Baisden v. I’m Ready Productions Inc., 5th Cir., No. 11-20290, involved copyright and contract claims between the author of Men Cry in the Dark the book, and the author of Men Cry in the Dark, the stageplay.

The book author, Baisden, and screenplay writers entered into a contract for revenue sharing and IP ownership.  After a few years, the production company distributed a DVD of the play in a time and format that didn’t sit well with the book author. Because Baisden contended the contract had already terminated,  he sued the production company for copyright infringement. Baisden lost at trial and appealed.

A key issue on appeal was whether the production company had acquired an oral implied license from Baisden after the termination of the contract. The Fifth Circuit concluded that Baisden’s post-termination cooperation with the screenplay writers was sufficient to support an implied license.

Baisden argued that the Fifth Circuit’s test for an implied license diverged from other circuits’ requirements.  Despite finding Baisden had waived such arguments by raising them in an untimely fashion, the court went out of its way to “clarify” that there was no circuit split:

Baisden resists this conclusion [existence of an implied license] on a number of grounds. Of these, the majority are raised in his reply brief. “It is well-settled that, generally, we will not consider issues raised for the first time in a reply brief.” United States v. Jackson, 50 F.3d 1335, 1340 n.7 (5th Cir. 1995). Although we find the majority of Baisden’s arguments on implied nonexclusive license waived, we address them to clarify and reaffirm our holding in Lulirama.

….

Contrary to this holding, Baisden argues that an  implied license can only arise in the context of a work-for-hire agreement. He argues that the relevant test in Lulirama requires that “(1) a person (the licensee) request[ ] the creation of a work, (2) the creator (the licensor) make[ ] the particular work and deliver[ ] it to the licensee who requested it, and (3) the licensor intend[ ] that the licensee requestor copy and distribute the work.” Id. But Baisden ignores that those elements were prefaced by our remark that “[o]ther circuits have held that an implied nonexclusive license arises” when these three elements are met. Id. (emphasis added). To be sure, we applied those three elements in Lulirama.

But we have never held that an implied license could not arise in other circumstances where the totality of the parties’ conduct supported such an outcome. Id.; see also Food Consulting Grp., Inc. v. Azzalino, 270 F.3d 821, 826 n.9 (9th Cir. 2001) (correctly stating test in Fifth Circuit). Other decisions support this conclusion. See Carson, 344 F.3d at 451-53 (considering whether nonexclusive license was created despite defendant not having asked plaintiff to create a product); see also Falcon Enters., Inc. v. Publishers Serv., Inc., 438 F. App’x 579, 581 (9th Cir. 2011) (unpublished opinion) (affirming district court’s finding of a nonexclusive license while acknowledging that licensee had not asked copyright owner to produce copyrighted material); John G. Danielson, Inc. v. Winchester-Conant Props., Inc., 322 F.3d 26, 41 (1st Cir. 2003) (considering nonexclusive license defense where third party, not defendant, requested production of copyrighted work).

The broad, totality-of-the-circumstances-type test for the creation of an implied license has implications beyond copyright. Implied licenses also arise in the patent context, for example, and the scope of these licenses may be measured against prior, written licenses, like in Baisden. See Zenith Electronics v. PDI Communication Systems, 522 F.3d 1348 (2008). Baisden thus holds that the existence of an implied license turns on the specific circumstances of the parties’ relationship.