Contracts Intellectual Property

For-ev-ver? The Importance Of Specific Survival Language In Contracts

What does the termination of a contract do to certain intellectual property rights that were granted, in perpetuity, from one party to another within that document? A recent ruling in the U.S. Southern District of New York can be instructive on this issue.

The case was filed by Frank Walker, who served as a drummer for the popular hip hop band The Roots. He sued for relief based on what he believed to be improper continued use of his likeness in the band’s promotional materials.

The important language in the agreement that Walker signed, and which was ultimately terminated, stated that he provided:

the worldwide right in perpetuity to use and publish and to permit others to use and publish [Plaintiff’s] name, likeness, voice and other biographical material in connection with [Plaintiff’s] services and performances hereunder and the results and proceeds thereof, including without limitation [Plaintiff’s] name, photograph, image and likeness in connection with any audio or video recordings.

It left the court with answering an important question. Did the grant of rights, labeled to be provided “in perpetuity,” continue despite the termination of the contract?

Walker has argued that the agreement limits use of his likeness to the time period when he was associated with the band. The court has disagreed. It recently held that,

This interpretation … would render the term and clear intent that the use of Plaintiff’s likeness be permitted ‘in perpetuity’ meaningless, because it would provide that Defendants are not, in fact, permitted to use Plaintiff’s likeness in perpetuity, but only as long as he is a member of The Roots.

The specific words used in a contract are of penultimate importance. Here, use of “in perpetuity” appears to have very significant influence on how the court ruled, despite termination of the overall agreement.

The court cited to a Second Circuit case, Galli v. Metz, wherein the Second Circuit held that “an interpretation of a contract that has the effect of rendering at least one clause superfluous or meaningless . . . is not preferred and will be avoided if possible … Rather, an interpretation that gives a reasonable and effective meaning to all terms of a contract is generally preferred to one that leaves a part unreasonable or of no effect.”

There was a true concern, in Walker’s case, that the phrase “in perpetuity” would be rendered superfluous if the band could no longer benefit from the rights granted after the contract was terminated. Further, a large component of the band’s potential success revolves around the ability to exploit those rights; without the rights that were granted, in perpetuity, the overall business purpose of the band would be limited if not quashed altogether.

It is difficult, if not impossible, for someone like Walker to prove that the intent of the parties was anything other than a permanent and perpetual assignment of the rights within the contract, whether or not it was terminated. The court cited multiple prior decisions as support. It rested heavily on another case captioned, Duffey v. Twentieth Century Fox Film Corp., which also dealt with a grant of rights in perpetuity, wherein the court said, “Courts must interpret unambiguous contract language as a matter of law.”