Analyzing when an implied non-exclusive license can be granted, the U.S. Court of Appeals for the Fifth Circuit clarified that an implied license can arise not only in the context of a work-for-hire agreement, but wherever the totality of the parties’ conduct supports such an outcome.  Baisden v. I’m Ready Productions Inc., Case No. 11-20290 (5th Cir., Aug. 31, 2012) (King, J.).

Author and nationally syndicated radio host Michael Baisden brought suit alleging that defendants infringed the copyrights in his books Men Cry in the Dark and The Maintenance Man by distributing videos of adapted stage plays of the same names.  Baisden and I’m Ready Productions Inc. (IRP) entered into an agreement in 2001 that entitled IRP to distribute copies of the Men Cry DVDs for three years, which could later be extended by negotiation or by finalization of a third-party merchandizing agreement.  In the summer of 2005, Baisden and IRP orally agreed to a second tour of Men Cry that would be governed by the same 2001 agreement.  Later that year, IRP entered into a merchandizing agreement with distributor Image Entertainment, several months after the original three-year period concluded. 

At trial, a jury found that valid agreements existed allowing the distribution of the videos and that no further money was due to Baisden.  Baisden appealed.

Baisden argued that § 204(a) of the Copyright Act does not allow a transfer of copyright ownership without a written instrument; therefore any oral modification or agreement did not convey his copyrights to IRP.  The 5th Circuit agreed, but pointed to its prior decision in Lulirama, observing that § 101 expressly excludes non-exclusive licenses from the § 204(a) writing requirement.  Baisden attended showings of the 2005 stage play and autographed copies of the DVDs, had conversations regarding the DVD sales and also orally agreed to continue the relationship with IRP under the 2001 agreement.  Since, under Lulirama, consent for an implied license may take the form of permission or lack of objection, the Fifth Circuit determined that Baisden’s knowledge and actions were sufficient for the jury to find that Baisden granted an implied non-exclusive license for continued DVD sales, which was not subject to the §204(a) writing requirement.

The 5th Circuit rejected Baisden’s argument that the test for implied licenses, as described in Lulirama, is restricted to work-for-hire agreements in which a licensee requests the creation of a work, a licensor makes the particular work and delivers it to the licensee who requested it and the licensor intends that the licensee-requestor copy and distribute the work.  While those were the elements applied in Lulirama, the 5th Circuit determined that implied licenses could also arise in other circumstances if the totality of the parties’ conduct supported such an outcome.  The 5th Circuit relied on a U.S. Court of Appeals for the Ninth Circuit decision, Food Consulting Group, for support that a copyright holder grants another a non-exclusive license if the totality of the parties’ conduct indicates intent to grant such permission.

Since there was an express license for distribution of The Maintenance Man recordings and an implied non-exclusive license for the Men Cry recordings, and because Baisden’s other arguments were unpersuasive, the 5th Circuit determined that the jury’s verdict was supported by substantial evidence and affirmed the district court’s judgment.