Monotype v. Deluxe is a 2011 lawsuit in the District of Massachusetts in which Monotype Imaging and its affiliates Linotype and International Typeface Corporation (ITC) sued Deluxe Corporation, a printer of cheques and business forms, for trademark infringement and breach of a 1996 font software licence. The licence dispute was whether Deluxe’s online ordering and emailed electronic proofs were permitted by a licence limited to internal use. The court allowed Deluxe’s counterclaim that Monotype had breached the licence’s guarantee of undisturbed use to proceed, and the case settled in 2012.[1][4]
Background
Monotype and Deluxe entered into a “Multiple Copy End User License Agreement” dated 1996-04-30.[2] As the court summarised it, the licence let Deluxe print its products using Monotype’s font software but provided that the software could be used only internally, by Deluxe employees on Deluxe premises; that Deluxe could not transfer “Licensed Products” to third parties; and that the right to reproduce them was for concurrent use on 100 printers. “Licensed Products” included bitmaps, defined as “machine readable digital representations of a single Typeface style in a fixed resolution, weight, width, format, and point size”.[1]
Deluxe had moved from catalogue and telephone orders with paper proofs to a website on which customers chose a typeface and received an emailed electronic proof before printing.[1] In late 2010 Deluxe asked Monotype about a licence for a new “Web-to-Print” business line that would let customers type text, apply typefaces and view the product online.[2]
The dispute
Monotype claimed that Deluxe breached the licence by letting internet users select and use its font software from computers around the world, and that the emailed proofs were “bitmaps” that could not be transferred to third parties. It also claimed that Deluxe’s drop-down menu of typeface names infringed trademarks such as Helvetica and New Century Schoolbook.[1] Deluxe answered that “bitmap” and “outline” in the licence referred to formats of font software, not to images of text produced with it, so the licence restricted transfer of the software but not its output. It counterclaimed that Monotype had breached the licence and acted unfairly by raising the claims after Deluxe rejected Monotype’s bid for the Web-to-Print licence, when Deluxe had sold online openly for more than a decade.[1]
Decision or outcome
On 2012-07-26 Judge Nathaniel M. Gorton refused to dismiss Deluxe’s breach of contract counterclaim. The licence stated that “Deluxe shall be entitled during the term of this license to use the Licensed Products without disturbance” while it performed its obligations. The court held that the ordinary meaning of “disturbance” was broad enough to cover Monotype’s alleged repudiation, insistence that Deluxe stop exercising its licensed rights and demand for fees not contemplated by the licence, and that the termination and liability clauses did not give Monotype “carte blanche to make cease-and-desist demands with impunity”. It declined to decide what “bitmap” meant without a full record.[1]
The court dismissed Deluxe’s unfair practices counterclaim under Massachusetts General Laws chapter 93A, seeing “only an ordinary commercial licensing dispute involving a reasonable disagreement over the meaning of contract terms”, and noting that Deluxe’s inquiries about a new licence could just as likely have prompted Monotype to look at Deluxe’s existing use.[1] The court entered a settlement order of dismissal the next day, and on 2012-08-30 the parties dismissed all claims and counterclaims with prejudice, each bearing its own fees and costs.[3][4]
Significance for software licensing and SAM practice
The case shows how a licence drafted for printing on premises can become uncertain when a business moves customer interaction online, and how defined terms written for one technology (“bitmaps”, “outlines”, printers) are applied to later ones. It also shows that a licensee’s own covenant of undisturbed use can be a counterweight when a vendor asserts that long-standing use is outside the licence.[1] A later font licence dispute is described in Berthold v. Target.
Lessons learned
- Re-read old licences when the business model changes. The 1996 licence limited use to Deluxe premises and 100 printers, and the dispute arose when ordering and proofing moved to the web.[1]
- Defined terms decide scope. Whether emailed proofs were “bitmaps” that could not be transferred was the central question, and the court said it needed a full record to decide it.[1]
- Quiet-use clauses protect licensees. The “without disturbance” clause supported a counterclaim over demands to stop use and pay additional fees.[1]
- A quote request can start a compliance review. Deluxe’s request to license the Web-to-Print line preceded Monotype’s claims about its existing use.[2][1]