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United States Naval Inst. v. Charter Commc'ns, Inc. - 687 F. Supp. 115 (S.D.N.Y. 1988)

Rule:

It is the law in New York that evidence of trade usage may be used to give particular meaning to and supplement or qualify terms of an agreement.

Facts:

 

This is an action alleging breach of contract and copyright infringement arising from the paperback reprint publication of the best-selling novel, The Hunt for the Red October by Thomas L. Clancy. The plaintiff, United States Naval Institute, published the hardcover edition in October 1984 and licensed the defendants Charter Communications, Inc., and Berkley Publishing Group, Defendants to "publish the . . . Work in a paperback edition not sooner than October 1985." Plaintiff agued this term of the license was violated when defendant shipped the book to booksellers prior to October 1985. It argued furthermore that pre-October sales were unauthorized by the license and therefore constituted infringements of the plaintiff's copyright. Defendant does not dispute that it shipped the book to domestic outlets before October. It contended, however, that pre-October shipment is contemplated in the industry by the term "October publication" and that its actions were entirely consistent with the rights conferred to it under the license agreement. A trial was conducted before the court without a jury. 

Issue:

Did plaintiff violate its license agreement when it shipped the books to domestic outlets before October?

Answer:

No

Conclusion:

Defendant proved conclusively at trial (without any contrary evidence being offered) that "publication date" is uniformly understood in the industry to refer to the time when the concentrated selling effort begins, not the time of shipment to outlets. The "publication date" refers usually to a month and presupposes that nationwide distribution has already been accomplished by the start of that month. Industry leaders representing both hardcover and paperback establishments testified to the industry's understanding and practice that books are shipped three to six weeks prior to the start of the month of "publication."  This interval between shipping and publication is necessary to insure that the distribution process has been accomplished nationwide before the concentrated selling effort begins on the "pub date." The court further concluded that where a party was engaged in a particular trade, the court presumed the plaintiff to have knowledge of the trade usages in that trade. The court dismissed plaintiff's action because plaintiff failed to prove its contentions, and because there was no breach of contract and no infringement of copyright. The defendant showed that it acted in accordance with its contractual entitlement. Whether plaintiff did or did not in fact know of the industry practice was irrelevant. The plaintiff could not obtain special interpretations of its contracts by claiming it was unaware of the meaning of industry terminology.

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