News

New Use Is an Old Story

8/01/2011 12:01 AM Eastern

Throughout the past century of technological
innovation, media has been hit with a repeating legal
issue: How should new technologies be treated under
old license grants not explicitly addressing the new technology?
Now, as cable and Internet providers stream video
content to iPads, here we go again: Are iPads included in
licensing agreements entered into before this latest technological
revolution?

Courts have examined existing license agreements and
new technologies in a “new use” line of jurisprudence.
Examples include whether
to extend videocassette rights to include
DVD, record rights to include CDs and
book publishing rights to include e-books.

The current litigation wave surrounds
use by cable providers of original-created
content beyond the scope of an alreadygranted
license by making content available
on iPads. The licenses in controversy
typically grant the right to exploit content
through cable and satellite TV, but not iPad delivery.

Present litigation remains undecided, but principles illustrated
in “new use” cases decided for many decades are
likely to be determinative. Judges will employ a fundamental
principle of contract interpretation and attempt to give
effect to the intent of the parties as revealed by the language
in the agreement. Also relevant is whether the technology
was known to industry insiders at the time of negotiation,
and whether the license grant is expressly limited.

If a license is broad (e.g., allowing sale in any format) or
includes future/successor technologies, courts may additionally
consider whether the “new use” (iPad delivery)
reasonably falls within the medium of display as described.

Current litigations are likely to examine the following:
Is the precise language of the license limited or broad in
scope? Did the license grant iPad display rights or other
similar (e.g., iOS and other mobile OS) delivery rights? Was
the technology known to industry insiders?

Each case will turn on its distinct facts and, most importantly,
the exact language of the license grant agreed to by
the parties and any restrictions thereto. However, to the extent
a license limits display to cable and satellite television
and does not address wireless and mobile device rights, a
court would be likely to rule in favor of content owners. Providers
then would be required to negotiate new agreements
to exploit content on iPads.

When entering into future licensing agreements,
content owners must carefully consider
and precisely limit the scope of
rights it grants. Best practice is to specifically define limited mechanisms of
delivery (cable, broadband, wireless),
limited mediums of display (television,
desktop-computers, laptops, tablets, ebooks)
and expressly exclude all other
means of exploitation including any future
or successor technologies. Owners
should note specific technologies not included
in the license and reserve all rights not granted
to the licensee to itself.

An owner must also consider existing agreements before
entering into new licensing arrangements. For instance, if
past agreements provide “most favored nation” clauses,
granting iPad rights under a broad license may trigger that
most favored nation clause and unintentionally allow a past
licensee tablet rights.

As new technology causes content and distribution to
converge, express contractual rights will once again take
center stage for content owners and cable providers. Both
parties win if agreements provide detailed clarity and unambiguous
inclusions and exclusions (unless the ambiguity
is ultimately intended).


Steven H. Goldberg is a partner with Baker Hostetler in
New York and serves as co-chair of the firm’s Transactions
Practice Team. Brian Karp is an associate.