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Rey v. Lafferty - 990 F.2d 1379 (1st Cir. 1993)

Rule:

Contract language is usually considered ambiguous where an agreement's terms are inconsistent on their face or where the phraseology can support reasonable difference of opinion as to the meaning of the words employed and obligations undertaken.

Facts:

Plaintiff Margret Rey, who owns the copyright to the "Curious George" children's books, challenges an award of damages to Defendant Lafferty Harwood & Partners (LHP) for Rey's withholding of approval of various ancillary products utilizing the "Curious George" character under their 1983 licensing agreement. Plaintiff, as co-author (with her late husband, H.L. Rey) of the Curious George books, also appealed from a counterclaim award of lost profits and consequential damages to defendant licensee, who alleged that plaintiff had unreasonably withheld approval of various ancillary products utilizing the books' main character. Appealing separatelly, LHP challenged the district court order awarding Rey damages and future royalties on certain other "Curious George" products. 

Issue:

Was the action of the author unreasonable when she withheld approval for certain products?

Answer:

No

Conclusion:

Applying Massachusetts law, the court affirmed that defendant had wrongfully withheld plaintiff's royalties for books and videos, the production of which was governed by a 1983 ancillary products agreement (APA). The court also reversed in part, holding that plaintiff's initial 1977 licensing agreement granting rights to produce films for television did not encompass the right to distribute the films in video form, and that plaintiff did not unreasonably withhold approval for certain products under the APA. Therefore, defendant was not entitled to damages for plaintiff's withholding her approval.

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