Opinion ID: 781953
Heading Depth: 2
Heading Rank: 2

Heading: Validity of the Agreements

Text: 22 Even if the contracts do evidence a work-for-hire relationship between himself and MTM, Warren argues that the contracts granting the copyrights to MTM should be rescinded because MTM failed to pay the full amount of the royalties to which he was entitled. Warren argues that this breach entitles him to reclaim the copyrights and sue for infringement, even if the music was originally created as a work for hire. He bases this conclusion primarily on a passage from the Nimmer treatise which states: If ... the employer's claim of copyright is based upon the agreement ... of the employee, then surely a material breach by the employer must under traditional principles of contract law entitle the employee to rescind the employment agreement and hence claim back the copyright which he had agreed to convey. 2 M. & D. Nimmer, Nimmer on Copyright, § 5.03[E] (2000). 23 However, we held in Rano v. Sipa Press, Inc., 987 F.2d 580 (9th Cir.1993), that [a] breach will justify rescission of a licensing agreement only when it is of so material and substantial a nature that [it] affect[s] the very essence of the contract and serve[s] to defeat the object of the parties.... [T]he breach must constitute a total failure in the performance of the contract. Id. at 586 (internal quotations omitted). MTM's alleged failure to pay royalties does not constitute a total failure of performance. See also Royal v. Leading Edge Prod. Inc., 833 F.2d 1, 3-4 (1st Cir.1987) (noting the dubious provenance of Nimmer's theory and holding that there is neither authority nor precedent for the proposition that a breach of the royalty agreement alone catalyzes an implicit exception to the work-made-for-hire doctrine) (emphasis in original). 24 Further, as the district court correctly points out, Nimmer's theory is based on an employer-employee relationship, in which the employer obtains ownership of a copyright as an implied term of the employment agreement. In such a case, the employee has no specific remedy for wrongful termination, and rescission may be appropriate. However, when an express agreement makes clear that the trade-off for the proprietary copyright interest is not a job, but the payment of royalties, and an unambiguous compact occupies the field, rescission is not necessary because the contract makes explicit what consequences will flow from a breach. Royal, 833 F.2d at 3. Significantly, the agreements between Warren and MTM provided that money damages would remedy any breach, and that rescission was not available. 7