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40 Fla. St. U. L. Rev 105 (2012-2013)
Must Licenses Be Contracts - Consent and Notice in Intellectual Property

handle is hein.journals/flsulr40 and id is 115 raw text is: MUST LICENSES BE CONTRACTS? CONSENT AND NOTICE IN INTELLECTUAL PROPERTY MARK R. PATTERSON* ABSTRACT Intellectual property owners often seek to provide access to their patented or copyrighted works while at the same time imposing restrictions on that access. One example of this approach is field-of-use licensing in patent law, which permits licensees to use the patented invention but only in certain ways. Another example is open-source licensing in copyright law, where copyright owners typically require licensees that incorporate open-source software in other products to license those other products on an open-source basis as well. Surprisingly, though, the legal requirements for granting restricted access are unclear. The source of this lack of clarity is the ill-defined nature of a '7icense, which is the usual means of granting access to intellectual property. Must a license be a contract? If so, then the imposition of restrictions presumably must satisfy the rules of contract formation. Or could a license be merely a unilateral commitment to allow limited access to intellectual property, as many open-source advocates contend? If so, then an intellectual property owner could grant access to its property while imposing restrictions to which a licensee has not consented, and of which the licensee might not even be aware. This Article argues that the weight of judicial authority and sound policy support a contractual approach. A requirement that license restrictions be imposed only by contract ensures that intellectual property owners obtain both the consent of licensees to the restrictions and consideration sufficient to make the contract enforceable. As in contract law more generally, these requirements facilitate certainty, predictability, and care in entering productive relationships. Consent is especially important as intellectual property is passed downstream through the distribution chain, because it ensures that downstream market participants are aware of the limitations on their use of intellectual property. Simple notice, which some have proposed as an alternative to contract, has shortcomings that make it a poor criterion for the establishment of infringement liability. This Article suggests, though, that in some circumstances notice of an upstream violation of a contractual license should indeed be sufficient to establish liability. Specifically, when a downstream user intentionally induces infringement by an upstream supplier, the downstream user should be liable. In such circumstances, the intent element serves as a substitute for the assent of contract law. I. INTRODUCTION .................................................................................................. 106 II. LICENSING WITH USE RESTRICTIONS ................................................................ 112 A. Patent Law ' abel Licenses ..................................................................... 113 B. Open-Source Software ................................................................................ 114 C. Consent, Notice, and Property ................................................................... 115 Ill. LICENSING IN DIFFERENT PROPERTY REGIMES ................................................ 117 A. Tangible Property ...................................................................................... 117 B. Patents ....................................................................................................... 121 1. Patent Licenses Must Be Contracts ..................................................... 121 2. Non-Contractual Restriction by Notice? .............................................. 126 C. Copyright Cases ......................................................................................... 129 1. Copyright Licenses as Contracts .......................................................... 129 2. Copyright '%Bare Licenses................................................................... 134 * Professor of Law, Fordham University School of Law. I am grateful for comments received from Stacey Dogan, Jeanne Fromer, Ethan Leib, Mariateresa Maggiolini, Maria Lil& Montagnani, Steve Thel, Alfred Yen, and participants at workshops at Fordham Law School, at Bocconi University, and as part of the New England Intellectual Property Colloquium. I am also grateful for the excellent research assistance of Benjamin Chynsky and Tiffany Mahmood.

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