Throughout the past century of ever-accelerating technological innovation, media industries have been hit with a repeating legal issue: How should new technologies be treated under old content license grants that did not explicitly address the new technology? Now, as cable and Internet providers stream video content directly accessible to their customers on iPads, here we go again: Are iPads included or excluded from licensing agreements entered into before business parties specifically contemplated this latest technological revolution?
Historically, courts have examined the impact of existing license agreements on new technologies in a “new use” line of jurisprudence. Examples include disputes over whether to extend (i) movie theatre and television rights to include videocassette, (ii) videocassette rights to include DVD, (iii) music record rights to include compact discs and (iv) the right to publish in book form to include e-books.
The current wave of litigation surrounds use by cable television and Internet providers (“Cable Providers”) of original-created television programming, original-created Internet programming and related content (the “Content”) beyond the scope of an already-granted license by making Content available on iPads (and other tablets) to current cable and Internet/broadband customers over wireless Internet and broadband. The types of licenses in controversy typically grant a Cable Provider the right to exploit Content through cable and satellite television, but may not address similar exploitation through wireless Internet and broadband delivery, and clearly not iPad delivery.
Courts have not yet adjudicated the present iPad-related litigation, but the standard principles illustrated in “new use” cases that have been decided for many decades will likely be the same determining factors in the current disputes. In deciding new use cases courts generally will employ a fundamental principle of contract interpretation and attempt to give effect to the intent of the parties as revealed by the language they chose to use as a primary consideration. Additionally, the law examines whether the technology at issue was invented or known to industry insiders at the time of negotiation of the license agreement and whether the license grant is expressly limited.
In cases where licenses are granted more broadly, (for example, granting rights to sell, license, vend and display throughout the world in any format), courts may undertake to additionally consider whether the “new use” (here iPad delivery of Content) reasonably falls within the medium of display as described. Similarly, when licenses include future or successor technologies now and/or hereafter developed, courts will examine the extent to which such new use falls within these definitions.
The current litigations over iPad rights under existing license agreements between Cable Providers and owners of Content (“Content Owners”) are likely to examine the following factors: Is the precise language of the license limited or broad in scope? Did the license grant iPad display rights or other similar wireless (including iOS and other mobile operating systems) and broadband delivery rights? Was the iPad tablet or similar portable device technology known to industry insiders at the time of the license grant?
Whether a particular license agreement under relevant law includes iPad delivery and display rights will turn on the particular facts of the case and, most importantly, the exact language of the license grant and any restrictions thereto. However, to the extent that a license is granted in a way that (i) limits delivery to cable and satellite television, (ii) does not contemplate wireless (including iOS and other mobile operating systems) and broadband delivery and (iii) does not specifically speak to portable devices, a court would be likely to rule in favor of content owners. Thus, Cable Providers would be required to enter into separate agreements if they desire to exploit content on iPad, smart phones and/or other portable devices that utilize wireless, broadband or other similar portable delivery technology. The fundamental principle of giving meaning to the parties’ chosen words will likely rule the day. Further, when courts consider whether industry insiders knew of the technology at issue at the time of the license grant, they are likely to note the existence of laptop computers and other portable devices, as iPads and other tablets operate similarly to a portable computer. If a limited license fails to mention laptop rights, it is difficult to reasonably argue that those rights should be expanded to include iPad display.
When entering into future licensing agreements, a Content Owner must carefully consider and precisely limit the scope of rights it grants to a licensee. Best practice for Content Owners is to specifically define the limited mechanisms of delivery (whether cable television, broadband or other wireless Internet delivery to portable devices), the limited medium of display (television, desktop computers, mobile computers, tablets, e-books) and to expressly exclude all other means of exploitation including any future or successor technologies. The Content Owner should note specific technologies that are not included as part of the license and reserve all rights not granted to the licensee to itself.
A Content Owner must also consider the scope of its existing agreements before entering into new licensing arrangements. For instance, if past license agreements provide “most favored nation” clauses for the licensee, granting iPad rights under a broad license may trigger that most favored nation clause and unintentionally allow a past licensee to exploit Content on a tablet.
Even if a particular medium of display is unintentionally covered by the scope of a license grant, a Content Owner nevertheless may be able to attack the exploitation of its Content on such medium of display if it does not preserve the integrity of the content both from a visual and creative perspective. This preservation clause typically is a separately expressed covenant in the licensing agreement.
As new technology causes content and distribution to converge, Content Owners and distribution providers should seek legal counsel to negotiate agreements and grant license rights with detailed clarity, unambiguous inclusions and unambiguous exclusions (unless the ambiguity is intended).
If you have questions about the material presented in this executive alert, please contact any member of Baker Hostetler’s Media Mergers and Acquisitions Team.
Authorship Credit: Steven H. Goldberg and Brian Karp
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