Okay, folks — this one is for the lawyers, pretty much. It’s a Contract Interpretation Quiz (I’ve added the emphasis):
Interpret this contract, reproduced below in full:
In consideration of the sum of One Dollar ($1.00) and other good, valuable, and adequate consideration, the receipt and sufficiency of which is acknowledged, the undersigned does hereby sell, assign, transfer, and set over to Bridgeport Music, Inc., its respective successors and assigns, fifty percent (50%) of his interest now owned or subsequently procured in the universe-wide copyright in and to the following musical composition(s) set forth in Exhibit A attached hereto, and all of the universe-wide right, title, and interest of the undersigned, vested or contingent, therein and thereto, including all claims for infringement of the copyrights whether now or hereafter existing, for the maximum terms of copyright, including any extensions and/or renewals thereto, throughout the universe.
The assignor sues for copyright infringement. Does the assignor have standing, or did it assign all claims for copyright infringement to the assignee?
According to the Eastern District of Texas, the assignor didn’t have standing. According to the Fifth Circuit, it did.
I woulda gotten this one, I think. Gotten it wrong, that is.
As Pam Chestek explains, the Circuit says the highlighted phrase — “including all,” etc. — was to be read in the context of the fifty-fifty rights split, as opposed to placing what it regards as undue emphasis of the plain language which would give the words “all claims” their seemingly obvious meaning.
Well, okay. But that doesn’t sound right to me. It is entirely within the realm of possibility that one party would retain entirely for itself, or another party would be assigned entirely, the right to all copyright infringement claims (not to suggest that they might be worth more than the copyright itself, mind you!), and frankly the way I read this clause, that is exactly what “all claims” means.
Honestly, however, it is ambiguous, isn’t it? What on earth did they mean, after all? Why didn’t the court acknowledge this ambiguity and step outside of the four corners of the document and jettison the Parol Evidence Rule so we could look at outside proofs and learn what the heck the parties really intended here? The decision makes no mention of this possibility, plowing past “ambiguity” on pages three to four.
They call me LIKELIHOOD OF CONFUSION®, yet I can hardly imagine much more ambiguity — and, I suppose we have to say, much less impressive draftsmanship, to put it politely? — than what we’re talking about right here.
Originally posted 2013-07-19 12:28:51. Republished by Blog Post Promoter
Hear hear!! What a lousy contract, eh? I agree completely with your take on it.
Actually, Ron, I’m going the other way on this. I mean, yeah, it’s a little sloppy, but you can see how the sloppiness came from an attempt to simplify. The real reason legal contracts are so full of parts and sub-parts and definitions is to avoid this kind of thing, and when lawyers try to simplify they open themselves up to this kind of mess.
But (to me, anyway) it seems pretty clear that the intent was to go 50-50 on everything, and then try to list just what counted as everything.
The “including” language puts infringement claims into “interest of the undersigned” and the real problem comes with the positioning (and meaning) of the “and” right after the “hereto.” The problem could even be thought of as turning on the comma after the hereto.
I’ve never had the guts to draft a contract with math-like bracketing, though that might have helped. Maybe it’s my ancillary training in patent drafting, but I like to use definitions to the same end:
Bridegeport is [bridgeport, inc, assigns, etc.]
The Works are [the following musical composition(s) set forth in Exhibit A attached hereto]
the Subject Rights are [Current Rights and Possible Rights]
Current Rights are [Party-one’s interest now owned or subsequently procured in the universe-wide copyright in and to the Works]
Possible Rights are [the universe-wide right, title, and interest of the undersigned to the Works, vested or contingent, including all claims for infringement of the copyrights whether now or hereafter existing, for the maximum terms of copyright, including any extensions and/or renewals thereto, throughout the universe.]
Then the heart of the agreement becomes clear:
[For Consideration], Party-one [sells blah blah blah] to Bridgeport fifty percent of the Subject Rights.
Unfortunately that ends up with a bunch of definition clauses and numbers and sub-paragraphs, and people (clients) don’t like it. So you get lawyers who try to “simplify” it, and end up with ambiguity.
It seems to me the most likely reading is that the phrase beginning with “all” continues the list of things included under “50%”. But, of course, you might be right and therefore are right that the court should have looked beyond the document to try and ascertain the intent.