Opinion ID: 399387
Heading Depth: 2
Heading Rank: 2

Heading: Counterclaims on Remand

Text: 19 On remand the district court must determine whether Talbot Press materially breached the licensing agreement or failed to satisfy a condition to the license. If Talbot Press' conduct merely constituted an immaterial breach of contract and, in addition, that breach was not a failure to satisfy a condition to the license, 15 then the Episcopal Conferences would only have a cause of action for breach of contract and Talbot Press would be an indispensable party. 3 Nimmer § 10.15 (10-108). However, if Talbot Press failed to satisfy a condition to the license, any use by the licensee or its assignee would constitute an infringement of copyright 16 and defendant-intervenors could elect to pursue a remedy for infringement rather than breach of contract. 3 Nimmer § 10.15 (10-109 n.11). In addition, even if the counterclaims asserted merely constitute a breach of contract, an action for copyright infringement would lie if the breach is so material that it allows the grantor power to recapture the rights granted so that any further use of the work was without authority. Id. at 10-110. It is established that even without an express reversion clause, the power to recapture may be exercised if a breach of contract is so material as to create a right of rescission in the grantor. Nolan v. Sam Fox Publishing Co., 499 F.2d 1394 (2d Cir. 1974); Nolan v. Williamson Music, Inc., 300 F.Supp. 1311 (S.D.N.Y.1969), aff'd sub nom Nolan v. Sam Fox Publishing Co., 499 F.2d 1394 (2d Cir. 1974). 20 The license granted by the Episcopal Conferences to Talbot Press provided: 21 The intention of the license herein granted to you is that you should thereby be authorized to produce and print an edition of a Breviary (hereinafter called the Derivative) particularly suited to the needs of the Dominican Order and to sell such copies to the Dominican Order in Ireland for them to supply to members of their own Order including tertiaries. You should not produce or print copies of the Derivative for any party other than the Dominican Order in Ireland and you should obtain an undertaking in writing from the Dominican Order that they will not supply copies to members of other religious orders or place copies on general sale at retail or wholesale outlets. 22 J.A. 177. It does not appear from the record that Talbot Press did in fact secure a written agreement from the Dominican Order stating that the Dominicans would not supply copies of the book to any other religious order or place copies on general sale. Indeed, there is evidence that copies of the book have been placed on general sale. In addition, it is unclear whether or not the substitution was authorized. Patrick McGoldrick, advisor to the Episcopal Conferences, read the galleys of the book in late August and reported that the edition fulfilled all requirements. J.A. 62. He noted that the book contained no newly set material. Id. The composition was duplicated and substitutions were readily apparent according to Austin Flannery, manager of Dominican Publications. J.A. 185; see also J.A. at 165, 181. After consultation with McGoldrick, Archbishop Dermot Ryan of the Archdiocese of Dublin granted an imprimatur to Morning and Evening Prayer. Whether McGoldrick and Ryan were deceived, or were simply mistaken, is not clear. In any event, the factual issue as to whether the substitutions were authorized must be decided by the district court. Likewise, whether or not the agreement has been materially breached or whether the breach constitutes a failure to satisfy a condition and, if so, how the breach ought to be remedied are matters which we must leave to the district court. If it finds a material breach of contract or a failure to satisfy a condition to the license, and formulates a remedy that would deprive Costello of that which it seeks to protect by way of an antitrust action, the district court would not have to face the antitrust claims again. Otherwise, it must.