Opinion ID: 601565
Heading Depth: 3
Heading Rank: 2

Heading: Termination for Material Breach.

Text: 25 Rano argues that Sipa materially breached the licensing agreement and that the breach gave him the right to terminate the agreement. Although licensing agreements are not terminable at will, under federal and state law a material breach of a licensing agreement gives rise to a right of rescission which allows the nonbreaching party to terminate the agreement. Costello Publishing Co. v. Rotelle, 670 F.2d 1035, 1045 (D.C.Cir.1981); 3 Nimmer § 10.15[A] at 112. After the agreement is terminated, any further distribution would constitute copyright infringement. Costello, 670 F.2d at 1045. 26 Here, it is clear that Rano attempted to rescind the agreement. The question is whether he had the right to rescind. 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.... [The breach must constitute] a total failure in the performance of the contract. Affiliated Hospital Products, 513 F.2d at 1186; Nolan v. Williamson Music, Inc., 300 F.Supp. 1311, 1317 (S.D.N.Y.1969), aff'd sub. nom. Nolan v. Sam Fox Publishing Co., 499 F.2d 1394 (2d Cir.1974); 3 Nimmer § 10.15[A] at 116-18. 27 Rano has not provided evidence sufficient to withstand summary judgment on this issue. Rano points to a number of acts that he contends constitutes a material breach, but only those acts preceding Rano's purported termination on March 12, 1987 are relevant. These acts include Sipa's alleged failure to pay royalties, failure to return negatives, and failure to credit for the Sara Ferguson photograph. The first two breaches claimed by Rano, upon which he relies most heavily, are not supported by the record. Sipa actually paid Rano 99.99% of the royalties due him up to approximately the time Rano sought to terminate the licensing agreement, excluding royalties due for photos published in the United States from 1985 to 1986. Of the latter, Sipa paid 86.85% of the royalties due. As to the second alleged breach, nothing in the letters evidencing the oral contract between the parties provided for a return of Rano's negatives on demand. Rano merely points to a letter from Sipa stating that the negatives would be filed at its offices and could be returned if necessary, although [Sipa] would want to keep them for a while. Finally, Rano provides no evidence to support his claim that he was due credit for the photograph of Sara Ferguson. Sipa provided evidence that the photograph was taken by another journalist; the duty was on Rano to show there was a genuine issue as to this fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-24, 106 S.Ct. 2548, 2552-54, 91 L.Ed.2d 265 (1986). 28 Even if we found Rano's allegations had merit, however, we could not conclude that Sipa materially breached the licensing agreement in light of the fact that the parties enjoyed a harmonious eight-year relationship (in which Rano received royalties and credit for his work). After considerable performance, a slight breach which does not go 'to the root' of the contract will not justify termination. Witkin Summary of California Law § 795 (9th ed. 1987); see Whitney Inv. Co. v. Westview Dev. Co., 273 Cal.App.2d 594, 78 Cal.Rptr. 302, 307 (1969); Restatement (First) of Contracts § 275 (1932). 29