UNPUBLISHED
`
`UNITED STATES COURT OF APPEALS
`FOR THE FOURTH CIRCUIT
`
`
`No. 07-1600
`
`
`JUAN ALTMAYER-PIZZORNO,
`
`
`
`Plaintiff - Appellee,
`
`v.
`
`
`
`
`
`
`
`
`
`
`L-SOFT INTERNATIONAL, INCORPORATED,
`
`
`
`Defendant – Appellant,
`
`and
`
`
`
`
`
`
`
`
`
`
`L-SOFT SWEDEN AB; L-SOFT INVESTMENTS, S.A.; L-SOFT UK LTD;
`ERIC THOMAS,
`
`
`
`Defendants,
`
`and
`
`
`
`
`
`
`
`
`
`
`DELOITTE & TOUCHE, LLP,
`
`
`
`
`
`Interested Party.
`
`
`
`
`
`
`No. 07-1613
`
`
`JUAN ALTMAYER-PIZZORNO,
`
`
`
`Plaintiff – Appellee,
`
`v.
`
`
`
`
`
`
`
`
`
`
`ERIC THOMAS,
`
`
`
`
`
`Defendant – Appellant,
`
`
`
`
`
`
`
`UNITED STATES COURT OF APPEALS
`FOR THE FOURTH CIRCUIT
`
`
`No. 07-1600
`
`
`JUAN ALTMAYER-PIZZORNO,
`
`
`
`Plaintiff - Appellee,
`
`v.
`
`
`
`
`
`
`
`
`
`
`L-SOFT INTERNATIONAL, INCORPORATED,
`
`
`
`Defendant – Appellant,
`
`and
`
`
`
`
`
`
`
`
`
`
`L-SOFT SWEDEN AB; L-SOFT INVESTMENTS, S.A.; L-SOFT UK LTD;
`ERIC THOMAS,
`
`
`
`Defendants,
`
`and
`
`
`
`
`
`
`
`
`
`
`DELOITTE & TOUCHE, LLP,
`
`
`
`
`
`Interested Party.
`
`
`
`
`
`
`No. 07-1613
`
`
`JUAN ALTMAYER-PIZZORNO,
`
`
`
`Plaintiff – Appellee,
`
`v.
`
`
`
`
`
`
`
`
`
`
`ERIC THOMAS,
`
`
`
`
`
`Defendant – Appellant,
`
`
`
`
`
`
`
`
`
`and
`
`
`
`L-SOFT INTERNATIONAL, INCORPORATED; L-SOFT SWEDEN AB; L-SOFT
`INVESTMENTS, S.A.; L-SOFT UK LTD,
`
`
`
`Defendants,
`
`and
`
`
`
`
`
`
`
`
`
`
`DELOITTE & TOUCHE, LLP,
`
`
`
`
`
`Interested Party.
`
`
`
`
`
`
`Appeals from the United States District Court for the District
`of Maryland, at Greenbelt. Peter J. Messitte, Senior District
`Judge. (8:02-cv-01556-PJM)
`
`
`
`
`Argued: September 25, 2008
`
`
`
`Decided: December 3, 2008
`
`
`
`Before WILLIAMS, Chief Judge, GREGORY, Circuit Judge, and James
`C. CACHERIS, Senior United States District Judge for the Eastern
`District of Virginia, sitting by designation.
`
`
`Affirmed by unpublished opinion. Judge Gregory wrote the
`opinion, in which Chief Judge Williams and Senior Judge Cacheris
`joined.
`
`
`
`
`
`
`ARGUED: Mark Thomas Stancil, ROBBINS, RUSSELL, ENGLERT, ORSECK,
`UNTEREINER & SAUBER, L.L.P., Washington, D.C., for Appellants.
`Norman L. Smith, FISHER & WINNER, Baltimore, Maryland, for
`Appellee. ON BRIEF: Craig M. Palik, MCNAMEE, HOSEA, JERNIGAN &
`KIM, P.A., Greenbelt, Maryland, for Appellant Eric Thomas;
`Roy T.
`Englert,
`Jr.,
`Ariel
`N.
`Lavinbuk,
`ROBBINS,
`RUSSELL, ENGLERT,
`ORSECK,
`UNTEREINER
`&
`SAUBER,
`L.L.P.,
`Washington, D.C., for
`Appellant
`L-Soft
`International,
`Incorporated. Jeffrey E. Nusinov, FISHER & WINNER, L.L.P.,
`Baltimore, Maryland; Francis J. Gorman, Charles L. Simmons,
`GORMAN & WILLIAMS, Baltimore, Maryland, for Appellee.
`
`
`Unpublished opinions are not binding precedent in this circuit.
`
`
`
`
`
`2
`
`
`
`GREGORY, Circuit Judge:
`
`
`
`Juan Altmayer-Pizzorno (“Pizzorno”) brought suit against L-
`
`Soft International, Inc. (“L-Soft”), and its CEO Eric Thomas
`
`(“Thomas”), alleging, inter alia, that L-Soft1 breached the
`
`software distribution contract between the parties and engaged
`
`in copyright infringement through its continued software sales
`
`after the termination of the contract. A jury returned a
`
`verdict for Pizzorno on both of these claims. On appeal, L-Soft
`
`argues that the district court erred in denying its motion for
`
`judgment as a matter of law on the copyright infringement claim.
`
`For the reasons set forth below, we affirm the judgment of the
`
`district court.
`
`
`
`
`
`L-Soft is a software company whose premier product is an e-
`
`I.
`
`mail list management program known as LISTSERV. LISTSERV offers
`
`various functions related to e-mail list management, but the
`
`program does not actually send e-mail messages. In 1995, L-Soft
`
`came into contact with Pizzorno, a developer who had designed
`
`mailing software that was capable of quickly sending a large
`
`number of e-mail messages. The two parties discussed an
`
`
`1 Defendants L-Soft International, Inc., and Eric Thomas are
`hereinafter collectively referred to as “L-Soft.”
`
`
`
`3
`
`
`
`arrangement in which L-Soft would market and sell licenses of
`
`Pizzorno’s mailing software that were packaged along with
`
`LISTSERV. These negotiations culminated in an October 1995
`
`contract between the parties, known as the Intellectual Property
`
`Distribution Agreement (“IPDA”).
`
`
`
`Under the terms of the IPDA, Pizzorno granted L-Soft the
`
`exclusive North American licensing rights to the mailing
`
`software, which was to be sold under the brand name LSMTP; in
`
`exchange, L-Soft was to pay Pizzorno twenty-five percent of the
`
`net proceeds from its sales of LSMTP. L-Soft also agreed to
`
`sell maintenance services for LSMTP, and Pizzorno was to provide
`
`support under the maintenance service contracts in exchange for
`
`eighty percent of the net proceeds from the service contracts.
`
`The payment schedule in the IPDA obligated L-Soft to make all
`
`royalty payments to Pizzorno on a quarterly basis.
`
`
`
`In addition to the IPDA’s licensing and royalty provisions,
`
`the contract included a non-competition covenant that prohibited
`
`L-Soft from developing any software that would be in direct
`
`competition with LSMTP and from contracting with a third party
`
`to develop competing software.2 The IPDA also contained two
`
`
`2 Section 6.2 provides:
`
`A software product shall be considered to qualify as
`Competing Software if, subject to the other limiting
`and defining provisions in this Article 6, the
`(Continued)
`
`
`
`4
`
`
`
`provisions allowing for termination of the contract, one in the
`
`event of default and the other for voluntary termination. Under
`
`Section 5.2 of the IPDA, either party could terminate the
`
`contract if, after giving written notice to the other party that
`
`it had breached the terms of the IPDA, the breaching party
`
`“fail[ed] to correct, or commence and diligently pursue
`
`corrective action, within thirty days.” (J.A. 100.) Under
`
`Section 5.4 of the IPDA, either party could voluntarily
`
`terminate the IPDA without cause; however, L-Soft had to give
`
`sixty days written notice, while Pizzorno was required to give
`
`eighteen months written notice. Furthermore, if Pizzorno
`
`elected to voluntarily terminate the IPDA, L-Soft would be
`
`immediately released from the non-competition covenant at the
`
`time that the notice of termination was given.
`
`
`
`From 1993 until 1998, both parties performed in accordance
`
`with the IPDA. However, Pizzorno did not receive his royalty
`
`payment for the first quarter of 1999, which ended on April 30,
`
`1999, and he sent Thomas correspondence by e-mail and registered
`
`
`
`
`software product performs tasks substantially similar
`to the Software, such that a typical customer and user
`of the Software could be reasonably expected to switch
`from the Software to the new software product with
`negligible
`or
`at
`least
`acceptable
`loss
`in
`functionality and performance.
`
`(J.A. 101.)
`
`
`
`5
`
`
`
`mail on May 25, 1999. In this correspondence, Pizzorno notified
`
`Thomas that L-Soft had failed to send him a royalty check for
`
`the first quarter of 1999 as required by the IPDA. Thomas
`
`responded to Pizzorno by e-mail, claiming that Pizzorno was
`
`himself in breach of the IPDA and disputing that L-Soft owed
`
`Pizzorno any royalties for the first quarter. L-Soft claimed
`
`that it had overpaid Pizzorno in prior quarters due to
`
`differences in accounting procedures.
`
`
`
`On July 13, 1999, Pizzorno sent Thomas a letter (“the July
`
`13th letter”), in which he stated:
`
`[O]n May 25th I sent you a letter, both per e-mail and
`on paper per registered mail, inquiring on the status
`of the 2nd quarter royalty payment, which was due by
`the end of April. You responded per e-mail saying
`that you were changing your accounting system and
`would pay once that had been done, but you never did.
`Certainly you realize that I have the right to be paid
`on time . . . I find it hard to believe that L-Soft
`owed me no money at all for that quarter. I wonder if
`you are still selling licenses of the program. As far
`as I can tell, by not paying me, you have breached the
`contract.
`
` I
`
` now consider the contract terminated, and unless you
`prove that L-Soft indeed owned [sic] me no money by
`the end of July, I will act accordingly. Thank you.
`
`
`(J.A. 222 (ellipsis in original).)
`
`On August 5, 1999, L-Soft sent a letter to Pizzorno in
`
`
`
`response to the July 13th letter. In this letter (“the August
`
`5th letter”), L-Soft reiterated that it had not paid Pizzorno
`
`because of changes in its accounting procedures, and L-Soft
`
`
`
`6
`
`
`
`assured Pizzorno that he would be paid royalties in the future
`
`as soon as he was entitled to them. L-Soft further alleged that
`
`Pizzorno was in breach of the IPDA because he had failed to
`
`provide adequate technical support and failed to provide L-Soft
`
`a copy of the source code for the mailing software.
`
`
`
`On August 25, 1999, Pizzorno sent a letter to L-Soft in
`
`response to the August 5th letter. In this letter (“the August
`
`25th letter”), Pizzorno stated that he had initially sent notice
`
`of default on May 25, 1999, and after he received no payment or
`
`adequate explanation for nonpayment, he sent the July 13th
`
`letter terminating the agreement. The August 25th letter
`
`continued:
`
`Given the history of payments from L-Soft to Mr.
`Pizzorno pursuant to the Agreement, Mr. Pizzorno finds
`it difficult to believe that no payments were due for
`the first quarter. If indeed no payments were due,
`then this implies that L-Soft has defaulted on its
`obligations to use its best efforts to sell the
`Software . . . . In any event, empty statements that
`no royalties are due will not suffice. Until L-Soft
`provides an accounting, Mr. Pizzorno will continue to
`treat the Agreement as terminated.
`
`
`(J.A. 231.) The August 25th letter also addressed L-Soft’s
`
`contention that Pizzorno had breached the IPDA by failing to
`
`provide the source code for the mailing software, stating that
`
`Pizzorno “has elected the escrow option” and “is prepared” to
`
`transmit the source code directly to the licensees. (J.A. 231-
`
`32.) Pizzorno further charged L-Soft with several additional
`
`
`
`7
`
`
`
`breaches of the IPDA, including: (1) failing to make second
`
`quarter royalty payments, (2) failing to use best efforts in
`
`marketing LSMTP, and (3) using LSMTP in a manner not permitted
`
`by the IPDA. Pizzorno demanded that L-Soft cure these breaches
`
`within thirty days.
`
`
`
`Pizzorno next communicated with L-Soft via two e-mails sent
`
`on September 10, 1999. In the first e-mail, Pizzorno contacted
`
`Thomas regarding Pizzorno’s failure to provide support services
`
`for the mailing software:
`
`[A]s I and my attorney have indicated, we consider the
`Agreement terminated. Accordingly, I am no longer
`providing support services. If L-Soft 1) persuades me
`that no royalties were due the first quarter, and 2)
`cures the breaches described in my attorney’s most
`recent letter, I will resume support. Until then, I
`will forward all “help” messages to you . . . .
`
`This of course ignores the problem that L-Soft
`continues to use LSMTP despite the termination of the
`Agreement. I will not ignore that for long.
`
`(J.A. 237.) Pizzorno wrote the second e-mail in response to a
`
`support request from an L-Soft employee. In that e-mail,
`
`Pizzorno told the employee that L-Soft and he were “in the
`
`middle of a contract dispute, and unless and until L-Soft
`
`resolves this dispute I will not be supporting LSMTP further.”
`
`(J.A. 253.) Pizzorno did answer the question, however, “as a
`
`courtesy, and without waiving any of my rights regarding the
`
`contract dispute.” (Id.)
`
`
`
`8
`
`
`
`
`
`On September 27, 1999, L-Soft responded to the August 25th
`
`letter. In this letter (the “September 27th letter”), L-Soft
`
`acknowledged that Pizzorno had made allegations that L-Soft was
`
`in default of the contract, but it denied those allegations. In
`
`addition, the September 27th letter followed up on Pizzorno’s
`
`failure to provide the source code for the mailing software.
`
`Pizzorno ultimately placed the source code into escrow in
`
`October 1999. The parties had no communications with each other
`
`from September 27, 1999, until the filing of this lawsuit;
`
`however, L-Soft continued to sublicense LSMTP and made no
`
`royalty payments to Pizzorno.
`
`
`
`On April 29, 2002, Pizzorno brought suit against L-Soft in
`
`the United States District Court for the District of Maryland
`
`for breach of contract and copyright infringement.3 L-Soft filed
`
`a counterclaim against Pizzorno for breach of contract. The
`
`jury returned a verdict in favor of Pizzorno, specifying in the
`
`verdict form that L-Soft had breached the IPDA on April 30,
`
`1999, and that Pizzorno had not breached the IPDA. The jury
`
`also determined that Pizzorno had terminated the agreement on
`
`
`3 Because L-Soft continued to sell LSMTP licenses after the
`lawsuit was filed, Pizzorno sent a notice of voluntary
`termination to L-Soft on December 16, 2003, which was “given in
`addition to my previous notices of termination” and “without
`prejudice to my termination of the Agreement in 1999 for cause.”
`(J.A. 743.)
`
`
`
`9
`
`
`
`July 13, 1999, and that L-Soft was liable for copyright
`
`infringement for all LSMTP sales occurring thereafter.
`
`
`
`Following the verdict, L-Soft raised and renewed several
`
`motions for judgment as a matter of law, two of which are
`
`relevant to this appeal: (1) that the July 13th letter was
`
`insufficient to terminate the IPDA, and (2) that the misuse of
`
`copyright defense precluded Pizzorno from recovering on the
`
`copyright infringement claim. The district court denied both
`
`post-trial motions and entered judgment for Pizzorno. L-Soft
`
`appeals.
`
`
`
`II.
`
`We review de novo the district court’s denial of a motion
`
`for judgment as a matter of law. Int’l Ground Transp., Inc. v.
`
`Mayor of Ocean City, 475 F.3d 214, 218 (4th Cir. 2007). A
`
`district court should grant a motion for judgment as a matter of
`
`law after the jury verdict “only if, viewing the evidence in a
`
`light most favorable to the non-moving party . . . and drawing
`
`every legitimate inference in that party’s favor, the only
`
`conclusion a reasonable jury could have reached is one in favor
`
`of the moving party.” Id. at 218-19.
`
`In deciding upon the applicability of an equitable defense
`
`such as misuse of copyright, a district court must accept the
`
`factual findings of the jury if they are supported by
`
`
`
`10
`
`
`
`substantial evidence. See Wang Labs., Inc. v. Mitsubishi Elecs.
`
`Am., Inc., 103 F.3d 1571, 1579 (Fed. Cir. 1997). If the
`
`district court makes its own factual findings in determining the
`
`applicability of an equitable defense, we must uphold such
`
`findings unless they are clearly erroneous. See id. at 1579
`
`n.3; Newell Cos., Inc. v. Kenney Mfg. Co., 864 F.2d 757, 762
`
`(Fed. Cir. 1988).
`
`A.
`
`In order to terminate a contract, one party must give the
`
`other party a notice of termination that is “definite, specific,
`
`positive, and unconditional.” C.W. Blomquist & Co., Inc. v.
`
`Capital Area Realty Investors Corp., 311 A.2d 787, 791 (Md.
`
`1973); accord City of Fairfax v. Washington Metro. Area Transit
`
`Auth., 582 F.2d 1321, 1327 (4th Cir. 1978). Written notice of
`
`termination is not required; rather, a contract may be
`
`terminated through conduct that is clearly inconsistent with the
`
`continued existence of the contract. Buchholtz v. Bert Goodman
`
`Signs, Inc., 199 A.2d 915, 917 (Md. 1964). Nevertheless, even
`
`where a contract is terminated or abandoned through the conduct
`
`of both parties, such termination must be shown by “positive and
`
`unequivocal conduct inconsistent with an intent to be bound.”
`
`Graham v. James, 144 F.3d 229, 238 (2d Cir. 1998); see also
`
`
`
`11
`
`
`
`Buchholtz, 199 A.2d at 917-18 (applying the “unequivocal”
`
`standard where the conduct of both parties was at issue).4
`
`First, L-Soft argues that the district court misconceived
`
`the legal standard for determining whether a contract has been
`
`terminated. According to L-Soft, the district court should have
`
`determined for itself whether the July 13th letter was ambiguous
`
`on its face, rather than merely “conclude[] that the jury could
`
`well conclude that the letter was not ambiguous.” (J.A. 1660.)
`
`L-Soft bases this argument on the familiar proposition that “the
`
`determination of ambiguity is one of law, not fact.” Calomiris
`
`v. Woods, 727 A.2d 358, 362 (Md. 1999). However, Calomiris is a
`
`case regarding the interpretation of the terms of a written
`
`contract, not a case about whether a written notice constituted
`
`an effective termination of a contract. See id. In deciding
`
`whether a contract was terminated, it is unnecessary for the
`
`court to initially determine whether a written notice of
`
`termination was “ambiguous” as is done for cases involving
`
`contract interpretation. The legal standard for contract
`
`termination permits the trier of fact to consider any written
`
`
`4 The district court suggested that there may be a lower
`standard for determining whether there has been an effective
`contract termination when both parties act as if the contract is
`terminated. (J.A. 1661.) While the district court was
`incorrect as a matter of law, it did not actually apply a lower
`standard in making its decision, and thus this error does not
`merit reversal.
`
`
`
`12
`
`
`
`documents, the conduct of the parties, and surrounding
`
`circumstances to determine whether the notice of termination was
`
`positive and unconditional. See Buchholtz, 199 A.2d at 917. A
`
`fair reading of the district court’s opinion reveals that the
`
`district court acknowledged that the notice of termination had
`
`to meet the positive and unconditional standard, and it held
`
`that a reasonable jury could have concluded that the July 13th
`
`letter and the prior conduct of the parties satisfied that
`
`standard.
`
`
`
`Nevertheless, L-Soft argues that even if the district court
`
`applied the correct legal standard for contract termination, the
`
`July 13th letter was legally insufficient to satisfy this
`
`standard. Under some circumstances, courts have determined that
`
`particular written documents did not satisfy the standard for
`
`termination as a matter of law. See, e.g., Stovall v.
`
`Publishers Paper Co., 584 P.2d 1375, 1381 (Or. 1978); Rosenbloom
`
`v. Feiler, 431 A.2d 102, 111 (Md. 1981); Accu-Weather, Inc. v.
`
`Prospect Commc’ns, Inc., 644 A.2d 1251, 1255 (Pa. Super. Ct.
`
`1994). L-Soft argues that the July 13th letter is similar to
`
`the purported written notice of termination at issue in Stovall,
`
`which the Supreme Court of Oregon determined was legally
`
`insufficient to constitute an effective notice of termination.
`
`In Stovall, the plaintiff’s counsel sent a letter to the
`
`defendant’s counsel as part of an ongoing dispute about the
`
`
`
`13
`
`
`
`construction of a road that was part of a timber contract. See
`
`584 P.2d at 1377. In the first two paragraphs of the letter,
`
`the plaintiff’s counsel ostensibly terminated the contract,
`
`stating that:
`
`We are giving you notice herewith that pursuant to
`Paragraph 11 of the contract we are exercising Mr.
`Stovall’s option to terminate the Timber Cutting
`Agreement and all rights thereunder of your client and
`of their predecessor in interest. The cutting of any
`timber will be considered willful trespass and treble
`damages will be sought under ORS 105.810.
`
`Id. at 1378.
`
`
`
`In the third paragraph of the letter, the plaintiff’s
`
`counsel first stated that he “was prepared to file [an] action
`
`several days ago,” and he even included a copy of the complaint
`
`with the letter. Id. However, the plaintiff’s counsel
`
`indicated that he and the plaintiff had “reexamined” a prior
`
`letter of the defendant and that “it would appear that in the
`
`interest of compromise [the defendant] is offering to do
`
`substantially more than it has previously acknowledged to be its
`
`obligation . . . .” Id. The letter then suggested a compromise
`
`to the ongoing dispute between the parties and indicated that if
`
`the compromise was not accepted by written notice within a week,
`
`the plaintiff would file a complaint thereafter. Id. at 1378-
`
`79. The plaintiff’s counsel concluded the letter with a related
`
`proposal, which the defendant should consider “if [the
`
`
`
`14
`
`
`
`defendant] accepts the compromise offer and will be logging in
`
`the area.” Id.
`
`
`
`Ultimately, the Stovall court found that the letter was an
`
`ineffective notice of termination as a matter of law. See id.
`
`at 1379-80. According to the court, when a letter “mix[es]
`
`words of termination with words of compromise, negotiations, and
`
`present obligation,” such a letter fails to satisfy the
`
`requirements for an effective termination. Id. at 1380. Even
`
`though the first two paragraphs of the letter seemed to contain
`
`clear, unequivocal language of termination, the remainder of the
`
`letter contained an extensive “offer of compromise,” raising
`
`doubts as to whether the plaintiff had terminated the contract.
`
`Id. at 1379-80. Throughout the second half of the letter, the
`
`plaintiff’s counsel referred to present contractual obligations,
`
`which would presumably continue if the defendant were to accept
`
`the plaintiff’s compromise offer within a week. See id.
`
`
`
`Although L-Soft contends that the July 13th letter is
`
`similar to the letter at issue in Stovall, the two letters are
`
`in fact quite distinct with regard to the termination of the
`
`respective contracts. In the first paragraph of the July 13th
`
`letter, Pizzorno stated that he had sent a letter to Thomas on
`
`May 25, 1999, inquiring about the royalty payment, but that he
`
`had not received any payment nor been provided with a sufficient
`
`explanation for non-payment. Pizzorno concluded the paragraph
`
`
`
`15
`
`
`
`by stating, “As far as I can tell, by not paying me, you have
`
`breached the contract.” (J.A. 222.) According to L-Soft, the
`
`last sentence of the first paragraph was equivocal because
`
`Pizzorno admitted that he lacked complete information about
`
`whether L-Soft had breached the IPDA.
`
`
`
`The last sentence of the first paragraph should not be read
`
`in isolation, as L-Soft suggests, but rather it must be
`
`considered in the context of the circumstances of the parties.
`
`Pizzorno had no way of knowing the precise amount of royalty
`
`payments that were due since he was not involved in the sales of
`
`the LSMTP software; all such information was held exclusively by
`
`L-Soft. The use of the phrase “[a]s far as I can tell” did not
`
`imply any equivocation in Pizzorno’s termination of the IPDA,
`
`but merely reflected the fact that Pizzorno had no way of
`
`verifying the amount of royalty payments he was owed.
`
`
`
`In the second paragraph of the letter, Pizzorno wrote, “I
`
`now consider the contract terminated, and unless you prove that
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`L-Soft indeed owned [sic] me no money by the end of July, I will
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`act accordingly.” (J.A. 222 (emphasis added).) L-Soft contends
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`that this language is similar to that of the letter in Stovall
`
`because it ostensibly terminated the IPDA but also provided a
`
`condition that L-Soft could satisfy to prevent the termination
`
`of the contract. In response, Pizzorno claims that this
`
`paragraph clearly terminates the IPDA, and that a reasonable
`
`
`
`16
`
`
`
`jury could conclude that the second clause merely gave L-Soft a
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`deadline to provide proof that no money was owed or else a
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`lawsuit would be filed to collect monies owed.
`
`
`
`While the second paragraph of the July 13th letter might
`
`not have been written using precise legal terminology, the
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`language is unlike the attempt to negotiate a compromise in the
`
`Stovall letter. Although L-Soft contends that the phrase “act
`
`accordingly” could have a variety of meanings, a reasonable jury
`
`could have found that Pizzorno used the phrase “act accordingly”
`
`to indicate that he would seek damages for breach of contract
`
`through the filing of a lawsuit. Even if the import of the “act
`
`accordingly” language could not be precisely deduced, a
`
`reasonable jury could have concluded that “act accordingly”
`
`clearly did not refer to the termination of the contract,
`
`particularly since Pizzorno had already stated that the contract
`
`was terminated in the first clause of the sentence and used the
`
`conjunction “and” to connect the two clauses.
`
`
`
`Finally, L-Soft urges this court to consider Pizzorno’s
`
`conduct following the receipt of the July 13th letter, which it
`
`claims is inconsistent with the termination of the IPDA on July
`
`13, 1999, including: (1) the August 25th letter, in which
`
`Pizzorno provided a list of L-Soft’s breaches of the IPDA; (2)
`
`the September 10th e-mail to Thomas, in which Pizzorno stated
`
`that he would resume support if Thomas cured the breaches of the
`
`
`
`17
`
`
`
`IPDA; (3) the placement of the LSMTP source code into escrow on
`
`October 1999; and (4) the termination of the IPDA on December
`
`16, 2003, pursuant to the voluntary termination provision.
`
`
`
`Even assuming that Pizzorno’s conduct following July 13,
`
`1999, was inconsistent with the termination of the contract,
`
`such conduct cannot “revive” a contract that has been
`
`terminated. Courts have noted that the “conduct between the
`
`giving of notice and the actual date of termination[] may be
`
`considered in determining whether there has been a clear and
`
`unequivocal termination.” Morris Silverman Mgmt. Corp. v. W.
`
`Union Fin. Servs., 284 F. Supp. 2d 964, 974 (N.D. Ill. 2003);
`
`accord Maloney v. Madrid Motor Corp., 122 A.2d 694, 696 (Pa.
`
`1956); Accu-Weather, Inc., 644 A.2d at 1254-55. However, in
`
`those cases in which courts have considered a party’s conduct
`
`subsequent to a purported notice of termination, the contract
`
`had not been immediately terminated in the written notice;
`
`rather, notice had been given for the contract to be terminated
`
`on some future date. See, e.g., Accu-Weather, Inc., 644 A.2d at
`
`1254-55; Morris Silverman Mgmt. Corp., 284 F. Supp. 2d at 975.
`
`Here, the conduct at issue followed a notice of immediate
`
`termination, and thus it is of no moment for purposes of
`
`determining whether Pizzorno terminated the IPDA on July 13,
`
`1999.
`
`
`
`18
`
`
`
`
`
`Since a reasonable juror could have concluded that the IPDA
`
`was terminated on July 13, 1999, based on the July 13th letter,
`
`the prior conduct of the parties, and the surrounding
`
`circumstances, the district court did not err in denying L-
`
`Soft’s motion for judgment as a matter of law as to this issue.
`
`B.
`
`
`
`L-Soft further contends that Pizzorno should not recover on
`
`his copyright infringement claim because the inclusion of the
`
`non-competition covenant in the IPDA constituted a misuse of
`
`copyright. The Fourth Circuit expressly recognizes misuse of
`
`copyright as an equitable defense to a suit for copyright
`
`infringement, first applying the defense in Lasercomb America,
`
`Inc. v. Reynolds, 911 F.2d 970 (4th Cir. 1990). The misuse of
`
`copyright defense is analogous to the misuse of patent defense,
`
`as both forbid the holder from using the copyright or patent
`
`“‘to secure an exclusive right or limited monopoly not granted
`
`by the [Copyright or Patent] Office and which it is contrary to
`
`public policy to grant.’” Id. at 977 (quoting Morton Salt Co.
`
`v. G.S. Suppiger Co., 314 U.S. 488, 492 (1942)). Specifically,
`
`the misuse of copyright defense precludes a copyright holder
`
`from recovering for copyright infringement where the holder has
`
`“attempt[ed] to suppress any attempt by the licensee to
`
`independently implement the idea which [the copyrighted
`
`material] expresses.” Id. at 978.
`
`
`
`19
`
`
`
`
`
`In Lasercomb America, the plaintiff developed computer die-
`
`making software for which it obtained a copyright, and it
`
`licensed the software to the defendant and others. Id. at 971-
`
`72. The plaintiff included anti-competitive terms in its
`
`standard licensing agreement, which forbade the licensees’
`
`“directors, officers and employees, directly or indirectly, to
`
`write, develop, produce or sell computer assisted die making
`
`software.” Id. at 973. Because of an oversight, the defendant
`
`did not sign the licensing agreement and thus was not bound by
`
`the anti-competitive terms. Id. Despite the fact that the
`
`defendant was not subject to the terms of the licensing
`
`agreement, this Court found that the defendant could avail
`
`itself of the misuse of copyright defense. See id. at 979.
`
`
`
`Although Lasercomb America recognized the existence of the
`
`misuse of copyright defense, the decision also acknowledged that
`
`a copyright holder who had misused a copyright was not forever
`
`barred from bringing a suit for infringement. Instead, the
`
`copyright holder “is free to bring a suit for infringement once
`
`it has purged itself of the misuse.” Id. at 979 n.22 (citing
`
`U.S. Gypsum Co. v. Nat’l Gypsum Co., 352 U.S. 457, 465 (1957)).
`
`Although the Lasercomb America decision did not elaborate on
`
`what standards should be used to determine whether copyright
`
`misuse has been purged, the misuse of patent defense has a well-
`
`established body of law upon which to draw. See id. at 973-74
`
`
`
`20
`
`
`
`(drawing upon the misuse of patent defense in recognizing the
`
`misuse of copyright defense). Therefore, we hold that in order
`
`for a court to find that there has been a purge of copyright
`
`misuse, the copyright holder must show that “the improper
`
`practice has been abandoned and that the consequences of the
`
`misuse of the [copyright] have been dissipated.” Morton Salt
`
`Co., 314 U.S. at 493; accord U.S. Gypsum Co., 352 U.S. at 474.
`
`
`
`Even though the burden is on the copyright holder to
`
`demonstrate that the misuse has been purged, cf. B.B. Chem. Co.
`
`v. Ellis, 314 U.S. 495, 498 (1942), the copyright holder is not
`
`required to prove that the consequences of the misuse have
`
`dissipated unless the defendant first shows that the misuse had
`
`anti-competitive consequences. Cf. U.S. Gypsum Co., 352 U.S. at
`
`465 (finding that the district court erred in holding that the
`
`patent misuse had not been purged because the record contained
`
`no facts about the consequences of the misuse); White Cap Co. v.
`
`Owens-Ill. Glass Co., 203 F.2d 694, 698 (6th Cir. 1953) (stating
`
`in a patent misuse case that “it was unnecessary for the
`
`plaintiff to prove that the consequences of the misuse had been
`
`dissipated because it was not shown that the misuse had illegal
`
`consequences”). If the defendant fails to show that the misuse
`
`had anti-competitive consequences, the termination of the
`
`contract containing the anti-competitive clause may be
`
`sufficient to purge the misuse. Cf. White Cap Co., 203 F.2d at
`
`
`
`21
`
`
`
`698; Ansul Co. v. Uniroyal, Inc., 306 F. Supp. 541, 560
`
`(S.D.N.Y. 1969), aff'd & modified, 448 F.2d 872 (2d Cir. 1971),
`
`cert. denied, 404 U.S. 1018 (1972) (“What conduct constitutes a
`
`‘purge’ depends upon the nature and extent of the misuse. Where
`
`the misuse consists of the insertion of an objectionable
`
`provision in a contract, the patentee’s cancellation and
`
`abandonment of the clause may be sufficient.”).
`
`
`
`On appeal, L-Soft argues that the district court erred in
`
`refusing to apply the misuse of copyright defense. In
`
`particular, L-Soft contends that the non-competition covenant of
`
`the IPDA prohibited L-Soft from developing or contracting for
`
`the development of mailing software having functions similar to
`
`those of LSMTP and that these restrictions constituted a misuse
`
`of copyright. On the other hand, Pizzorno argues that the non-
`
`competition covenant was different from the standard licensing
`
`agreement at issue in Lasercomb America in that: (1) the non-
`
`competition covenant was part of a single contract between the
`
`parties instead of a standard restriction imposed on multiple
`
`licensees; and (2) the non-competition covenant bound only L-
`
`Soft and not its officers, directors, or affiliate companies,
`
`and thus the non-competition covenant did not have any actual
`
`anti-competitive effects on L-Soft. Alternatively, Pizzorno
`
`argues that even if the inclusion of the non-competition
`
`
`
`22
`
`
`
`covenant was a misuse of copyright, any misuse was purged by the
`
`termination of the IPDA.5
`
`
`
`The district court found that L-Soft could not avail itself
`
`of the misuse of copyright defense, both because the facts of
`
`the present case did not “quite have the same flavor” as those
`
`in Lasercomb America and because any misuse was purged by
`
`Pizzorno’s termination of the IPDA. (J.A. 1700.) We do not
`
`need to decide whether the inclusion of the non-competition
`
`covenant was a misuse of copyright, for even assuming that it
`
`was a misuse of copyright, the misuse was purged at the time
`
`that Pizzorno terminated the IPDA.
`
`
`
`With respect to the district court’s determination that any
`
`misuse of copyright had been purged, the district court first
`
`found that Pizzorno had abandoned the improper practice
`
`constituting misuse when he terminated the IPDA on July 13,
`
`1999. In making this determination, the district court accepted
`
`the jur
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