An exclusive licensee of any of the rights comprised in a copyright, though it is capable of breaching the contractual obligations imposed on it by the license, cannot be liable for infringing the copyright rights conveyed to it.
Plaintiff, as the assignee of a copyright of a book, entered into a licensing agreement, granting defendant the exclusive license to publish a paperback edition of the book. Defendant shipped its paperback edition to retail outlets early, placing those outlets in position to sell the paperback prior to the agreed date. In plaintiff’s breach of contract and copyright infringement actions against defendant, the district court held that defendant did not violate the agreement. The court revesed the decision and remanded the case for entry of a judgment awarding plaintiff of appropriate relief. Plaintiff was awarded prejudgement interest and actual damages of $ 35,380.50. On appeal, plaintiff challenged the judgement as it failed to award damages for copyright infringement. The appellate court affirmed the award for breach of contract, but ruled that there was no copryright infringement.
Was the defendant, who was granted exclusive publication rights by plaintiff, liable for copyright infringement for the early distribution of the book in violation of the date set by the parties?
Defendant became the owner of the right to publish the paperback edition of the book and remained the owner of that right for at least five years after its first publication of that edition. Therefore, its publication of that edition could not constitute copyright infringement. As to the quantification of plaintiff’s loss, it was within the prerogative of the district court as finder of fact to look to plaintiff’s sales. It was not improper, given the inherent uncertainty, to exercise generosity in favor of the injured party rather than in favor of the breaching party. Therefore, it could not be said that the district court's calculation of plaintiff's damages was clearly erroneous.