I have a simple question about the requirement of adding the term irrevocable to make a license like the GPL or OGL truly unable to be revoked. What is the court case that decided this in various common law jurisdictions?
I was told that this was an addition added only in the late 2000s.
Despite searching, I've not been able to find a clear US case on this. Indeed instead I've actually found US sources referencing the UK case I
did find -
BMS v AB Agri (2010). This decision seems well within mainstream jurisprudence. It says that the meaning of Perpetual depends on the context, and that Perpetual does not always mean irrevocable. I can see why this would encourage people to put Irrevocable in their contract drafts.
Here's the abstract I got from Westlaw:
BMS Computer Solutions Ltd v AB Agri Ltd
No Substantial Judicial Treatment
Court
Chancery Division
Judgment Date
10 March 2010
Where Reported
[2010] EWHC 464 (Ch)
[2010] 3 WLUK 294
Judgment
Subject
Contracts
Other related subjects
Information technology
Keywords
Licensing agreements; Technical support; Termination; Variation
Judge
Sales J
Counsel
For the applicant: Vernon Flynn QC, Jonathan Hill.
For the respondent: Neil Kitchener QC, Philip Roberts.
Solicitor
For the applicant: Greene & Greene (Bury St Edmunds).
For the respondent: Addleshaw Goddard.
Case Digest
Summary
A variation to a software licensing agreement to make it perpetual rather than of limited duration extended the original agreement
rather than superseded it. The termination provisions in the original agreement had not been expressly deleted and they continued
to have effect.
Abstract
The applicant computer software business (B) applied for summary judgment on two points in a claim it had brought against
the respondent licensee of its software (L).
B had entered into a licence agreement licensing a predecessor company of L to use a software package for its animal feed
mill. The licence agreement included provisions as to its termination and stated that it would expire after 10 years unless it was
terminated earlier. On the same date, the parties entered into a technical support agreement, which also contained provisions as
to its termination. The licence agreement required the support agreement to be kept in place, otherwise the licence agreement
would terminate. By a variation agreement some years later, the licence and support agreements were novated to take effect
as licence and support agreements between B and L. The variation agreement stated that the licence would be extended to
be a "perpetual licence usable ... at all [L's] operations ... up to a maximum aggregate annual tonnage". It further provided
for payments to be made in respect of tonnage above the maximum, and that new licence and support agreements were to be
negotiated for all non-organic tonnage growth. L gave notice to terminate the support agreement as it was developing its own
software, but it asserted that its licence to use B's software continued, contrary to B's contention that continuation of the licence
was conditional on the support agreement continuing. L had also used the software at an additional mill without negotiating
new licence and support agreements. The annual tonnage of compound feed of L's operations remained less than the maximum.
B made its application on the issues of (i) whether, on the construction of the three agreements, the licence had been terminated,
notwithstanding its description in the variation agreement as "perpetual"; (ii) whether L was required to obtain a further licence
in respect of the additional mill.
Held
Application granted.
(1) The licence had been terminated.
"Perpetual" had different shades of meaning, including "incapable of being brought to an
end" and "of indefinite duration, but subject to any contractual provisions governing termination". The latter interpretation of
"perpetual" in the variation agreement was correct. There was therefore no incompatibility between the variation agreement
and the requirement to keep the support agreement in place, so that requirement continued to have effect. Therefore, when L
terminated the support agreement, it also terminated the licence. The variation agreement had plainly not been intended wholly
to displace the licence agreement: it stated that the licence would be extended rather than replaced. That indicated that the
licence referred to in the variation agreement was subject to the same termination provisions as in the licence agreement. The
fact that the variation agreement did not refer to the termination provisions in the licence and support agreements indicated that
those provisions were intended to continue in force. Further, the termination provisions were very important terms: if the parties
had intended to delete them, they would have referred to them in terms to make that intention clear rather than leaving it to be
inferred from the use of "perpetual", a term of uncertain meaning. There was also a clear commercial need for the termination
provisions to continue to operate since otherwise there would be no mechanism to bring potentially onerous obligations under
the agreement to end. (2) Use of the software to produce feed above the maximum tonnage was clearly contemplated as being
authorised under the variation agreement, since it had made provision for the additional payments. The maximum tonnage figure
did not therefore provide a limit on the extent of the licence granted by B when L's business grew or was added to. It would
not be commercially realistic to suppose that the parties intended that there should be no protection for B if L expanded its
activities. It was possible and necessary to interpret the variation agreement by giving it its ordinary and natural meaning so as
to require new licence and support agreements to be negotiated for all non-organic tonnage growth.
BMS Computer Solutions Ltd v AB Agri Ltd, 2010 WL 783753 (2010)
© 2023 Thomson Reuters. 2
- and if he came out strongly against that position for some reason, I'd take that seriously. But I got the impression he simply wasn't speaking on that matter.
