Implied license

An implied license is an unwritten license which permits a party (the licensee) to do something that would normally require the express permission of another party (the licensor). Implied licenses may arise by operation of law from actions by the licensor which lead the licensee to believe that it has the necessary permission.

Implied licenses often arise where the licensee has purchased a physical embodiment of some intellectual property belonging to the licensor, or has paid for its creation, but has not obtained permission to use the intellectual property.

Examples

• A person who purchases a record album does not explicitly purchase a right to perform that album by playing it on a record player, but this right is implied.^[1]
• A person or entity that purchases computer software in a suite. Software that is individually purchased, or not included in the suite is protected by a single license & and not part of a implied license.
• A person who posts a lengthy comment to an internet forum may claim copyright to that post. However, if posters in that forum commonly copy the entire text to which they are responding into a later post, the original poster will be deemed to have given an implied license for his text to be copied into the later post.
• In a non-IP context, a person who holds a party on their house gives all of the invited guests an implied license to enter their property, and to enter those parts of the property that would usually be made available to guests, such as the bathrooms.
• In patent law, where an employee invents something while on company time, the employer receives an implied license to use the invention, even if no contract exists to assign rights to the employer. This is sometimes referred to as shop right.^[2] In copyright law, the work for hire provision would grant the employer copyright to the work, provided the invention is within the employee's job description.^[3]
• In 2008, the Ninth US Circuit held that a non-exclusive license to use copyrighted material can be granted by implied license, but not an exclusive license. Further, if the creator has received consideration for the work, the non-exclusive grant is irrevocable.^[4]
• Where a copyrighted work has been commissioned, the law in the United Kingdom is that the creator retains rights in the commissioned work. Unauthorised use of the work would therefore infringe the creator's copyright. Nevertheless, the commissioner may have an implied license to use the commissioned work, although only for the particular purpose under which the commission was originally agreed.^[5][6]

Implication: from surrounding circumstances or by operation of law?

In the United States, implied licenses are usually considered to be of two kinds: either they reflect the intention of the parties, which is inferred from a fact-specific inquiry into the surrounding circumstances, or else they are constructive agreements, in which case the intention of the parties is likely to be immaterial. In reality, there is a continuum between these kinds of implied license and it may be difficult to determine whether the license or contract in question is one which the law implies, irrespective of any protests by the unwilling licensor, or instead one inferred from the whole pattern of factual circumstances including the evidence of intent.

In England, there is more of a tendency to regard all implied licenses as matters of fact and intent, while what would be a license implied by law in the US is treated under some other branch of substantive law such as the doctrine of non-derogation from grants.^[7]

In both countries, the exhaustion doctrine has the effect of creating an implied license to use a product sold under the "authority" of the patentee. It is controversial whether and to what extent contractual expedients can successfully limit the scope of such implied licenses.

Express license

The opposite of an implied license is an express license, which must be in writing, for some forms of intellectual property. Oral exclusive licenses were permitted, however, under US copyright law before 1978.^[8] Oral nonexclusive copyright licenses remain valid under US law.^[9] Patent licenses may be oral.^[10] Licenses under the Semiconductor Chip Protection Act must be in writing.^[11]

References

1. "An incident to the purchase of any article, whether patented or unpatented, is the right to use and sell it...." United States v. Univis Lens Co., 316 U.S. 241, 249 (1942); see also Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476, 484 (1964) ("[I]t is fundamental that sale of a patented article by the patentee or under his authority carries with it an 'implied license to use.'") (quoting Adams v. Burke, 84 U.S. (17 Wall.) 453, 456 (1873)).
2. United States v. Dubilier Condenser Corp., 289 U.S. 178 (1933); Lariscey v. United States, 949 F.2d 1137 (Fed. Cir. 1991).
3. Section 101, Copyright Act of 1976 (USC 17 §101)
4. Asset Marketing Systems, Inc. v. Gagnon, 542 F.3d 748 (9th Cir. 2008)
5. Blair v Osborn and Tomkins [1971] 2 WLR 503
6. David Bainbridge, Intellectual Property, 1999 (4th ed.), pp.84-85
7. An illustrative case is British Leyland Motor Corp. v. Armstrong Patents Co., [1986] A.C. 577, [1986] All E.R. 850 (H.L.). The opinion by Lord Templeman in that case pointed out that an implied license might be negatived by express language, under principles of freedom of contract, but that was not so when non-derogation instead is involved: “The right cannot be withheld by the manufacturer of the car by contract with the first purchaser and cannot be withheld from any subsequent owner.” That is, the nature of property makes the right inherent and not a matter of freedom of contract. It is thus seen that the effect is comparable to the US license that is implied by operation of law.
8. See Davis v. Blige, 505 F.3d 90, 108 (2d Cir. 2007).
9. See Vincent v. City Colleges of Chicago, 485 F.3d 919, 922 (7th Cir. 2007); Bateman v. Mnemonics, Inc., 79 F.3d 1532, 1538 n.12 (11th Cir. 1996).
10. Waymark Corp. v. Porta Systems Corp., 334 F.3d 1358, 1364 (Fed. Cir. 2003); Enzo APA & Son v. Geapag A.G., 134 F.3d 1090, 1093 (Fed. Cir. 1998).
11. Section 903(b) of the Act, 17 U.S.C. § 903(b), provides: "The owner of the exclusive rights in a mask work may transfer all of those rights, or license all or less than all of those rights, by any written instrument signed by such owner or a duly authorized agent of the owner."

Further reading

• Kenneth L. Port et al., Licensing Intellectual Property In The Information Age (2005), p.338-355.