Court Opinion

ID: 194639
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:21:45+00
Date Added: 2024-06-11T09:58:12.323368
License: Public Domain

March 30, 1993
                  UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT
                                           

No. 92-1139

                           MARGRET REY,

                       Plaintiff, Appellee,

                                v.

                  RICHARD G.D. LAFFERTY, ET AL.,

                     Defendants, Appellants.

                                           

No. 92-1177

                           MARGRET REY,

                      Plaintiff, Appellant,

                                v.

                  RICHARD G.D. LAFFERTY, ET AL.,

                      Defendants, Appellees.

                                           

          APPEALS FROM THE UNITED STATES DISTRICT COURT

                FOR THE DISTRICT OF MASSACHUSETTS

             [Hon. Rya W. Zobel, U.S. District Judge]
                                                    

                                           

                              Before

                      Selya, Cyr and Boudin,

                         Circuit Judges.
                                       

                                           

   H. Joseph Hameline  with whom  Andrea M. Fish  and Mintz,  Levin,
                                                                    
Cohn, Ferris, Glovsky & Popeo, PC were on brief for appellee Rey.
                               
   Charles  Donelan  with whom  Katherine  E.  Perrelli, Kristen  G.
                                                                    
McGurn  and Day, Berry & Howard were on brief for appellants Lafferty,
                             
et al.

                                           

                          March 30, 1993
                                           

          CYR, Circuit Judge.   Margret Rey,  who owns the  copy-
          CYR, Circuit Judge.
                            

right  to the  "Curious George"  children's books,  challenges an

award of damages to Lafferty Harwood & Partners ("LHP") for Rey's

withholding of  approval of various ancillary  products utilizing

the "Curious George" character  under their 1983 licensing agree-

ment.   LHP appeals the district court order awarding Rey damages

and future royalties on  certain other "Curious George" products.

We affirm in part and reverse in part.

                                I

                            BACKGROUND
                                      

          "Curious George" is  an imaginary  monkey whose  antics

are chronicled in seven  books, written by Margret and  H.A. Rey,

which have  entertained readers since  the 1940s.   A mischievous

personality  consistently lands Curious George in amusing scrapes

and  predicaments.  The more  recent "monkey business"    leading

to  the  present litigation     began  in  1977 when  Margret Rey

granted Milktrain  Productions an option to  produce and televise

104 animated "Curious George"  film episodes.  The  option agree-

ment was  contingent on  Milktrain's obtaining financing  for the

film project,  and adverted to  a potential agreement  to license
                                           

"ancillary  products," based  on the "Curious  George" character,

once the 104 film episodes had been completed.

                                3

A.  The Original Film Agreements.
                                

          Milktrain  approached LHP, a  Canadian investment firm,

to  obtain financing for  the project.   LHP  agreed to  fund the

venture by selling  shares in the project to investors (hereinaf-

ter:  the "Milktrain  Agreement"); LHP and its investors  were to

divide a 50% share of Milktrain's profits on the films and on any

future ancillary products.

          With  the financing  commitment in  place, Rey  granted

Milktrain  and LHP a limited  license "to produce  (within a two-

year period from the date of exercise) one hundred and four (104)

four minute film episodes based on the ["Curious George"] charac-

ter  solely for broadcast on television"  (hereinafter:  the "Rey

License").   Rey  was to  receive a  fee for  assisting  with the

editing and production of the episodes, and an additional royalty

amounting  to 10% of the  revenues from any  film telecasts.  The

Rey  License made no mention of ancillary product rights.  Never-

theless, LHP promoted the project to investors through a prospec-

tus (hereinafter:  the "1978 Private Placement Memorandum") which

represented, inter alia, that "the production contract [with Rey]
                       

gives LHP the right to participate in the financing of  . . . the

option . . .  to undertake the  exploitation of  other rights  to

'Curious  George'  including manufacturing,  food,  licensing and

other commercial areas of exploitation."

B.  The Revised Agreements.
                          

          The film project soon  encountered delays and financial

setbacks.  By early 1979, though only 32 of the  104 episodes had

                                4

been completed, the original  investment funds had been virtually

exhausted.  In order to rescue the project and complete the films

to Rey's satisfaction, LHP  offered to arrange additional financ-

ing.  In consideration, LHP insisted that the Milktrain Agreement

be revised to permit LHP to assume control of the film production

process  and to  receive higher  royalties on the  completed epi-

sodes.  Milktrain  assented to these  revisions, and the  revised

Milktrain Agreement (hereinafter:   the "Revised Milktrain Agree-

ment" or "RMA") was signed on November 5, 1979.

          As prelude  to its  description of the  new obligations

between Milktrain and LHP, the RMA recited that Milktrain and LHP

owned "the rights to Curious George which have been obtained from

. . . Rey" under the Rey License.  The RMA further stated that:

          Investors  acquiring  the episodes  shall ac-
          quire all right,  title and interest therein,
          without limitation or reserve,  including the
          original negative . . . .

          LHP shall have the right to participate on an
          equal basis with  [Milktrain] in their  right
          of  first refusal  after  the present  agency
          rights expire to  undertake the  exploitation
          of  other rights to Curious George, including
          manufacturing, food, licensing and the publi-
          cation of the 104 episodes in book form . . .
          in  accordance with  the  rights  granted  to
          [Milktrain] and  LHP [by Rey] in [the Revised
          Rey License].1

          Simultaneously  with the  negotiation of  the RMA,  LHP

proposed several  changes in the Rey  License, including language

                    

     1Shortly thereafter, Milktrain apparently assigned its share
of ancillary  product licensing  rights to LHP,  leaving LHP  the
sole owner of these rights.

                                5

which would have  granted LHP the  immediate right to  "undertake

the exploitation  of other rights to  'Curious George,' including

manufacturing,  food, licensing  and the  publication of  the 104

episodes in  book form."   Rey  rejected  the LHP  proposal in  a

letter to Richard G.  D. Lafferty (president and C.E.O.  of LHP):

"I have repeatedly stated to Milktrain and to you that I will not

consider negotiating such rights before the films are done."  Rey

did  consent, however, to certain changes to the royalty arrange-

ments, whereby Rey  would receive  a 10% share  of film  revenues

only "after  the investors  have recouped [their  investment] and

certain soft dollar commitments . . . have been paid."

          On November 5, 1979, concurrently with the execution of

the Revised  Milktrain Agreement,  a revised  version of the  Rey

License  (hereinafter:  the  "Revised Rey License"  or "RRL") was

executed,  incorporating  these   changes,  and  superseding  the

original  Rey License.   The  RRL recited  that the  original Rey

License  had granted Milktrain and  LHP the right  to produce and

distribute animated "Curious George" films "for  television view-

ing,"  but  made no  mention  of the  "ancillary  product" rights

unsuccessfully sought by LHP.

          As agreed, LHP undertook  to arrange further  financing

to complete the film project.  On November 23, 1979, LHP released

another  prospectus (hereinafter:   the  "1979 Private  Placement

Memorandum") to  which it  attached the Revised  Milktrain Agree-

ment.  The 1979  Private Placement Memorandum again  stressed the

prospect of  eventual revenues from ancillary  products but noted

                                6

that these rights "have yet to be negotiated" with Rey.

C.   The Ancillary Products Agreement.
                                     

          Production  of the  104  TV episodes  was completed  in

1982.   On January 3, 1983,  an Ancillary Products  Agreement (or

"APA") was signed by Rey and LHP, granting LHP a general right to

license "Curious George" in spin-off ("ancillary") products for a

renewable term of five  years.  The APA defined  "ancillary prod-

ucts" as:

          All  tangible  goods  . . . excluding  books,
          films, tapes, records,  or video  productions
          . . . . However, for stories already owned by
          [LHP]  and which  have been  produced as  104
          episodes  under the  license  granted in  the
          January, 1978 agreement  and the  November 5,
          1979  revision of that agreement, [LHP] shall
          have  the  right  to  produce  books,  films,
          tapes, records and video productions of these
          episodes  under  this  Agreement, subject  to
          [Rey's]  prior  approval  . . .  which  prior
          approval shall not be unreasonably withheld.

In  return for these rights, Rey  was to receive one-third of the

royalties on  the licensed products, with  certain minimum annual

payments guaranteed.   Rey retained the  right to disapprove  any
                                                                 

product, and  to propose changes  which would make  a disapproved
       

product  acceptable to her.   The APA provided,  inter alia, that
                                                           

Rey's approval would not be withheld "unreasonably."

D.  The Houghton Mifflin Contract.
                                 

          Following  the  execution  of  the  Ancillary  Products

Agreement, LHP assigned its licensing rights to a new subsidiary,

Curgeo Enterprises,  which turned its attention  to licensing the

                                7

"Curious  George"  character  in  various  product  forms.2    On

March 27, 1984, Curgeo executed  a contract with Houghton Mifflin

Company to publish the  104 television film episodes in  the form

of a children's book series.  The contract provided that Houghton

Mifflin  would publish  at least  four books,  with illustrations

drawn  directly from the film  negatives, in each  year from 1984

through 1987; the contract was renewable  for an additional five-

year term  if LHP and Rey  agreed to extend the  APA beyond 1987.

Pursuant to  the contract, Houghton Mifflin  published four books

each year from 1984 through 1987.

          In  1987, LHP  notified  Houghton Mifflin  that it  had

declined to extend  the APA, but that Curgeo  had "entered into a

new  operating agreement which permits  us to continue  to act in

the capacity  in  which we  have been  acting for  the last  five

years. . . . [Y]ou are free to pick up your option to renew."  In

response, Houghton  Mifflin extended  its contract for  the addi-

tional  five-year term,  publishing an  additional four  books in

1988 and again in 1989.  It ceased publication of the book series

in 1990, when Rey advised that the APA had been cancelled.

E.   Other Product Licenses.
                           

          Curgeo  moved  aggressively  to  license  the  "Curious

George" character in other  product areas as well.   Beginning in

1983, the  "Curious George"  TV  episodes were  licensed to  Sony

                    

     2Curgeo  Enterprises  is not  named  in  the Rey  complaint;
Curgeo  Agencies Inc.  and  Curgeo Overseas,  Inc., are  named as
defendants.   We  refer to  the  three entities  collectively  as
"Curgeo."

                                8

Corporation,  which transferred  the images  from the  television

film negatives to  videotape.   LHP takes the  position that  the

Sony video license was entered pursuant to the RRL; Rey claims it

is subject to the APA.  See supra at pp. 6-7.
                                 

          In 1983, Curgeo licensed  "Curious George" to Eden Toys

Inc., which proposed to market a "Curious George" plush  toy.  In

the beginning, Rey rejected Eden's proposed  designs for the toy,

but Eden eventually proposed  several versions which were accept-

able to Rey.   The plush toy was marketed from  1983 to 1990, but

experienced poor sales and  generated less revenue than expected.

Eden blamed the  poor market performance on  Rey's alterations to

Eden's original design proposals.

          In 1987,  Curgeo  received  a  commitment  from  Sears,

Roebuck  to market  "Curious  George" pajamas  through the  Sears

catalog.   The  Sears pajama  project promised high  returns, but

catalog deadlines  necessitated immediate  approval of  a product

design.   Glen Konkle,  Curgeo's agent, brought  Rey a  prototype

pajama and a flat paper sketch of "Curious George" which had been

proposed as  the basis for the  final pattern.  Rey  rejected the

proposal, complaining  that the  pajama material was  "hard, ugly

[and] bright yellow," and that the sketch of "Curious George" was

"plump" and "not  recognizable."  The catalog deadline passed and

the pajama manufacturers withdrew their bids.  In addition, Beach

Paper  Products,  which had  orally  agreed  to license  "Curious

George" for a line  of paper novelties, withdrew its  offer after

learning that  "Curious George" products would  not receive expo-

                                9

sure in the Sears catalog.

          In 1988, Curgeo licensed  "Curious George" to DLM Inc.,

which intended to use the "Curious George" character in a trilogy

of educational software.  Rey approved the software in principle,

and production began in July 1988.   In August 1988, however, DLM

withdrew its plans to complete the "trilogy" after Rey telephoned

DLM's project director and  harshly criticized the design  of the

first software  product and the accompanying  manual developed by

DLM.

F.  The Ancillary Products Agreement Renewal.
                                            

          Due  in part  to these  product rejections,  LHP earned

less money than it anticipated from ancillary products.  When the

APA came up for renewal in January 1988, LHP declined to exercise

its  option for  an  additional  five-year  term.   Instead,  the

parties agreed to renew on  a month-to-month basis, terminable by

either  party  on one  month's notice.    Rey's royalty  rate was

increased to 50% (effective January 3, 1988), but with no guaran-

teed minimum payment.  On April 10, 1989, Rey terminated the APA.

LHP responded by advising that Curgeo would "continue to adminis-

ter those licenses which [remained] outstanding and report to you

from time  to  time accordingly."    LHP thereupon  continued  to

market the Sony  videos and  to publish the  television films  in

book form under the Houghton Mifflin agreements.

G.   "Curious George" Goes to Court.
                                   

          On February 8,  1991, Rey filed  suit against Lafferty,

                                10

Curgeo and  LHP, in  connection with LHP's  continuing, allegedly

unauthorized production  of the  Houghton Mifflin books  and Sony

videos.  Rey's complaint alleged violations of federal copyright,

trademark  and unfair-competition  statutes, breach  of contract,

and  violations  of Mass.  Gen. L.  ch.  93A ("chapter  93A"); it

sought to  enjoin further violations and to recover unpaid royal-

ties on the books and videos.  LHP countersued, claiming that Rey

unreasonably had withheld approval  of various products while the

APA  remained  in force.   The  LHP  complaint alleged  breach of

contract, interference with contractual and advantageous business

relationships, and violation of chapter 93A.

          After a four-day bench  trial, the district court found

for Rey on  her claims  for breach of  contract, ruling that  the

book and video licenses were governed by the APA and that Rey was

entitled to recover $256,327  in royalties.  The court  found for

LHP  on  several LHP  counterclaims,  however,  holding that  Rey

unreasonably  had withheld  approval  of, inter  alia, the  Sears
                                                     

pajamas, the DLM software, and  Eden's original plush toy design.

LHP was  awarded $317,000,  representing lost profits  and conse-

quential damages  resulting from  Rey's rejection of  these prod-

ucts.

                                II

                            DISCUSSION
                                      

          "Under  Massachusetts law,  the  'interpretation  of  a

contract is  ordinarily  a  question  of  law  for  the  court'."

                                11

Fairfield 274-278 Clarendon Trust v. Dwek, 970 F.2d 990, 993 (1st
                                         

Cir. 1992) (quoting Edmonds  v. United States, 642 F.2d  877, 881
                                             

(1st Cir. 1981)); see also, e.g., Lawrence-Lynch Corp. v. Depart-
                                                                 

ment of Environmental Mgmt., 392 Mass. 681, 682, 467 N.E. 2d 838,
                           

840 (1984); Sparks v. Microwave Associates, Inc.,  359 Mass. 597,
                                                

600, 270 N.E. 2d 909,  911 (1971).3  Only if the contract  is am-

biguous  will  there arise  issues of  fact reviewable  for clear

error.   See Dwek,  970 F.2d  at 993; see  also ITT Corp.  v. LTX
                                                                 

Corp., 926 F.2d  1258 (1st Cir.  1991); Fashion House, Inc.  v. K
                                                                 

Mart Corp., 892 F.2d 1076, 1083  (1st Cir. 1989) (New York  law).
          

"Contract  language  is  usually  considered  ambiguous where  an

agreement's terms  are inconsistent on  their face  or where  the

phraseology can  support reasonable  difference of opinion  as to

the meaning of the words employed and  obligations undertaken," K
                                                                 

Mart, 892 F.2d at 1083 (citing In re Navigation Technology Corp.,
                                                                

880 F.2d 1491, 1495  (1st Cir. 1989)).  The  ambiguity determina-

                    

     3The  Rey License and  RRL contain  choice-of-law provisions
providing  for the application of New York law, and the Milktrain
Agreement and RMA contain choice-of-law provisions providing  for
the application of  the law  of the Province  of Quebec,  Canada.
Neither party  alludes to  these contractual provisions  in their
briefs, however, and both  parties appear to have  premised their
trial presentations  and appellate  briefs on the  application of
Massachusetts  law.  In accordance with their choice, and since a
"reasonable  relation"  exists  between their  contract  and  the
Massachusetts forum, see  Carey v. Bahama Cruise  Lines, 864 F.2d
                                                       
201, 206 (1st Cir. 1988), we apply Massachusetts law.  See Borden
                                                                 
v.  Paul Revere Life Ins. Co., 935  F.2d 370, 375 (1st Cir. 1991)
                             
("[w]here . . . the parties have agreed about what law governs, a
federal court sitting  in diversity  is free, if  it chooses,  to
forego independent analysis and accept the  parties' agreement");
accord  Doherty v. Doherty Ins.  Agency, Inc., 878  F.2d 546, 547
                                             
(1st Cir. 1989);  Moores v.  Greenberg, 834 F.2d  1105, 1107  n.2
                                      
(1st Cir. 1987).

                                12

tion itself is subject to plenary review, id., and parol evidence
                                             

may not be  used to  "create ambiguity where  none otherwise  ex-

ists."  See Boston Car Co. v. Acura Auto. Div., 971 F.2d 811, 815
                                              

(1st Cir. 1992) (citing ITT Corp., 926 F.2d at 1261).
                                 

A.   The Book/Video Claims.
                          

          The  Rey complaint  alleged  that LHP's  only right  to

publish the "Curious George"  TV episodes in book and  video form

derived from the Ancillary Products Agreement, was subject to the

APA's royalty provisions, and expired when Rey terminated the APA

in 1989.  LHP responds  that the book and video rights  to the TV

episodes were governed by the parties' other agreements, specifi-

cally  the Revised Rey  License, which (according  to LHP) incor-

porated the Revised Milktrain Agreement.  According to LHP, these

other  agreements continued in effect notwithstanding termination

of the APA; moreover, these agreements provided that no royalties

were due Rey before LHP's investors recovered their investment in

the 104 TV films.4   The district court accepted  the interpreta-

tion urged by Rey, based on the language of the various contracts

and the circumstances surrounding their execution.  We agree.

     1.   The Houghton Mifflin Books.
                                    

          The  Ancillary Products Agreement provided, inter alia,
                                                                

that

          for  stories  already  owned by  [LHP]  . . .
          which  have  been  produced  as  104 episodes

                    

     4LHP contends that  $250,000 (U.S.) had yet to  be recovered
by the investors at the time the present action was commenced.

                                13

          under  the  license granted  in  the January,
          1978 agreement and the November 5, 1979 revi-
          sion of that agreement,  [LHP] shall have the
          right to produce books, films, tapes, records
                                
          and video productions of these episodes under
                                                       
          this  Agreement,  subject  to  [Rey's]  prior
                         
          approval . . .

(Emphasis added.)  Throughout the document the  term "this Agree-

ment,"  utilizing the  capital  letter "A",  refers  to the  APA.

Thus, the plain language of the  operative provision clearly con-

templates that the  APA was to govern the licensing  of any books

and "video productions" arising from the 104 films.  See Barilaro
                                                                 

v.  Consolidated Rail  Corp., 876  F.2d 260,  265 n.10  (1st Cir.
                            

1989) ("it is  . . . 'a  general rule  in the  construction of  a

written instrument that the same word occurring more than once is

to  be given  the  same meaning  unless  a different  meaning  is

demanded  by the context.'")  (quoting Dana v.  Wildey Sav. Bank,
                                                                

294 Mass. 462, 466, 2 N.E.2d 450, 453 (1936)).

          LHP argues, nonetheless, that  a narrow meaning must be

ascribed to the quoted APA language, insofar as the RMA purported

to grant investors  "all right,  title and interest  [to the  104

film  episodes], without  limitation  or reserve,  including  the

original  negative."  The problem with LHP's argument is that Rey

never signed the RMA.  LHP concedes this, but argues that the RMA

and  RRL were negotiated and  executed simultaneously by LHP, and

must be  interpreted  in pari  materia.   See,  e.g.,  Interstate
                                                                 

Commerce Comm'n v. Holmes,  slip op. at 10-11 (1st  Cir. Jan. 11,
                         

1993)  (escrow agreement  and  consent decree  read together,  as

"synergistic" documents);  accord Chelsea Indus.,  Inc. v.  Flor-
                                                                 

                                14

ence,  358  Mass. 50,  55-56, 260  N.E.2d  732 (1970);  Thomas v.
                                                              

Christensen, 12 Mass. App.  Ct. 169, 422 N.E.2d 472,  476 (1981).
           

The Massachusetts courts sometimes have held that the party to be

bound need not have  signed each component part of  an integrated

agreement where it is the "sense" of the transaction, as support-

ed  by reliable indicia in the  writings which were signed by the

party to be bound, that a unitary transaction was contemplated by

the parties.   See Chase Commercial Corp. v. Owen,  32 Mass. App.
                                                 

Ct.  248,  588  N.E.2d  705 (1992)  (holding  that  non-signatory

guarantor  was bound by jury  trial waiver contained  in loan and

security agreements, though guarantee agreement contained no such

waiver,  where "the  three  documents were  part of  one transac-

tion"); see also Gilmore  v. Century Bank &  Trust Co., 20  Mass.
                                                      

App. Ct. 49, 50, 477 N.E.2d 1069, 1073  (1985) (holding that non-

signatory trustee could recover  for breach of workout agreement,

even though not a party to its terms, based on  "sense" of agree-

ment, and "such factors as simultaneity of execution, identity of

subject  matter and  parties, cross-referencing,  and interdepen-

dency  of  provisions").   On  this theory,  LHP  contends, Rey's

signature on  the RRL bound her  to the language of  the RMA, and

authorized LHP to transfer the television episodes to  book form,

using available technology.

          However, where contract language contains  no unambigu-

ous indicia of the parties' mutual intent to enter into a unitary

transaction, we review for "clear error" the fact-dominant deter-

mination whether  their separate  documents were intended  by the

                                15

parties as  an integrated agreement.   Interstate Commerce Comm'n
                                                                 

v. Holmes, slip op. at 10-11; Holmes Realty Trust v. Granite City
                                                                 

Storage  Co., 25 Mass.  App. Ct. 272, 517  N.E.2d 502, 504 (1988)
            

("it  would be  open to  a fact finder  . . . to  treat [separate
                                      

documents] as  intended by the  parties to  be parts of  a single

transaction") (emphasis  added); Fred S. James & Co. v. Hoffmann,
                                                                

24 Mass. App. Ct. 160, 163, 507 N.E.2d 269, 271 (1987).

          In  the present case, we  find no "clear  error" in the

district  court's  determination  that the  parties  contemplated

separate  (though  related)  transactions  for  film  rights  and
        

financing.  The evidence cut both ways.  On the one hand, the RMA

and  the RRL were executed  at approximately the  same time, with

some overlap in their internal references and subject matter.  On

the  other hand, their  respective provisions are  less in unison

than parallel.5   Most  importantly, the written  and circumstan-

tial indicia sharply  contradict any suggestion  of a meeting  of

the minds relating to  the licensing of ancillary products.   Rey

did not  participate in negotiating the RMA, did not sign it, was

                    

     5Even  if the  RMA  and RRL  were  jointly construed,  their
language might point away  from the interpretation urged  by LHP.
Section 2(i) of the RMA granted LHP's investors "all right, title
and  interest" in the  104 T.V. episodes,  "without limitation or
reserve,"  but   1(a) tempered this  grant by defining the rights
as "described herein, and  set forth in Schedule 'A'  [the RRL]."
This  language suggests  that  the "right,  title, and  interest"
language of  the RMA was meant  only to confirm  and restate, and
                                                            
not to expand upon,  the RRL's parallel, but more  limited, grant
of  rights.  Cf. Fred  S. James & Co., 24  Mass. App. Ct. at 164,
                                     
507  N.E.2d at  272 (finding  no conflict  between simultaneously
executed  instruments, where  their  language  and the  extrinsic
evidence suggested independent obligations arising  from simulta-
neous contracts).

                                16

never  made a party to  its terms, and  expressly refused, during
                                                                 

the RRL negotiations, to license "Curious George" for the "ancil-
                                                                 

lary"  purposes now urged by LHP.  See  supra at p. 6.  Moreover,
                                             

the 1979 Private Placement Memorandum prepared by LHP acknowledg-

es Rey's  nonacceptance by  attaching  the RRL as an  exhibit and

noting that  ancillary product rights "have yet to be negotiated"

with  Rey.  Finally, the parties' intention to exclude the Hough-

ton Mifflin books from the RRL, and their intention to cover them

in  the  APA, are  corroborated  by  their subsequent  course  of

dealing:  among  other things, the record shows that LHP paid Rey

royalties on the books and videos on several occasions at the 33%
                                                                 

rate  required under the APA, rather than the 10% rate prescribed
                            

by the  RRL, and  that Curgeo  expressly keyed  the dates of  the

Houghton Mifflin  contract to  the term (and  anticipated renewal
                                                                 

term) of the Ancillary Products Agreement:
                                         

          By September 30, 1987,  Curgeo [will]  inform
          [Houghton  Mifflin] in writing  as to whether
          Curgeo  has exercised  its option  to exploit
          the   character   "Curious  George"   through
          December 31,  1993 and,  if Curgeo  has exer-
          cised  said option,  Curgeo  shall  give  the
          Publisher the option to extend this Agreement
          through December 31, 1993.

          It was for  the district court to balance  the evidence

in the  first instance, see  Holmes Realty Trust, 517  N.E. 2d at
                                                

504, and  we discern no sound  reason to disagree  with its find-

ings,  particularly  on "clear  error"  review.   See  Interstate
                                                                 

Commerce Comm'n v.  Holmes, slip  op. at 13  (citing Cumpiano  v.
                                                             

Banco Santander Puerto Rico,  902 F.2d 148, 152 (1st  Cir. 1990))
                           

                                17

(even  if  proffered interpretation  did  "[give]  rise . . .  to

another plausible  view of the evidence,"  reversal not warranted

on "clear error" review).6

          To sum up:   Since the district court supportably found

that the RRL  and the  RMA are separate,  though related,  agree-

ments, the RMA's purported grant of rights did not  bind Rey, who

was bound only by the grant of rights she endorsed in the RRL and

APA.   The RRL contained no grant of rights to produce the Hough-

ton  Mifflin  books, and  the APA,  which  granted the  right "to

produce books . . . of these episodes," obligated LHP  to pay Rey

royalties on the books without  regard to whether LHP's investors

had  recouped their  investment on  the television  film project.

Thus,  the district  court  did not  err  in finding  that  LHP's

withholding of the Houghton  Mifflin book royalties was wrongful,

and we affirm its ruling on this point.  

                    

     6We reject  LHP's further  contention that Rey's  failure to
protest publication of  the four Houghton  Mifflin books in  1990
estops her from cancelling the book and video contracts under the
APA.   Where more than one inference fairly may be drawn from the
evidence and  an estoppel ruling  turns on an  issue of fact,  we
review for clear error.  United  States v. Marin, 651 F.2d 24, 29
                                                
(1st Cir. 1981); Morgan  Guaranty Trust Co. v. Third  Nat'l Bank,
                                                                
529 F.2d 1141, 1144 (1st Cir. 1976).  In our  view, Rey's conduct
does not require an inference that she acquiesced in the publica-
tion  of these books  under the APA.   Rather, Rey  protested the
publication  of the  four  books  by  filing suit  shortly  after
realizing the unauthorized nature of Houghton Mifflin's continued
publication.  The district court apparently found that Rey's one-
year delay, dating from  the first unauthorized publication until
the filing of Rey's  suit for injunctive relief, was  not "unrea-
sonable"  in the  circumstances, and  we  decline to  disturb its
findings on this issue.

                                18

     2.   The Sony Videos.
                         

          LHP's claim to the Sony video royalties is more compli-

cated:  assuming the  videos were not covered by  the contractual

clause in the RMA, see supra Part II.A.1., might they nonetheless
                            

have  been covered  by  the grant  of rights  in  the RRL,  which

licensed LHP  to produce the  104 episodes "for  television view-
                                                                 

ing"?  The district  court thought not:  the  parties' "reference
   

to television viewing  . . . in a licensing agreement  . . . does

not include  [video technology] . . .  which probably was  not in

existence at the time that the rights were given."

          a.  "New Uses" and Copyright Law.
                                          

          For  purposes  of the  present  appeal,  we accept  the

uncontested  district  court  finding  that  the  relevant  video

technology "was not  in existence  at the time  that the  rights"

were granted under  the RRL  in January 1979.   Consequently,  it

must be  inferred that the  parties did not  specifically contem-

plate  television  "viewing" of  the  "Curious  George" films  in

videocassette form at the  time the RRL was signed.  Such absence

of  specific intent  typifies cases  which address "new  uses" of

licensed  materials, i.e., novel technological developments which
                         

generate unforeseen applications for a previously  licensed work.

See  Melville B. Nimmer and  David Nimmer, 3  Nimmer on Copyright
                                                                 

  10.10[B] at 10-85  (1992) ("Nimmer") ("the  . . . fact that  we
                                    

are  most  often dealing  with  a  later developed  technological

process  (even if  it were  known  in some  form at  the time  of

execution) suggests that the parties' ambiguous phraseology masks

                                19

an absence of intent rather than a hidden intent which the  court

simply must 'find'").

          Normally, in such situations, the courts have sought at

the  outset to identify any indicia of a mutual general intent to
                                                       

apportion  rights to "new  uses," insofar as  such general intent

can  be discerned from the language of the license, the surround-

ing  circumstances, and trade usage.  See, e.g., Murphy v. Warner
                                                                 

Bros. Pictures, Inc., 112 F.2d 746, 748 (9th Cir. 1940) (grant of
                    

"complete and entire" motion picture rights to licensed work held

to  encompass later-developed  sound motion  picture technology);

Filmvideo Releasing Corp. v. Hastings, 446 F. Supp. 725 (S.D.N.Y.
                                     

1978) (author's explicit retention  of "all" television rights to

licensed work, in  grant of motion picture rights predating tech-

nological advances  permitting movies to be  shown on television,

included  retention of  right to  show motion picture  on televi-

sion).   Where no reliable indicia of general intent are discern-
                                             

ible, however, courts  have resorted to one of  several interpre-

tive methods to resolve the issue on policy grounds.

          Under the  "preferred" method,  see 3 Nimmer  at 10-85,
                                                      

recently cited with  approval in SAPC, Inc.  v. Lotus Development
                                                                 

Corp., 921  F.2d 360,  363 (1st Cir.  1990), the court  will con-
     

clude, absent contrary  indicia of the parties' intent, that "the

licensee  may properly pursue  any uses  which may  reasonably be

said to fall  within the medium as described in  the license."  3

Nimmer at 10-86.  Under this interpretive method, the courts will
      

presume that at  least the possibility of nonspecific  "new uses"

                                20

was  foreseeable by  the  contracting  parties  at the  time  the

licensing agreement was drafted; accordingly, the burden and risk

of drafting licenses  whose language anticipates the  possibility

of  any  particular "new  use"  are  apportioned equally  between

licensor  and licensee.    See, e.g.,  Bartsch v.  Metro-Goldwyn-
                                                                 

Mayer, Inc., 391 F.2d 150, 155 (2d Cir.), cert.  denied, 393 U.S.
                                                       

826 (1968)  ("[i]f the words [of the license] are broad enough to

cover the new use, . . . the burden of framing and negotiating an

exception should fall on the grantor" of the licensed rights).

          An alternative interpretive method is to assume that

          a license of rights  in a given medium (e.g.,
                                                      
          'motion picture rights')  includes only  such
          uses  as  fall  within  the  unambiguous core
          meaning  of the  term . . . and  excludes any
          uses which lie  within the ambiguous penumbra
          (e.g.,  exhibition of motion  picture film on
               
          television).  Thus  any rights not  expressly
          (in this case meaning  unambiguously) granted
          are reserved.

See 3  Nimmer at 10-85; see  also Bourne Co. v.  Walt Disney Co.,
                                                                

1992  Copyr. L.  Rep.  (CCH)   26,934  (S.D.N.Y.  1992) ("if  the

disputed  use  was not  invented  when the  parties  signed their

agreement,  that use is not permitted under the contract").  This

method  is intended  to  prevent licensees  from "'reap[ing]  the

entire  windfall'  associated  with  the new  medium,"  Cohen  v.
                                                             

Paramount Pictures  Corp.,  845 F.2d  851,  854 (9th  Cir.  1988)
                         

(quoting Neil  S. Nagano, Comment, Past Software Licenses and the
                                                                 

New  Video Software  Medium, 29  U.C.L.A. L.  Rev. 1160,  1184 (-
                           

1982)),  and  is  particularly  appropriate  in  situations which

                                21

involve overreaching or exploitation  of unequal bargaining power

by a licensee in  negotiating the contract.  See,  e.g., Bartsch,
                                                                

391 F.2d at 154 & n.2 (citing Ettore  v. Philco Television Broad-
                                                                 

casting Corp.,  229 F.2d  481 (3d  Cir. 1955) (suggesting  narrow
             

construction where licensor was not "an experienced  businessman"

and had no  "reason to know of the . . .  potential" for new uses

at  the time he signed the relevant  agreement)).  It may also be

appropriate where  a particular "new use"  was completely unfore-

seeable  and therefore could not possibly have formed part of the
                                         

bargain  between the parties at  the time of  the original grant.

Cohen, 845 F.2d  at 854; Kirke  La Shelle  Co. v. Paul  Armstrong
                                                                 

Co., 263 N.Y. 79,  188 N.E. 163  (1933).  Obviously, this  method
   

may  be  less appropriate  in  arm's-length transactions  between

sophisticated parties involving foreseeable  technological devel-

opments;  in  such  situations, narrow  construction  of  license

grants may afford an unjustifiable windfall  to the licensor, who

would  retain blanket rights to analogous "new uses" of copyright

material notwithstanding the breadth of the  bargained-for grant.

See generally 3 Nimmer at 10-85 ("it is surely more arbitrary and
                      

unjust to  put the onus on the licensee by holding that he should

have  obtained a  further  clarification of  a meaning  which was

already present than it is to hold  that the licensor should have

negated  a meaning which  the licensee  might then  or thereafter

rely upon.").7

                    

     7The problem  becomes particularly acute when  the analogous
technology  develops so  rapidly  as to  supplant the  originally
contemplated  application of  the  licensed  work, rendering  the

                                22

          b.  Video Technology as "New Use".
                                          

          These  fine-tuned  interpretive  methods  have  led  to

divergent results  in cases considering the  extension of televi-

sion rights to new video forms.   Thus, for example, in Rooney v.
                                                              

Columbia Pictures Industries, Inc.,  538 F. Supp. 211 (S.D.N.Y.),
                                  

aff'd, 714 F.2d  117 (2d Cir. 1982), cert.  denied, 460 U.S. 1084
                                                  

(1983), the court determined that a series of  contracts granting

motion picture  distributors a general license  to exhibit plain-

tiffs'  films "by any present or future methods or means" and "by
                                       

any means now known  or unknown" fairly encompassed the  right to
                               

distribute the  films by means of  later-developed video technol-

ogy.

          The  contracts  in  question gave  defendants
          extremely  broad  rights in  the distribution
          and  exhibition  of  pre-1960 films,  plainly
                                                       
          intending  that such rights  would be without
                   
          limitation  unless  otherwise  specified  and
          further indicating  that future technological
          advances in methods  of reproduction,  trans-
          mission  and  exhibition would  inure  to the
          benefit of defendants.

(Emphasis  added.)     Similarly,  in  Platinum   Record  Co.  v.
                                                             

Lucasfilm,  Ltd., 566 F. Supp. 226, 227 (D. N.J. 1983), the court
                

                    

parties'  original bargain  obsolete.   Thus, for  example, broad
grants  of "motion  picture  rights,"  made before  technological
advances permitted  the combination of moving  images with sound,
                                                                
later were  held, typically,  to encompass  the  rights to  sound
motion picture technology; a narrower holding would have left the
original license virtually worthless, despite its broad language,
and would have provided the licensor with an undeserved windfall.
See, e.g., Murphy, 112  F.2d at 748; L.C. Page &  Co. v. Fox Film
                                                                 
Corp., 83 F.2d 196 (2d Cir. 1936).
     

                                23

held  that  videocassette  rights  were encompassed  by  a  broad

synchronization license to "exhibit, distribute, exploit, market,

and perform [a motion  picture containing licensed musical compo-

sition] . . . perpetually  throughout the world  by any means  or

methods now or  hereafter known."   Again, the  court rested  its

holding on  the  "extremely  broad  and  completely  unambiguous"

contractual  grant of  general rights  to applications  of future
                              

technologies, which  was  held to  "preclude[]  any need  in  the

Agreement for  an exhaustive list  of specific potential  uses of

the film."  Id.
               

          By contrast,  in Cohen, 845  F.2d at 853-54,  the Ninth
                                

Circuit concluded that a 1969 contract granting rights  to "[t]he

exhibition  of [a]  motion picture  [containing a  licensed work]

. . . by means of television," but containing a broad restriction
                            

reserving to  the licensor "all  rights and uses  in and to  said

musical composition, except those herein granted," did not encom-
                                                          

pass the  right to revenues  derived from  sales of  the film  in

videocassette form.  After deciding  that "[t]he general tenor of

the [contract]  section [in which the granting  clause was found]

contemplate[d] some sort of broadcasting or centralized distribu-
                                                                 

tion,  not distribution by sale or rental of individual copies to
    

the general public," see  id. at 853 (emphasis added),  the court
                             

stressed that  the playing of videocassettes,  with their greater

viewer control  and decentralized access on  an individual basis,

did not constitute "exhibition" in the  sense contemplated by the

contract.

                                24

          Though  videocassettes  may  be exhibited  by
          using a television monitor, it does not  fol-
          low  that,  for  copyright purposes,  playing
          videocassettes  constitutes  "exhibition   by
          television."  . . .  Television  requires  an
          intermediary  network,  station, or  cable to
          send the television  signals into  consumers'
          homes.   The menu of  entertainment appearing
          on  television is controlled  entirely by the
          intermediary and, thus, the consumer's selec-
          tion is limited to what is available on vari-
          ous channels.  Moreover, equipped merely with
          a conventional television set, a consumer has
          no means of capturing any part of the televi-
          sion  display; when  the program  is over  it
          vanishes,  and the  consumer is  powerless to
          replay  it.   Because they  originate outside
          the  home,  television signals  are ephemeral
          and beyond the viewer's grasp.

          Videocassettes, of course, allow viewing of a
          markedly  different  nature. . . .  By  their
          very  essence, . . .  videocassettes liberate
          viewers  from  the constraints  otherwise in-
          herent in television,  and eliminate the  in-
          volvement of an intermediary, such  as a net-
          work.

          Television  and  videocassette  display  thus
          have very  little in common  besides the fact
          that a conventional  monitor of a  television
          set  may be  used both to  receive television
          signals and to  exhibit a videocassette.   It
          is in  light of this fact  that Paramount ar-
          gues that VCRs  are equivalent to "exhibition
          by  means of  television."    Yet, even  that
          assertion is flawed.  Playing a videocassette
          on a VCR does  not require a standard televi-
          sion  set  capable  of  receiving  television
          signals by cable or  by broadcast; it is only
          necessary to have a  monitor capable of  dis-
          playing the material on the magnetized tape.

Id. at 853-54.
   

          Most  recently,  in  Tele-Pac,  Inc. v.  Grainger,  570
                                                           

N.Y.S.2d 521, appeal dismissed,  580 N.Y.S.2d 201, 588  N.E.2d 99
                              

(1991), the court held  (one judge dissenting) that a  license to

                                25

distribute certain  motion pictures "for broadcasting  by televi-

sion or any  other similar  device now known  or hereafter to  be

made  known" did  not  encompass the  videocassette film  rights.

"Transmission of sound and  images from a point outside  the home
                                                                 

for  reception by  the general  public . . .  is implicit  in the
                                      

concept of  'broadcasting by television.'   Conversely, while one

may speak of 'playing,'  'showing,' 'displaying,' or even perhaps

'exhibiting' a videotape, we are unaware of any usage of the term

'broadcasting' in that context."  Id. at 523 (emphasis added).
                                     

          c.   Video Rights and the RRL.
                                       

          Although  the question  is extremely  close, under  the

interpretive  methodology outlined  above  we  conclude that  the

RRL's  grant of rights to  the 104 film  episodes "for television

viewing" did  not encompass the right to  distribute the "Curious
                 

George" films in videocassette form.

          First,  unlike the  contracts in Rooney  and Lucasfilm,
                                                                

the  RRL contained no general grant of rights in technologies yet

to be developed, and no explicit reference to "future methods" of

exhibition.   Compare Lucasfilm, 566 F. Supp. at 227; Rooney, 538
                                                            

F.  Supp. at  228.   Rather,  the  RRL appears  to  contemplate a

comparatively limited and particular grant of  rights, encompass-

ing only the 104 film episodes and leaving future  uses of "Curi-

ous  George"  to  later  negotiation in  the  ancillary  products

agreement.   Although  the RRL  conversely contains  no "specific

limiting language,"  compare Cohen, 845  F.2d at 853,  we believe
                                  

such limitation is reasonably inferable from the situation of the

                                26

parties  and  the "general  tenor of  the  section" in  which the

"television viewing" rights were granted.

          Second, as properly  noted in Cohen, "television  view-
                                             

ing" and "videocassette viewing" are not coextensive terms.  Even

though videocassettes may be,  and often are, viewed by  means of
                            

VCRs on home television screens, see, e.g., Sony Corp. of America
                                                                 

v. Universal City Studios, Inc., 464 U.S. 417, 429 (1984) (noting
                               

prevalent use  of videocassette recorders for  "time-shifting" of

commercial television  programming); Rooney, 538 F.  Supp. at 228
                                           

("whether the exhibition apparatus is a home videocassette player

or a  television station's  broadcast transmitter, the  films are

'exhibited' as images on home television screens"), still, as the

Ninth Circuit pointed  out, a "standard television set capable of

receiving television signals" is not strictly required for video-

cassette viewing.  Cohen, 845 F.2d  at 854.  "[I]t is only neces-
                        

sary to have a monitor capable  of displaying the material on the

magnetized  tape."   Id.    Indeed,  a  number of  non-television
                        

monitors recently marketed in  the United States permit videocas-

sette viewing  on computer screens, flat-panel  displays, and the

like.8  Thus,  we find  insufficient reliable indicia  of a  con-

trary mutual  intent on the part  of Rey and LHP  to warrant dis-

turbing  the district  court's  implicit  determination that  the

                    

     8See, e.g.,  Nathalie  Welch,  ASK  Flat-Panel  Display  Now
                                                                 
Available in U.S., MacWeek, January 4,  1993 (noting availability
                 
of  flat-panel LCD  monitor  capable of  displaying VCR  output);
Alice Laplante & Stuart  Johnston, IBM Unveils Multimedia Adapter
                                                                 
Board,  Software Toolkit,  InfoWorld,  February 12, 1990  (noting
                        
availability of MCA adapter card permitting videocassette  images
to be viewed and manipulated on PS/2 color computer monitor).

                                27

language  of the RRL is not "broad  enough to cover the new use."

Bartsch, 391 F.2d at 155.
       

          Finally, any  lingering concerns about  the correctness

of  the  district court's  interpretation  are  dispelled by  the

evidence that the RRL (including its "television viewing" clause)

was drafted and proposed  by LHP, a professional investment  firm

accustomed to licensing agreements.  Rey,  an elderly woman, does

not appear  to have  participated in its  drafting, and,  indeed,

does  not appear to have  been represented by  counsel during the

larger part of  the transaction.   Under these circumstances,  as

noted supra pp. 21-22, ambiguities in the drafting instrument are
           

traditionally  construed against  the  licensor and  the drafter.

See also Nimmer at  10-71 ("ambiguities [in licensing agreements]
               

will  generally  be  resolved  against the  party  preparing  the

instrument of transfer"); U.S.  Naval Institute v. Charter Commu-
                                                                 

nications, Inc., 875 F.2d 1044, 1051 (2d Cir. 1989) (interpreting
               

ambiguous  copyright  assignment  against sophisticated  drafting

party);  see  generally, e.g.,  Merrimack  Valley  Nat'l Bank  v.
                                                             

Baird, 372  Mass. 721,  724, 363  N.E.2d 688,  690 (1977)  ("as a
     

general  rule, a writing is  construed against the  author of the

doubtful language . . . if  the circumstances surrounding its use

and the ordinary meaning of the words do not indicate the intend-

ed meaning of the language").

          Accordingly, as the  Sony videocassette sales were  not

encompassed by the RRL,  but governed exclusively by the  APA, we

find  no  conflict between  the terms  of  the documents,  and we

                                28

affirm the award of royalties to Rey under the APA.

B.  The "Junk Products" Counterclaim.
                                    

          We  next turn to the LHP counterclaim that Rey breached

the APA  by "wrongfully withholding" approval  of ancillary prod-

ucts  she considered  "junky."9  The  district court  agreed with

LHP, holding that

          [The  Ancillary  Products Agreement]  clearly
          contemplated  the   exploitation  of  Curious
          George. . . . Based on  the testimony of  Ms.
          Stoebenau and  Mr. Konkle, I find  that means
          that there may  be produced with  the charac-
          ter,  junk  products,  junky  products. . . .
          Plaintiff [had]  the right . . . to insist on
          . . . an  honest  and good  depiction of  the
                                                       
          character.   She  did not  have the  right to
                   
          disapprove the quality of  the product. . . .
                                                
          She had  [the] right to disapprove  an incor-
          rect,  improper,  bad  depiction  of  Curious
          George.

(Emphasis added.)  The court further found:  

          [A]lthough  Mrs. Rey  unquestionably approved
          many  products, I  find  that she  improperly
          disapproved the Sears project for the reasons
          just  outlined;   that  she  was unreasonable
          with  respect to the  Eden project,  and that
          she was so rude to Ms. Craighead  as to abort
          the second and perhaps later trilogies of the
          software.

(Emphasis  added.)   After careful  consideration, we  must agree

with Rey that the district court misapplied the APA. 

          The  product-approval procedure under  the APA required

                    

     9LHP does not  challenge the district court  ruling that its
counterclaims  for interference with contractual and advantageous
business relationships,  breach of  the implied covenant  of good
faith  and  fair dealing,  and  unfair  business practices  under
chapter 93A were time-barred.

                                29

that:

          LHP  will submit product or other information
          sufficient to describe the product to you for
          prior approval.   When a product is submitted
          . . . we will wait two weeks  before proceed-
          ing.  If we do not receive any disapproval of
          the product from you  within two weeks we are
          entitled to  presume that you approve  of the
          product.   If you do disapprove  of any prod-
          uct,  you  will,  if  feasible,  suggest such
          changes  to  LHP  as may  render  the product
          acceptable to  you,  or, if  you cannot  make
          such feasible suggestions, you may  refuse to
          approve the product.   Product approval  will
          not be unreasonably withheld.

The term "product" is not defined in the APA.  It is black letter

law, however, that where "the words of an agreement are plain and

free from ambiguity, they must be construed in their ordinary and

usual sense," Boston Edison Corp. v. FERC, 856 F.2d 361, 365 (1st
                                         

Cir. 1988), and,  as we have  noted in another context,  the word

'product,' taken in  its ordinary and usual  sense, "simply means

'something produced.'"   See K  Mart, 892 F.2d  at 1085  (quoting
                                    

Webster's Third  New International Dictionary 1810  (1981)).  See
                                                                 

also  id. at 1084 ("where  possible, words should  be given their
         

natural  meaning,  consistent  with   the  tenor  of  contractual

terms"); id. at 1085 ("[I]t is sufficient [to avoid ambiguity] if
            

the language employed  is such that a reasonable  person, reading

the  document as a whole and in realistic context, clearly points

toward a readily ascertainable meaning").  Considered in context,

we  think  the "ordinary  and usual"  meaning  of the  broad term

"product" plainly  indicates the  parties' mutual  intention that

each  article bearing  the likeness  of "Curious  George"     not
             

                                30

merely the likeness itself    be approved by Rey.

          By  contrast, the  narrow interpretation  urged by  LHP

would  convert the  term "product"  into a  mere synonym  for the

"Curious  George" mark.  Nowhere  does the APA  intimate that the

parties contemplated that the  term "product" was to be  given so

restrictive an interpretation.  Indeed, elsewhere the APA plainly

precludes  the narrow  interpretation urged  by LHP  by expressly

distinguishing between the  mark and the "product" with  which it
              

is used.  See APA p.3 ("[LHP] will not sell or authorize the sale
             

or distribution of  any product  on or in  connection with  which
                                                                 

'Curious George'  is used  . . .") (emphasis  added); id.  at 3-4
                                                         

(referring  to separate  approval  procedure for  "apparel  prod-
                                                                 

ucts").10  As the  APA is unambiguous in  this regard, the  trial
    

                    

     10The interpretation we adopt accords with  the common-sense
understanding recognized in other  areas of intellectual property
law.   Thus, for example,  in the trademark  context, courts fre-
quently  have recognized  that  "the trademark  holder [has]  the
right to control the  quality of the goods manufactured  and sold
under  its trademark,"  Shell  Oil Co.  v. Commercial  Petroleum,
                                                                 
Inc., 928 F.2d 104  (4th Cir. 1991)  (emphasis added);  El  Greco
                                                                 
Leather Products  Co. v. Shoe World,  806 F.2d 392,  395 (2d Cir.
                                   
1986), cert. denied, 484 U.S. 817 (1987)) ("The actual quality of
                   
the goods  is irrelevant;  it is  the control  of quality  that a
                                                 
trademark holder is entitled to maintain") (emphasis added);  see
                                                                 
also Societe  des Produits Nestle,  S.A. v. Casa  Helvetia, Inc.,
                                                                
982  F.2d  633  (1st  Cir. 1992)  (hereinafter  Produits  Nestle)
                                                                
("[r]egardless  of the  offending goods'  actual  quality, courts
have issued Lanham  Act injunctions solely because of  the trade-
mark owner's  inability  to  control the  quality  of  the  goods
bearing  its name").  "The rationale for this requirement is that
marks  are treated by purchasers as an indication that the trade-
mark  owner  is associated  with  the product."    Kentucky Fried
                                                                 
Chicken Corp. v. Diversified  Packaging Corp., 549 F.2d 368,  387
                                             
(5th Cir. 1977).   Indeed, under trademark law the  protection of
the mark may be lost if the licensor fails to control the quality
                                          
of the licensed goods; failure to control the quality of licensed
goods  can constitute  an abrogation  of  the licensor's  duty to
protect  the informational value of the mark.  See Kentucky Fried
                                                                 

                                31

testimony of  LHP's witnesses, Cheryl Stoebenau  and Glen Konkle,

need not be considered.   Extrinsic evidence may not  be utilized

to  contradict the unambiguous terms of a written agreement.  See
                                                                 

LTX  Corp., 926 F.2d at 1263-64; Triple-A Baseball Club Assoc. v.
                                                              

Northeastern Baseball, Inc., 832 F.2d  214, 221 (1st Cir.  1987),
                           

cert. denied, 485 U.S. 935 (1988).
            

                    

Chicken, 549 F.2d at 387; see also Church of Scientology Int'l v.
                                                              
Elmira Mission of Church of Scientology, 794 F.2d 38, 43 (2d Cir.
                                       
1986).   LHP argues  that the licensor's duty  of control is less
stringent where  the mark is licensed for  use in a context unre-
lated to the licensor's original business.  See Winnebago Indus.,
                                                                 
Inc. v. Oliver &  Winston, Inc., 207 U.S.P.Q. 335,  340 (T.T.A.B.
                               
1980).  Whatever  its merit  as a general  matter, however,  this
proposition  is  unavailing in  the  present  context:   the  APA
licensed the use  of "Curious George"  for purposes both  related
                                                                 
and  unrelated to  the  original (literary)  use of  the "Curious
              
George"  mark, and  in no  instance  does it  distinguish between
"related" and "unrelated" uses.  
     Similarly,  under copyright  law,  while a  licensor has  no
"moral right" to control the quality of  licensed depictions, see
                                                                 
Gilliam v. American Broadcasting  Cos., 538 F.2d 14, 24  (2d Cir.
                                      
1976), she  may insist, contractually, on  approval provisions to
"assure quality  control and high standards  in the exploitation"
of her creative  work."  See Clifford Ross Co.  v. Nelvana, Ltd.,
                                                                
710 F.  Supp. 517, 520  (S.D.N.Y.), aff'd.  without opinion,  883
                                                           
F.2d 1022 (2d Cir. 1989);  see also Zim v. Western Pub.  Co., 573
                                                            
F.2d  1318, 1324 (5th Cir.  1978) (author has "profound interest,
both professional  and financial,  in maintaining the  quality of
[published products], particularly those already  published under
[her] name").   Clifford Ross is particularly  instructive, as it
                             
too involved  a "classic  literary property," the  "Babar" child-
ren's book  character.   Upholding a contractual  provision which
called for the copyright  holder's participation in the selection
of licensing agents for the character, and enjoining the issuance
of  further  licenses absent  the  holder's  approval, the  court
concluded that there  would be "irreparable  harm" to the  future
profitability of "Babar,"  and to the artistic  reputation of the
holder, "if the exploitation  of Babar continue[d] without regard
to [the licensor's] high standards of quality control."  Clifford
                                                                 
Ross,  710 F. Supp. at 520.   Compare Geisel v. Poynter Products,
                                                                 
Inc., 283 F. Supp. 261  (S.D.N.Y. 1968) (issuing injunction under
    
Lanham Act; finding likelihood  of "irreparable harm" to author's
reputation  where "Dr.  Seuss"  toys, which  author  found to  be
"tasteless,  unattractive,  and  of  an  inferior  quality," were
marketed as authorized by author).

                                32

          Even though  the APA's product approval  clause did not

preclude  Rey  from rejecting  products  based  on their  "junky"

quality, it did  obligate her  to act "reasonably"  in doing  so.

The duty  to act "reasonably,"  like a duty  to employ "best  ef-

forts," or to act in  "good faith," is not reducible to  "a fixed

formula[, and]  varies with the  facts and the  field of  law in-

volved."  See Triple-A Baseball Club, 832 F.2d at 225 (discussing
                                    

contractual  "best efforts"  clause);   see  generally Robert  S.
                                                      

Summers,  "Good Faith"  in  General Contract  Law  and the  Sales
                                                                 

Provisions  of the Uniform Commercial  Code, 54 Va.  L. Rev. 195,
                                           

201, 204-07  (1968) (discussing  "good faith" as  "phrase without

general  meaning," incapable of precise definition).   In a some-

what different context, the Massachusetts courts have interpreted

contractual  clauses preventing the  "unreasonable withholding of

approval" of commercial sublessees, as imposing a duty to act "in

accordance with  usual standards of reasonableness."   See Nassif
                                                                 

v. Boston & M. R. Co., 340 Mass. 557, 564, 165 N.E.2d 397, 401-02
                     

(1966);  Worcester-Tatnuck  Square CVS, Inc. v.  Kaplan, 33 Mass.
                                                       

App. Ct.  499, 601 N.E.2d 485  (1992).  It falls to  us to define

"usual standards of reasonableness," in the present context, in a

way  which  accords with  the  contracting  parties' intent,  yet

avoids  rendering the  "reasonableness"  standard  either  purely

illusory or duplicative of more particular contractual terms.

          We  think  the  APA's  proscription  of  "unreasonable"

product disapproval  required, at a minimum,  that Rey articulate

some material reason, subjective or otherwise, for disapproving a
             

                                33

product.  That is to say, Rey could not withhold product approval

without ascribing  a reason,  nor for  reasons immaterial  to the

"Curious George" mark, its  proposed use or commercial potential,

or  unrelated to Rey's  artistic and  reputational identification

with the mark and ancillary  products.  Moreover, assuming  there

existed some material ground for withholding product approval, it

would need to be communicated, consistent with contractual speci-

fications,  "within a reasonable time and in a reasonable manner,

i.e., in  a manner which makes it  possible for [the licensee] to
    

rework the [product]  in order to meet . . . approval."  See Zim,
                                                                

573  F.2d at 1324.   Finally, the reason  for withholding product

approval could not be so preclusive as to frustrate the fundamen-
                                                                 

tal contractual assumptions on  which the APA was formed.  In the
                           

context  of this case, for example, Rey could not impose approval

standards  which would  effectively eliminate  all potential  for

profitable  use of  the "Curious  George" property;  the parties'

mutual assent, in the APA, that Rey would be  entitled to minimum

royalty payments,  plainly  implied a  mutual understanding  that

some licensing of the "Curious George" character would be accept-
    

able,  in order  to enable  sales from  which royalties  might be

generated.   Cf.  Steven J.  Burton, Breach  of Contract  and the
                                                                 

Common  Law Duty to Perform in Good  Faith, 94 Harv. L. Rev. 369,
                                          

403 (1980)  ("discretion in performance may  be exercised legiti-

mately  [only] for  the purposes  reasonably contemplated  by the

parties").

          The district court supportably found that Rey  approved

                                34

"many products," including the original film series, the Houghton

Mifflin books, the  Sony videocassettes, the first  series of DLM

software,  and the Eden plush  toys (as modified).   In addition,

Rey  testified,  without  contradiction,  that  she had  approved

"children's sweatshirts,  film strips, earmuffs  and school  bags

for  children . . .  buttons, children's  books . . .  paper doll

books[,]  [w]rist  watch,  alarm clocks,  wall  clocks, footwear,

little tennis shoes for  children, . . . [b]each slippers, . . ."

After reviewing the  record, we  are convinced that  Rey did  not

utilize  objectively unreasonable criteria for approving products

under  the APA.   We  turn to  the particular  product rejections

challenged on appeal.

     1.   The Sears Pajamas.
                           

          The district court ruled that Rey acted unreasonably by

basing  her  disapproval of  the  Sears  project on  the  "junky"

quality  of the pajama material which  would bear "Curious Georg-

e's" likeness.11   As  we have stated,  see supra  at pp.  32-34,
                                                 

the basis for the  district court's finding of "unreasonableness"

was  insufficient as a  matter of law.   Rey did not unreasonably

withhold approval of the Sears pajama  project as unbefitting the

"Curious George"  image protected  by her copyright,  because the

grounds for  withholding approval were reasonably  related to the

                    

     11The district  court did not address  the aesthetic reasons
Rey  gave  for rejecting  the  Sears project,  viz.,  the "bright
                                                   
yellow"  color  of the  pajama  material  and the  unrecognizable
"plump"  depiction of "Curious George."  We believe these grounds
were not unreasonable.

                                35

integrity  and commercial  value of her  artistic creation.   See
                                                                 

Clifford Ross, 710 F. Supp. at 520.12
             

     2.   The Beach Paper Products.
                                  

          Our  conclusion that Rey  reasonably rejected the Sears

project disposes of LHP's claim for damages relating to the Beach

paper  products as well.  Rey never saw, much less "disapproved,"

the  Beach  paper products:   as  the undisputed  evidence shows,

Beach  withdrew its proposal when the Sears project fell through;

it never reached agreement  with LHP or presented any  product to

Rey for  approval.   Therefore,  LHP's claimed  right to  recover

potential profits from  the Beach project could  be justified, if

at  all, only as consequential damages  resulting from a wrongful
                                      

rejection of the  Sears project.   As the  Sears project was  not

wrongfully  rejected under  the  terms of  the  APA, LHP  is  not

entitled to consequential damages  related to Beach's anticipated

                    

     12LHP  nonetheless  maintains that  Rey's  rejection of  the
Sears  pajama project was  "unreasonable," insofar as  it was not
communicated  in  a manner  which  "ma[de] it  possible  . . . to
rework  the [product] in order  to obtain . . .  approval."  Zim,
                                                                
573 F.2d at 1324.  LHP argues that time pressures inherent in the
Sears catalog deadlines  made the presentation  of the pajamas  a
"one-shot deal,"  with "reworking" of the  design impossible once
rejection  had occurred.  It insists that the "lousy material" in
the pajamas    a  basis for Rey's disapproval     was required by
federal fire  safety standards;  no other material  was available
for use in the product.
     Even assuming  these fact-based arguments are  well founded,
however     an assessment we  are in no  position to make  on the
present record    they are beside the point:  the APA's  "reason-
ableness" constraint did not oblige Rey to apply lower standards,
or  to relax  her vigilance  in policing  ancillary uses  for the
"Curious George" character, merely  because deadlines were  tight
or objections to the product could not be cured.  See APA at p. 3
                                                     
("if you  disapprove  of  any  product, you  will,  if  feasible,
                                                                
suggest such changes to  [LHP] as may render the  product accept-
able to you") (emphasis added).  

                                36

profits.   See, e.g., Ryan v.  Royal Ins. Co., 916  F.2d 731, 744
                                             

(1st Cir. 1990) ("unless  appellants can demonstrate that [appel-

lee] breached  a duty  owed to them. . . .  consequential damages

will not lie"). 

     3.   The Eden Plush Toys.
                             

          The district court  ruled that  Rey acted  unreasonably

with respect to the  Eden plush toys project,  but the court  did

not state whether its ruling was based on Rey's objections to the

"junky" nature of the proposed product, or some other ground.  We

conclude, nonetheless, that remand  is unnecessary in the present

circumstances, see Produits Nestle,  982 F.2d at 640-41  ("when a
                                  

trial  court misperceives and  misapplies the law,  remand may or

may  not be  essential"), since  LHP did  not present  sufficient

evidence to enable a  finding that Rey's actions with  respect to

Eden were "unreasonable."   See id. at 642 (quoting  Dedham Water
                                                                 

Co. v. Cumberland Farms Dairy, Inc., 972  F.2d 453, 463 (1st Cir.
                                   

1992)).        Applying the standard articulated supra pp. 33-34,
                                                      

"reasonableness" in the present  context turns, first, on whether

the reasons for rejecting a proposed product were "material."  As

recently noted by  the court,  "[t]here is no  mechanical way  to

determine  the point  at which  a difference  becomes 'material.'

Separating  wheat  from chaff  must  be  done on  a  case-by-case

basis."  Produits Nestle,  982  F.2d at  641.   In  reference  to
                        

conventional commercial products, such as the Perugina chocolates

licensed in Produits Nestle, the appropriate test is  whether the
                           

ground for refusing to approve a version of a licensed product is

                                37

one  which "consumers would likely  consider relevant."   Id.  In
                                                             

the context  of an  artistic creation  such as  "Curious George,"

however, the highly subjective element  of "creativity," connect-

ing product and author, implicates intangible considerations such

as the  "total concept and feel" of the product.  See Roth Greet-
                                                                 

ing Cards v. United Card Co.,  429 F.2d 1106 (9th Cir. 1970); see
                                                                 

also Sid & Marty Krofft Television Productions, Inc. v. McDonalds
                                                                 

Corp., 562  F.2d 1157 (9th  Cir. 1977).   We believe  an author's
     

discretionary right to disapprove an ancillary product, as not in

keeping  with the  aesthetic image the  author envisions  for her

artistic creation,  reasonably may be  made to depend  on product

conformity, at least where, as here, conformity with the author's

aesthetic standard would neither  set unreasonably high levels of

commercial  practicality nor  foreclose all  prospect  of profit-
                                                     

ability on which the  contract was predicated.  See  supra at pp.
                                                          

33-34.

          The evidence before  the district court clearly  showed

that Rey imposed a demanding aesthetic standard for the design of

the  Eden Toys  doll.13  Eden's  frustration at  Rey's meticulous

immersion  in the details of toy design may indeed be understand-

able, the more so perhaps because of the irascible terms in which

Rey appears to  have chosen  to couch her  product criticisms  on

occasion.  Even viewing the evidence as a whole in the light most

                    

     13For example,  she relocated the felt  patterns on "Curious
George's"  face  by a  few  millimeters  and rejected  particular
colors and color  combinations which Eden thought would  make the
doll more saleable.

                                38

flattering to LHP, however, we cannot conclude that her  proposed

changes were unrelated to her  legitimate artistic concerns or to

her desire  to protect the  aesthetic integrity  of the  "Curious

George" image.

          "Reasonableness"  likewise  requires,  of course,  that

changes be made  "within a  reasonable time and  in a  reasonable

manner, i.e., in a manner which makes it possible for [the licen-
            

see] to  rework the [product] in  order to meet .  . . approval."

See  Zim, 573  F.2d at 1324.   The  evidence before  the district
        

court, which we  have examined in detail, did not show that Rey's

product criticisms, though caustic,  were made in an unreasonable

time or manner.  And although the record is replete with testimo-

ny that  Eden and  LHP grumbled  about Rey's product  criticisms,

neither  Eden  nor LHP  ever communicated  to  Rey, prior  to the
                                                  

present  lawsuit, that her proposed changes to the Eden plush toy

products were  impracticable or even unduly  burdensome.14  Since

Rey's  objections to  Eden's original  toy  design were  based on

criteria  reasonably  related  to  her  legitimate  artistic  and

aesthetic concerns about the proposed ancillary product, and were

communicated  in a  time and  manner which  would permit  Eden to

conform  the product, we conclude that  Rey's rejection of Eden's

product designs was not "unreasonable."

                    

     14For  example,   the  President  of  Eden  Toys  testified:
"[W]hat we tried to do, therefore, was to  get very specific, and
say: If you  want it moved  three millimeters to the  left, we'll
                                                                 
move it, but let's all agree on that's where it's going to be . .
       
. ."  (Emphasis added.)

                                39

     4.   The DLM Software.
                          

          Finally, we consider whether  Rey's alleged rudeness to

Donna Craighead, the DLM project manager, amounted to  an "unrea-

sonable  withholding of approval" of  the DLM software project in

violation of  the APA.   We  conclude that  it did  not.  As  all

parties  agree, the  licensing  arrangement between  DLM and  LHP

covered only the first  installment in the proposed  DLM software

trilogy, the first installment  was approved by Rey prior  to her
                                            

telephone  conversation  with  Craighead, and  DLM  continued  to

manufacture and market the first-installment  software even after

Rey's intemperate remarks.  Given  the fact that Rey's statements

led to no  curtailment in the production or  sale of the licensed

software,  we are unable to discern any relevant respect in which

Rey's statements  to Craighead could be  considered a "rejection"

of the product for which LHP had issued its license to DLM.

          The district court apparently  thought that Rey's harsh

criticism of the first  software installment may have discouraged

DLM from undertaking "second and . . . later" installments in the

proposed trilogy.   Here, however, the  relevant consideration is

that these subsequent  installments had not yet  been licensed by
                                                              

the time Rey communicated her criticism about the  first software
                                                        

product  and manual.   Even  were Rey's  criticism  actionable in

tort,  as an  "intentional  interference  with contractual  rela-

tions,"  see Restatement (Second) of Torts    766, or as a breach
            

of the implied good-faith  duty not to interfere with  LHP's per-

formance under  the APA,  it nevertheless was  not actionable  in

                                40

contract.   Under  the plain  terms  of the  APA,  Rey could  not

"reject" products  not yet licensed or  presented for approval.15

          LHP  attempts to  extend  the APA's  plain language  by

characterizing Rey's criticism of the DLM project as "essentially

revok[ing]  product  approval  [of]  the  DLM  software  concept"
                                                                

already approved  by Rey.  LHP does not define the term "software

concept," but clearly uses it to encompass not only the first DLM

product but  all subsequent installments in  the planned trilogy.

Such  an interpretation  would not  withstand analysis  under the

language of  the APA,  however, nor  comport with  the undisputed

record evidence.

          We reject LHP's  overly expansive definition  of "prod-

uct" in the present context.   By lumping all DLM software  prod-

ucts under the umbrella of a single software "concept," LHP would

eviscerate Rey's retained right to grant, or reasonably withhold,

approval  for  distinct generations  of  software  products in  a

particular  software series.   All conceptually  related articles
                                               

identified by  LHP as  part of  the same  series would  be deemed

approved,  sight unseen;  the policing  of the  integrity of  the

conceptual relationship  presumably having ceased to  be a matter

of legitimate concern  to Rey.  Courts universally recognize that

the  elasticity of contract  language is  limited by  the natural

meaning of its terms and their context.  See K Mart, 892 F.2d  at
                                                   

                    

     15The district court ruled that the tort claims  arising out
of  "most of"  Rey's  conduct were  time-barred.   LHP  does  not
challenge this ruling.  See supra n.9 and accompanying text.
                                 

                                41

1085; Boston Edison Corp., 856 F.2d at 365.  LHP's interpretation
                         

strips the "product approval" term  from its context and depletes

its natural meaning.

                            CONCLUSION
                                      

          Under the APA, Rey is entitled to recover the royalties

wrongly withheld on  the Houghton Mifflin books  and Sony videos;

and we affirm the district court rulings respecting these claims.

The APA likewise  entitled Rey to  withhold approval of  licensed

ancillary  products  on reasonable  grounds;  thus,  LHP was  not

entitled to  recover damages for Rey's reasonable exercise of her

right to withhold approval of the Sears pajama project, the Beach

paper products,  the Eden  Toys project, or  the DLM  software.16

Accordingly, the damages awards to LHP are vacated.

          Affirmed in  part, reversed in part;  costs are awarded
                                                                 

to Rey.
      

                    

     16We  have considered  all other  arguments advanced  by the
parties  and find  them either to  be wanting  or, alternatively,
moot.   Without limiting the generality of the foregoing, we note
that, because  we conclude that Rey  reasonably withheld approval
of  the Sears project, the Eden plush toys, and the DLM software,
we  need not  consider  whether LHP's  estimates  of lost  future
profits from  these products  were sufficiently certain  and non-
speculative to support an award of damages.  See, e.g., Hendricks
                                                                 
& Assocs.,  Inc. v. Daewoo  Corp., 923  F.2d 209,  217 (1st  Cir.
                                 
1991) (citing John Hetherington & Sons, 210 Mass. 8, 21, 95  N.E.
                                      
961 (1911));   Redgrave v. Boston  Symphony Orchestra, Inc.,  855
                                                           
F.2d 888, 893  (1st Cir.),  cert. denied, 488  U.S. 1043  (1988).
                                        
Nor  need we consider whether  the damages awarded  LHP for these
products should have been reduced by  50%, reflecting Rey's share
                                         
of product royalties under  the pre-1988 APA formula, or  by 33%,
under the revised APA formula for products licensed after January
1, 1988.

                                42