwriters,
Inc. v. Honeywell, Inc., 604 F.2d 737, 741 (2d Cir. 1979). But see Data
Processing Servs., Inc. v. LH Smith Oil Corp., 492 N.E.2d 314, 318 (Ind. Ct.
App. 1986); Micro-Managers, Inc. v. Gregory, 147 Wis. 2d 500, 509 (Ct. App.
1988).
20. See, e.g., ProCD, Inc.
v. Zeidenberg, 86 F.3d 1447, 1455 (7th Cir. 1996) (holding that license was
limited to consumer use); Storm Impact, Inc. v. Software of the Month Club,
13 F. Supp. 2d 782, 791 (N.D. Ill. 1998) (holding that an on-line shareware
license allowed copying and distribution except for resale).
21. See Microsoft Corp. v.
DAK Indus., Inc., 66 F.3d 1091, 1095 (9th Cir. 1995) (concluding that a distribution
agreement involving a lump sum payment and delivery of a master disk is more
like a sale of the right to make the stated number of copies, than an executory
license for purposes of characterizing claims under bankruptcy law).
22. 17 U.S.C. § 101 et. seq. (1994
& Supp. II 1996).
23. In establishing a distribution
system for the mass market, an informational property rights owner may elect
to establish a transaction in which it gives its distributors either (1) ownership
of a copy and a right to sell copies of its work to others, or (2) a license
(permission) to license copies to others. Copyright and other intellectual property
law supports either choice. It also provides that, if a license is created and
the distributor exceeds the license, the eventual transferee (even if in good
faith) is not protected under bona fide purchaser concepts. See Microsoft
Corp. v. Harmony Computers & Electronics, Inc., 846 F. Supp. 208, 214 (E.D.N.Y.
1994); Major League Baseball Promotion v. Colour-Tex, 729 F. Supp. 1035, 1040
(D.N.J. 1990); Microsoft Corp. v. Grey Computer, 910 F. Supp. 1077, 1084 (D.
Md. 1995); Marshall v. New Kids on the Block, 780 F. Supp. 1005, 1008-9 (S.D.N.Y.
1991).
24. Contract formation, of course,
is a major issue in contract law. When it was first adopted, Article 2 of the
U.C.C. was viewed as establishing highly permissive rules enabling the early
formation of contracts despite the lack of precise agreement as to all specific
terms. The "open term" or "layered" contract model is found
in several provisions in Article 2. See, e.g., U.C.C. § 2-204 (1996)
(allowing formation in any manner); id. § 2-207 (allowing formation even
though offer and acceptance have varying terms); id. § 2-311 (permitting
formation with open terms even though one party retains the right to particularize
the details of performance after the fact).
25. In most cases, these "default"
rules are subject to contrary agreement. Article 2B, for example, provides expressly
that with specified exceptions, the provisions of the statute are applicable
only if the agreement of the parties does not otherwise so indicate. It lists
a total of 13 provisions that are not subject to this general rule of contract
choice. See U.C.C. § 2B-106 (Apr. 15, 1998 Draft).
26. This particular limitation was
originated in the development of the original Article 2 of the U.C.C. See
U.C.C. § 2-302 (1962). It has subsequently been incorporated into the common
law of many states as applicable to contracts outside the U.C.C., but this adoption
has not been universal. Article 2B adopts the literal language of existing Article
2 on the issue of unconscionable contracts or clauses. See U.C.C. § 2B-110
(Aug. 1, 1998 Draft). This, of course, would uniformly extend this concept to
all contracts within the new scope of the U.C.C.
27. See Randy E. Barnett,
The Sound of Silence: Default Rules and Contractual Consent, 78 VA.
L. REV. 821 (1992); Ian Ayres
& Robert Gertner, Strategic Contractual Inefficiency and the Optimal
Choice of Legal Rules, 101 YALE L.J.
729, 734 (1992); Charles J. Goetz & Robert E. Scott, The Limits of Expanded
Choice: An Analysis of the Interaction Between Express and Implied Contract
Terms, 73 CALIF. L. REV.
261, 266 (1985).
28. See Grant Gilmore, On
the Difficulties of Codifying Commercial Law, 57 YALE L.J.
1341, 1341 (1957).
29. See, e.g., W. David Slawson,
Standard Form Contracts and Democratic Control of Lawmaking Power, 84
HARV. L. REV.
529, 529-30 (1971) (stating that standard form contracts "account for more
than ninety-nine percent of all the contracts now made" and that their
"predominance ... is the best evidence of their necessity").
30. See supra section II(B)(3)
for discussion of incentives to contract. There are incentives to do more in
a contract than simply specify price and quantity.
31. Of course, tort products liability
may override liability limitations in cases to which they apply. As a general
rule, however, tort claims arise only in the event of personal injury or property
damage. Contract law, including Article 2B, does not alter the range of product
liability law.
32. See, e.g., Klos v. Polskie
Linie Lotnicze, 133 F.3d 164, 169 (2d Cir. 1997) (holding that round trip air
tickets were not contracts of adhesion); Fireman's Fund Ins. Co. v. M.V. DSR
Atl., 131 F.3d 1336, 1339 (9th Cir. 1998) (finding forum selection clause in
bill of lading enforceable and the fact that the contact was a contract of adhesion
was irrelevant); C.H.I., Inc. v. Marcus Bros. Textile, 930 F.2d 762, 763-64
(9th Cir. 1991) (holding that a standard form confirmation was not an adhesion
contract); Aviall, Inc. v. Ryder Sys., Inc., 913 F. Supp. 826, 831 (S.D.N.Y.
1996) (finding adhesion only when the party seeking to rescind the contract
establishes that the other party used "high pressure tactics," or
"deceptive language," or that the contract is unconscionable).
33. See, e.g., Klos,
133 F.3d at 168-69 ("The concept of adhesion contracts introduces the serpent
of uncertainty into the Eden of contract enforcement. At the very least, it
represents a serious challenge to orthodox contract law that a contract is to
be interpreted in accordance with the objective manifestation of the parties'
intent .... It may not be invoked to trump the clear language of the agreement
unless there is a disturbing showing of unfairness, undue oppression, or unconscionability.");
Fireman's Fund Ins.Co., 131 F.3d at 1339; Chan v. Society Expedition,
Inc., 123 F.3d 1287, 1292 (9th Cir. 1997); Dillard v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 961 F.2d 1148, 1154-55 (5th Cir. 1992); Riggs Nat'l
Bank of Washington D.C. v. Dist. of Columbia, 581 A.2d 1229, 1251 (D.C. Ct.
App. 1990); American Bankers Mortgage Corp. v. Federal Home Loan Mortgage Corp.,
75 F.3d 1401 (9th Cir. 1996) (contract of adhesion fully enforceable in the
absence of showing of unconscionability); E.H. Ashley & Co. v. Wells Fargo
Alarm Serv., 907 F.2d 1274, 1279 (1st Cir. 1990); Graham v. Scissor-Tail, Inc.,
623 P.2d 165, 172 (1981). Compare Todd D. Rakoff, Contracts of Adhesion:
An Essay in Reconstruction, 96 H
ARV. L. REV.
1173 (1983).
34. See RESTATEMENT
(SECOND) OF
CONTRACTS § 19 (1981).
35. Id.
36. As I discuss below, copyright
law does not fully conform to this property law structure in that many of the
rules it promulgates are stated as "default rules" which apply in
the case of a transactional relationship between the parties or their transferees.
37. ProCD, Inc. v. Zeidenberg, 86
F.3d 1447, 1454 (7th Cir. 1996).
38. 489 U.S. 141 (1989).
39. See id. at 144-45.
40. See id. at 168.
41. See id. at 157.
42. See generally Herbert
Hovenkamp, Marginal Utility and the Coase Theorem, 75 CORNELL
L. REV. 783
(1990); Jules L. Coleman, Efficiency, Exchange, and Auction: Philosophic
Aspects of the Economic Approach to Law, 68 CALIF.
L. REV. 221 (1980).
43. See Daniel Farber, Parody
Lost/Pragmatism Regained: The Ironic History of the Coase Theorem, 83 VA.
L. REV. 397, 406 (1997).
44. See, e.g., RICHARD
POSNER, ECONOMIC
ANALYSIS OF LAW
89-96 (4th ed. 1991); Richard Epstein, Unconscionability: A Critical Reappraisal,
28 J.L. & ECON. 293 (1975).
45. This, of course, is the function
of rules such as the doctrines of unconscionability (See U.C.C. § 2-302
(1994)), concepts of duress, fraud and related doctrines. See, e.g.,
Brower v. Gateway 2000, Inc., 676 N.Y.S.2d 569, 574 (App. Div. 1998)
(holding that arbitration clause in standard form contract that was otherwise
enforceable is unconscionable because it effectively deprived a computer buyer,
through excessive costs, of the ability to pursue a claim); Intergraph Corp.
v. Intel Corp., 3 F. Supp. 2d 1255, 1286 (N.D. Ala. 1998) (concluding provision
in technology contract permitting termination on little or no notice held unreasonable
as a matter of law).
46. Under current law, for example,
a "first sale" of a copy of a computer program does not give the owner
of the copy a right of public display or public performance or a right to rent
the copy to third persons. The first two rights reflect traditional limitations
on the copyright doctrine of first sale. The third was added more recently to
respond to unique risks involved in digital technology and digital copies. When
it was adopted, the transactional leverage of a vendor of copies of works offered
for sale was altered. The impact of that change on actual transactions, however,
filters through the various market factors and demand issues that shape transactions.
If I do not desire to rent my copy to others, the fact that buying ownership
of a copy does not give me that right is immaterial. If I desperately desire
a right to rent the copy, the change increases what I may be willing to pay
or agree to in any particular transaction.
47. Often, the least complex examples
are the most telling. When you purchased the newspaper today, did the price
you paid depend on your judgment about whether or not you could make multiple
copies of the newspaper for distribution to your commercial clients? I think
not.
48. See Feist Publications,
Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 362-64 (1991).
49. The copyright doctrine works
on a different premise. It assumes that information is placed into the public
and rejects the existence, under copyright, of any exclusive or preclusive property
right that can be asserted against parties in the absence of contract.
50. Modern law establishes that
property rights in information come from an increasingly wide array of sources.
Property rights related to information are characterized by a two-part equation:
1) the presence of specified conditions or circumstances that 2) yield particular
rights in reference to identifiable information. See RAYMOND
T. NIMMER, INFORMATION
LAW 2-14 - 2-28 (1996).
The rights come from criminal law, privacy law, and other sources. Writing with
reference to this issue, the Ninth Circuit Court of Appeals noted that for a
property right to exist in any situation, "first, there must be an interest
capable of precise definition; second, it must be capable of exclusive possession
or control; and third, the putative owner must have established a legitimate
claim to exclusivity." G.S. Rasmussen & Assocs. v. Kalitta Flying Serv.,
958 F.2d 896, 903 (9th Cir. 1992). The potential rights recognized in modern
law include rights recognized under copyright law and patent law and also rights
of commercialization, non-disclosure, control of access, and to prevent or authorize
destruction of the information.
51. See, e.g., 17 U.S.C.
§§ 901-914 (1994) (semiconductor maskwork rights); id. at § 104A (1994
& Supp. II 1996) (restored works); id. at § 106(6) (1994 & Supp.
II 1996) (digital audio rights); id. at § 106A (1994) (providing special
rights in works of visual art); id. at § 1101 (1994) (fixation of live
performance); Digital Millenium Copyright Act, H.R. 2281, 105th Cong. (1998).
Some might view this expansion unwarranted, but regardless of the characterization,
these developments clearly indicate an on-going policy judgment that the contours
of the digital information era will be shaped, at least in part, by an expanded
and different set of rights in information than existed during the industrial
era. The pattern of expansion in the United States has international parallels.
See generally NIMMER, supra
note 50.
52. Cases suggest that interpretations
of the scope of a license should be designed to protect the licensor's retention
of rights. See generally SOS, Inc. v. Payday, Inc., 886 F.2d 1081 (9th
Cir. 1989).
53. 972 F. Supp. 804 (S.D.N.Y.),
reh'g denied, 981 F. Supp. 841 (S.D.N.Y. 1997).
54. See id. at 806.
55. See 17 U.S.C. § 201(c)
(1994).
56. See Tasini, 972 F. Supp.
at 827.
57. See id. at 814.
58. See id. at 807.
59. See id.
60. See id. at 812.
61. The court observed: "[The
electronic publication] strips away many of the elements present in the publishers'
hard copy periodicals [and] carries a revised version of that magazine."
Id. at 846.
62. Id. at 807.
63. Id. at 845.
64. See Everex Systems, Inc.
v. Cadtrak Corp., 89 F.3d 673, 679 (9th Cir. 1996); Unarco Indus., Inc. v. Kelley
Co., Inc., 465 F.2d 1303, 1335 (7th Cir. 1972); Harris v. Emus Records Corp.,
734 F.2d 1329, 1333 (9th Cir. 1984); In re Alltech Plastics, Inc., 71
B.R. 686, 689 (Bankr. W. D. Tenn. 1987).
65. Everex Systems, 89 F.3d
at 679.
66. See 17 U.S.C. § 203(3)
(1994).
67. See Rano v. Sipa Press,
Inc., 987 F.2d 580, 586 (9th Cir. 1993) (holding that copyright law preempts
state law regarding contracts (licenses) that are terminable at will because
they contain no duration clause; applying 17 U.S.C. § 203(a) (1994)).
68. See id. at 583.
69. See P.C. Films Corp.
v. MGM/UA Home Video, Inc., 138 F.3d 453, 457 (2d Cir. 1998) (holding that "perpetual"
license is enforceable during term of the copyright, but not deciding if it
is enforceable after the term expires).
70. See, e.g., 17
U.S.C. § 117 (1994).
71. See id. at § 202 ("Ownership
of a copyright ... is distinct from ownership of any material object in which
the work is embodied."). Copy ownership is distinct from questions of whether
the transaction creates a license. See, e.g., Applied Information Management,
Inc. v. Icart, 976 F. Supp. 149, 153 (N.D.N.Y. 1997); DSC Communications Corp.
v. Pulse Communications, Inc., 976 F. Supp. 359, 362 (E.D. Va. 1997).
72. See U.C.C. § 2-401 (1994);
Icart, 976 F. Supp. at 154.
73. See, e.g., Advent Sys.
Ltd. v. Unisys Corp., 925 F.2d 670, 675-76 (3d Cir. 1991). Compare RRX
Indus., Inc. v. Lab-Con, Inc., 772 F.2d 543, 547-48 (9th Cir. 1985) (holding
that the determination of whether a software system is a good rather than a
service should be decided on a case by case basis).
74. See U.C.C. §§ 2-106,
2-401 (1994).
75. Article 2 provides that, unless
there is contrary agreement, title to a good passes when physical delivery occurs.
See id. § 2-401.
76. See, e.g., DSC Communications
Corp. 976 F. Supp. at 359.
77. 886 F.2d 1081 (9th Cir. 1989).
78. See id. at 1087-88.
79. See id.
80. See, e.g., Bourne v.
Walt Disney Co., 68 F.3d 621, 626 (2d Cir. 1995). Proposed Article 2B adopts,
to the extent permitted by federal law, this commercial interpretation rule
and provides some assumptions about the attributes of an affirmative grant that
assure that a licensee receives the capability to enjoy use of the expressly
granted rights. See U.C.C. § 2B-307(a) (Aug. 1, 1998 Draft).
81. Of course, nothing precludes
Congress from enacting a third type of preemptive rule within the scope of its
legislative competence: an express preclusion of particular terms of a contract.
See Rano v. Sipa Press, Inc., 987 F.2d 580, 585-86 (9th Cir. 1993) (invalidating
state rule on termination at will based on conclusion that it was preempted
by express copyright statutory provision).
82. 17 U.S.C. § 301(a) (1994).
83. The case to come closest to
this result was the lower court decision in ProCD v. Zeidenberg, 908
F. Supp. 640, 657-59 (W.D. Wis. 1996). The District Court opinion, however,
was expressly over-ruled on this point by the Seventh Circuit Court of Appeals.
ProCD, 86 F.3d at 1447.
84. See, e.g., Benjamin Capital
Investors v. Cossey, 867 P.2d 1388, 1391 (Or. App. 1994) (concluding damage
claim as formulated was preempted by copyright).
85. 17 U.S.C. § 301(a) (1994).
86. M. NIMMER &
D. NIMMER, NIMMER ON COPYRIGHT
1.01[B] (1994).
87. See generally National
Basketball Ass'n v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997); United States
ex. rel. Berge v. Board of Trustees of the Univ. of Alabama, 104 F.3d
1453 (4th Cir. 1997).
88. See, e.g., Computer Assocs.
Int'l, Inc. v. Altai, Inc., 982 F.2d 693, 721 (2d Cir. 1992) (trade secret);
National Car Rental Sys., Inc. v. Computer Assocs. Int'l, Inc., 991 F.2d 426,
431 (8th Cir. 1993) (contract); Data General Corp. v. Grumman Sys. Corp., 36
F.3d 1147, 1165 (1st Cir. 1994) (trade secret); ProCD, 86 F.3d at 1455
(contract).
89. 86 F.3d 1447 (7th Cir. 1996).
90. See id. at 1453-55.
91. Id. at 1454.
92. It can be argued that this might
change if, in effect, no third party can avoid being bound by the contract terms
in order to use the information. How or why this would affect a preemption analysis
as compared to a misuse or antitrust claim is not clear. The fundamental fact
is that the restrictions (whatever they might be) are grounded in a separately
viable contractual relationship. If there is no such contractual relationship,
of course, the issue is not one of preemption, but simply a question of how
copyright affects the party's right to use the information.
93. 655 F. Supp. 750, aff'd,
847 F.2d 255 (5th Cir. 1988). The lower court had held that the underlying contract
would have been invalid as a contract of adhesion under Louisiana law. See
id. at 761. This result was reached with little or no analysis and represents
one of the very few reported decisions relying on a theory of adhesion to invalidate
a contract. See id. The more normal analysis of an adhesion contract
is that, if the court encounters one, it more closely scrutinizes the terms
of the agreement under standards of unconscionability and other contract law
doctrines to protect the adhering party.
94. See Vault, 847 F.2d at
268-69.
95. See id. at 269.
96. See id.
97. See id.
98. U.S. CONST.
art. VI, cl. 2.
99. See Sears, Roebuck &
Co. v. Stiffel, 376 U.S. 225, 231 (1964); Compco Corp. v. Day-Brite Lighting,
Inc., 376 U.S. 234, 237-38 (1964). During this period, the Court expressed in
its decisions a hostility to intellectual property rights and their commercialization
that it has seldom returned to since. See also Lear, Inc. v. Adkins,
395 U.S. 653, 674 (1969) (invalidating state common law doctrine of licensee
estoppel based on conflict with alleged federal patent policy encouraging challenges
to the validity of a patent). Compare Aaronson v. Quick Point Pencil
Co., 440 U.S. 257, 265-66 (1979).
100. See Sears, Roebuck &
Co., 376 U.S. at 231-232; Compco Corp., 376 U.S. at 238.
101. 416 U.S. 470 (1974).
102. See id. at 498-99.
103. See id. at 479.
104. See id. at 492-93.
105. 489 U.S. 141 (1989).
106. See id. at 143.
107. See id. at 159-62.
108. See id. at 162-64.
109. See id. at 160-61.
110. See id. at 150-51.
111. See id.
112. See id. at 151.
113. See id. at 142.
114. Id. at 160.
115. See DSC Communications
Corp. v. DGI Techs., Inc., 81 F.3d 597, 601 (5th Cir. 1996) (dictum) (discussing
the possible availability of a copyright misuse defense in forthcoming trial
in decision on preliminary injunction issue); Lasercomb Am., Inc. v. Reynolds,
911 F.2d 970, 979 (4th Cir. 1990) (holding anticompetitive language in software
licensing agreement to be a copyright misuse).
116. See U.C.C. § 2B-105
Reporter's Note 2 (Apr. 15, 1998 Draft).
117. See Brulette v. Thys
Co., 379 U.S. 29, 33-34 (1964). Compare Aaronson, 440 U.S. at
265-66.
118. See, e.g., Digidyne
Corp. v. Data Gen. Corp., 734 F.2d 1336, 1344 (9th Cir. 1984) ("requisite
economic power[, necessary to establish one element of an illegal per se tying
claim,] is presumed when the tying product is patented or copyrighted");
cf. A.I. Root Co. v. Computer/Dynamics, Inc., 806 F.2d 673, 676 (6th
Cir. 1987) (stating "we find the pronouncement in [United States v.]
Loew's to be overbroad and inapposite to the instant case. Accordingly,
we reject any absolute presumption of market power for copyright or patented
product [sic].").
119. A recent illustration of
this theme, although grounded entirely in antitrust law, comes in the appellate
court ruling in the Kodak case. See generally Eastman Kodak Co. v. Image
Technical Servs., Inc., 504 U.S. 451 (1992).
120. 314 U.S. 488 (1945).
121. See id. at 489.
122. See id. at 491.
123. See id. at 489.
124. See id.
125. See id. at 493-94.
126. See Roger B. Andewelt,
Department of Justice Antitrust Policy, 1 DOMESTIC AND
FOREIGN TECH.
LICENSING L. 401 (1982). Compare
U.S. DEPARTMENT OF JUSTICE,
ANTITRUST GUIDELINES FOR THE
LICENSING AND ACQUISITION
OF INTELLECTUAL PROPERTY (1994).
127. 35 U.S.C. § 271(d)(5) (1994).
128. Id.
129. 911 F.2d 970 (4th Cir. 1990).
130. See id. at 973.
131.See id.
132. See id. at 979.
133. See id. at 976.
134. See id. at 979.
135. See generally Reliability
Research, Inc. v. Computer Assocs., Int'l, Inc., 793 F. Supp. 68, 69 (E.D.N.Y.
1992) (mem.) (denying copyright holder's pre-discovery motion to strike licensee's
affirmative defense of misuse as issue is a disputed issue of law); Broadcast
Music, Inc. v. Hearst/ABC Viacom Entertainment Servs., 746 F. Supp. 320, 328
(S.D.N.Y. 1990). In most reported cases in which the doctrine is raised, its
application is rejected. See generally James A.D. White, Misuse or
Fair Use: That is the Software Copyright Question, 12 B
ERKELEY TECH.
L.J. 251 (1997).
136. 81 F.3d 597 (5th Cir. 1996).
137. See id. at 601.
138. See id. at 599.
139.See id.
140. See id.
141.See id.
142. Id at 601.
143. See id. at 599.
144. The patent misuse statute
was enacted in the 1980s, before the doctrine of misuse was first applied to
copyright claims in the Lasercomb decision, thus explaining the omission
of a copyright misuse statute.
145. See, e.g., In re
Independent Serv. Org. Antitrust Litig., 989 F. Supp. 1131, 1135 (D. Kan.
1997).
146. See, e.g., Atari Games
Corp. v. Nintendo of Am., Inc., 975 F.2d 832, 846 (Fed. Cir. 1992) (holding
that defense not available where defendant had unclean hands because of fraud
on Copyright Office).
147. 395 U.S. 653 (1969).
148. See id. at 673-74.
149. See id. at 662-68.
150. See id. at 673.
151. See id.
152. See id.
153. See Brulette v. Thys
Co., 379 U.S. 29, 33-34 (1964).
154. See id. at 31.
155. See Aaronson v. Quick
Point Pencil Co., 440 U.S. 257, 265-66 (1979).
156. See id. at 266.
157. U.C.C. § 2-302 (1962).
158. Id. at § 2-302, cmt.
1.
159. See generally Arthur
Leff, Unconscionability and the Code-The Emperor's New Clause, 115 U.
PA. L. REV.
485 (1967) (setting out ideas of procedural and substantive unconscionability);
160. U.C.C. § 2-302, cmt. 1 (1962).
161. See RESTATEMENT
(SECOND) OF
CONTRACTS § 211 (1981).
162. See James J. White,
Form Contracts Under Revised Article 2, 75 WASH.
U. L.Q. 315, 324 n.17 (1997).
163. See RESTATEMENT
(SECOND) OF
CONTRACTS § 211 (1981).
164. See generally White,
supra note 162.
165. RESTATEMENT
(SECOND) OF
CONTRACTS § 211, cmt.
f (1981).
166. Id.
167. Id.
168. See generally
White, supra note 162.
169. See U.C.C. § 2B-110
(Aug. 1, 1998 Draft).
170. Id. § 2B-208, cmt.
3(b).
171. See, e.g., U.C.C §
2B-208 (Nov. 1, 1997 Draft).
172. See Comments of various
parties on this issue posted on <http://www.2bguide.com>
(visited Nov. 15, 1998).
173. See U.C.C. § 2-206
(July 25-Aug. 1, 1997 Draft).
174. See U.C.C. § 2B-102
(Aug. 1, 1998 Draft).
175. See U.C.C. § 2-206
(Mar. 1998 Draft).
176. In Article 2B, a subcommittee
of the American Bar Association recommended that the concept be deleted and
replaced with a refund right applicable to mass market transactions where terms
are proposed after the initial payment. The Drafting Committee adopted that
proposal, but added express language about the relationship between negotiated
terms and terms of the standard form that responds to the policy issue underlying
the Restatement rule. See U.C.C. § 2B-208(a) (Aug. 1, 1998 Draft).
177. The theory invalidates only
terms that the party has reason to believe would make the contract unacceptable
if they were known to the adhering party. Obviously, one way to defeat a claim
of reason to know of the adverse impact of a term is to make the party aware
of it and rely on the fact that it, in fact, did not refuse the contract.
178. See RESTATEMENT
(SECOND) OF
CONTRACTS § 211, cmt. b (1981).
179. See U.C.C. § 2B-208 (Aug.
1, 1998 Draft).
180. See RESTATEMENT
(SECOND) OF
CONTRACTS § 211, cmt. f (1981).
181. See, e.g., 11 U.S.C.
§ 365(c) (1994).
182. See generally MELVIN
F. JAGER, TRADE
SECRET LAW
(1997); GALE PETERSON,
TRADE SECRET PROTECTION IN THE
INFORMATION AGE
(1997).
183. RESTATEMENT
(SECOND) OF
CONTRACTS § 178 (1981).
184. See id. §§
179, 186-88, 192-96 (1981).
185. See, e.g., Application
Group, Inc. v. Hunter Group, Inc., 61 Cal. App. 4th 881, 908 (1998) (invalidating
contract choice of law because of conflict with fundamental California policy
on non-competition clauses expressed in state statute).
186. See RESTATEMENT
(SECOND) OF
CONTRACTS