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Re: Copyright Misuse Doctrine in Apple v. Psystar

From: Alexander Terekhov
Subject: Re: Copyright Misuse Doctrine in Apple v. Psystar
Date: Mon, 02 Mar 2009 14:41:46 +0100

Rahul Dhesi wrote:
> I will go with the CAFC's analysis over yours.

The CAFC ruled:

"Under California contract law, "provided that" typically denotes a
condition. See, e.g., Diepenbrock v. Luiz, 159 Cal. 716 (1911)"

The Diepenbrock v. Luiz case is quoted in full below. The case was about
real condition precedent (payment for improvements) in the event of
lease (license) termination by lessor (licensor) upon sale of leased
property. The lease would not terminate until such payment is made. IOW
the right to terminate the contract arised only after the payment is
made. To use that case to find any conditions precedent in the Artistic
License is utter idiocy. The CAFC further ruled: 

"The choice to exact consideration in the form of compliance with the
open source requirements of disclosure and explanation of changes..." 

How on earth can "disclosure and explanation of changes" come before (be
a condition precedent) to the license grant? 

The CAFC opinion is utter idiocy, Rahul.

M. H. DIEPENBROCK, Respondent, v. FRANK J. LUIZ, Appellant 

Sac. No. 1782 

Supreme Court of California 

159 Cal. 716; 115 P. 743; 1911 Cal. LEXIS 373 

May 2, 1911 

PRIOR-HISTORY: APPEAL from a judgment of the Superior Court of
Sacramento County. Peter J. Shields, Judge. 

COUNSEL: J. Frank Brown, and C. E. McLaughlin, for Appellant. 

R. Platnauer, for Respondent. 

JUDGES: In Bank. Melvin, J. Sloss, J., and Lorigan, J., concurred. Shaw,
J., concurring. Henshaw, J., and Angellotti, J., concurred. 



This cause was decided by the district court of appeal of the third
appellate district, and a rehearing was granted in order that we might
further examine the authorities applicable to the lease involved in the
litigation. After careful examination of the authorities cited and of
the arguments of counsel presented in their briefs, we have adopted the
opinion of the district court of appeal, written by Mr. Justice Burnett,
which is as follows: -- 

"The action, based upon a lease of agricultural lands from one R. W.
Brown to defendant, is to recover the rental which under the terms of
said lease became due on November 15, 1906. The lease was executed on
November 11, 1905, and on November 10, 1906, Brown conveyed the premises
together with 'the reversion and reversions, remainder and remainders,
rents, issues and profits thereof,' to plaintiff. 

"The main controversy is over the proper construction of the following
clause in said lease: 'It is agreed by and between the parties hereto,
that the party of the first part may sell the demised premises at any
time during the said term. Whenever sold this lease shall cease and be
at an end, provided that the party of the first part shall then pay to
the party of the second part, for all improvements placed upon the
demised premises to the time of such sale, including the cost of all
ditches, built thereon by the latter and all crops then growing thereon,
the value thereof to be agreed upon by the parties hereto, and if they
do not agree the value thereof shall be fixed by two disinterested
persons selected for that purpose, by the parties hereto, and if they
fail to agree by a third person selected by them for that purpose, and a
majority of the three shall fix the value of such improvement, and the
cost of such ditches, and the value of such crops, and as so fixed shall
be paid by the party of the first part to the party of the second part.' 

"It is the contention of appellant that the lease was terminated the
instant a bona fide sale was effected by the lessor, while respondent
claims that the termination was subject to the further condition of
payment of the value of the improvements. In other words, the parties
differ as to whether the clause providing for said payment constitutes a
covenant or a condition. Appellant insists that in harmony with the rule
of construction that every word is to be understood in its ordinary and
popular sense, we may adopt any of the following definitions of provided
as given by Webster, to wit: 'On condition'; 'by stipulation'; 'with the
understanding.' Substituting these various definitions for provided he
argues that 'with the understanding' harmonizes perfectly with the text.
'It creates no discord, and does not limit the meaning and effect of
that which precedes or succeeds it, much less nullify and render
meaningless, important portions of the paragraph in which it is found.
On the other hand the substitution of the definition 'upon condition'
creates inconsistency, inharmony and discord. It practically eliminates
succeeding sentences where careful provision is made for the
ascertainment and payment of the amount while its effect on the
preceding sentence 'whenever sold this lease shall cease and be at an
end' is to convert an absolute, positive and emphatic declaration into a
qualified statement, the effect of which depends upon the will of one of
the parties jointly making it.' 

"It is undoubtedly true, as claimed by appellant, that stipulations in a
contract are not construed as conditions precedent unless that
construction is made necessary by the terms of the contract. ( Deacon v.
Blodget, 111 Cal. 418, [44 Pac. 159]; Antonelle v. Lumber Co., 140 Cal.
318, [73 Pac. 966].) There are also well considered cases holding that
provided does not necessarily impose a condition. In Hartung v. Witte,
59 Wis. 285, [18 N. W. 177], it is said: 'But the words, "upon the
express condition," as here used, or the words "if it shall so happen"
or "provided however" and the like do not always make a condition, and
it is often a nice question to determine whether it is a condition or a
covenant and courts always construe similar clauses in a deed as
covenants rather than as conditions, if they can reasonably do so.' (2
Washburn on Real Property, 4.) 

"In Stanley v. Colt, 72 U.S. 119, [18 L. Ed. 502], it is declared that
'The word provided though an appropriate word to constitute a common law
condition does not invariably and of necessity do so. On the contrary,
it may give way to the intent of the party as gathered from an
examination of the whole instrument, and be taken as expressing a
limitation in trust.' 

"Similarly in Woodruff v. Woodruff, 44 N. J. Eq. 353, [16 Atl. 6, 1 L.
R. A. 380], it is said: 'While the words "provided nevertheless" and
"upon the following conditions" are appropriate words to create a
condition, they do not of necessity create such an estate. They and
similar words, will give way when the intention of the grantor as
manifested by the whole deed, is otherwise, and they have frequently
been explained and applied as expressing simply a covenant or a
limitation in trust.' 

"Indeed, the decisions are uniform to the point that, while ordinarily
the word 'provided' indicates that a condition follows, as expressed in
Boston S. and D. v. Thomas, 59 Kan. 470, [53 Pac. 472], 'there is no
magic in the term, and the clause in a contract is to be construed from
the words employed and from the purpose of the parties, gathered from
the whole instrument.' 

"Respondent, on the contrary, quotes from Rich v. Atwater, 16 Conn. 409;
Robertson v. Caw, 3 Barb. (N. Y.) 410, and De Vitt v. Kaufman Co., 27
Tex. Civ. App. 332, [66 S. W. 224], to the effect that the word
'provided' means 'on condition' and is the appropriate word for creating
a condition precedent. 

"It is admitted by appellant that it is an apt word for that purpose,
but he contends that to so interpret it would be against the evident
intention of the parties. 

"Reflecting, however, that the lease was for the term of five years and
that valuable improvements were likely to be made by the lessee and that
the lessor wanted to be in a position to avail himself of any favorable
opportunity to sell the premises to advantage, what is more reasonable
than the conclusion that the lessor desired to retain an option to
terminate the lease if the would-be purchaser should demand that the
premises be conveyed free from encumbrance? Of course, it is only in
view of such a contingency that there would be any reason for leaving
the lessor a choice as to the payment for the improvements. It would
hardly be supposed that he was so generous as to choose to pay unless
the exigency of a profitable sale made it to his advantage to do so. On
the other hand, the lessee would hardly be willing to have his valuable
leasehold interest destroyed at any time by a sale without at least some
protection for his outlay on the property. And he might, quite
naturally, desire more security than the mere personal covenant of the
lessor to pay him for his improvements. He would, therefore, as a
reasonable man, insist that if the lessor is to have the privilege of
selling the property at any time and desires thereby to terminate the
lease, it must be upon the condition that he pay for the improvements.
It would immediately occur to the parties, however, that in case the
improvements are to be paid for some question might arise as to their
value and for the purpose of determining this the judgment of two -- and
in case of their disagreement -- of three arbitrators, it might be
considered expedient to invoke. If the parties had these conditions in
mind would they not with sufficient accuracy express their intention by
declaring that 'the lessor may sell the demised premises at any time
during said term. Whenever sold the lease shall cease and be at an end
provided that the party of the first part shall then pay to party of the
second part the value of the improvements placed thereon by said party
of the second part to be agreed upon by said parties and if they cannot
agree, said value to be determined by two disinterested parties and in
case of their disagreement a third party shall be selected and a
majority of the three shall fix the value of the improvements to be paid
by said party of the first part?' This is substantially the language
used, and to adopt the construction of appellant, we must depart from
the primary meaning of the word provided and hold that the parties used
it in a secondary sense. The argument of appellant is interesting and
ingenious, but it cannot change the fact that, attributing the usual and
ordinary signification to the language of the parties, a condition is
found in the provision in question. Nor, if we bear in mind the
contingency already suggested and implied in the terms employed, does
the conclusion of the learned trial judge derogate from the force of the
seemingly positive promise to pay for the improvements. 

"But accepting appellant's interpretation, how does the case appear? If
the lease was terminated by the sale, it was the duty of defendant to
surrender the premises. It is indeed so provided in these words: 'At the
end of said term or early ending of this lease the party of the second
part shall surrender possession of the demised premises in good order
and condition.' It is the duty of the lessor to pay for the
improvements. The lessor failed to pay and the lessee continued in
possession. It is admitted that the lessor's covenant was a personal
one, it was not made subject to a lien upon the land, nor upon
appellant's theory was the lessee authorized to remain in possession
until he was paid for the improvements. The lessee's redress, therefore,
for the violation of the lessor's promise is a personal action against
the latter for the value of the improvements. The lessee occupied and
used the premises to his profit by virtue of no other right than that
created by the lease until after the payment of the rent became due --
indeed, until the end of the year. It is true that another lease was
executed by plaintiff to defendant and his son, but this was on November
17th -- two days after said rent was due -- and it was not to take
effect until December 1st. There can be no doubt, then, that defendant,
having occupied the premises for the whole year, was burdened with the
obligation to pay for the use thereof. The only question that could
arise would be whether he should pay the rent prescribed in the lease or
what the use of the premises was reasonably worth. This we need not
determine, as, in another view, assuming the termination of the lease by
the sale, it would seem that defendant cannot escape the payment of the
rent. As already seen, the said sale occurred only five days before the
rental was to be paid and less than a month before the expiration of one
year of occupancy by said lessee. This fifteen hundred dollars was the
balance of the annual rental, and since there was no agreement as to any
apportionment or abatement of rent, in the absence of any statutory
provision, in case of termination of the lease before the rent was due,
the rule would be as stated in section 389 of Taylor's Landlord and
Tenant: 'It is well settled that in all cases of periodical payments,
accruing at intervals, and not de die in diem, there can be no
apportionment, for rent will not be apportioned in respect of time,
unless by force of a statute or of some special provision of the lease.'
But section 1935 of the Civil Code provides the rule in this state as
follows: 'When the hiring of a thing is terminated before the time
originally agreed upon, the hirer must pay the due proportion of the
hire for such use as he has actually made of the thing, unless such use
is merely nominal, and of no benefit to him.' As has already appeared,
the defendant actually had use of the property for the entire year under
the original lease, but if the computation should be limited to the date
of the sale it amounts practically to the same thing, and, under the
evidence, it cannot be said that the use was merely nominal or of no
value to defendant. 

"It was rightly held, we think, that the claim for the rent was
transferred to plaintiff and therefore he was the proper party to
institute the action. Indeed, the evidence shows that defendant did not
object to paying the rent to plaintiff but he insisted that he should be
reimbursed by the said plaintiff for the value of the improvements. But
this cannot be urged as an offset to plaintiff's claim since plaintiff
did not undertake to pay therefor. If there be anything due for said
improvements it must be from the original lessor. 

"The judgment is affirmed." 


(GNG is a derecursive recursive derecursion which pwns GNU since it can 
be infinitely looped as GNGNGNGNG...NGNGNG... and can be said backwards 
too, whereas GNU cannot.)

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