Open Source Enforceability Ruling

August 17, 2008

In Jacobsen v Katzer and Kamind Associates, Inc, United States Court of Appeals for the Federal Circuit, 2008-1001, decided on 13 August 2008, the Court of Appeals for the Federal Circuit in the US upheld the restrictions contained within the Open Source Software Artistic Licence. The Court held that the restrictions in the licence operate as conditions rather than mere covenants. The effect is that, if the conditions are violated, the licence disappears since its grant is conditional upon observance of them.  Having determined that the terms of the Artistic Licence are enforceable copyright conditions, the case has been remitted back to the District Court to determine the likelihood of success on the merits and questions of potential irreparable harm in the context of an application for a preliminary injunction to prevent the defendants’ further use of the software.  The District Court had held that the plaintiff did not have a cause of action for copyright infringement based on breach of the conditions of the Artistic Licence but only for breach of contract and, because a breach of contract under US law creates no presumption of irreparable harm, the District Court had denied the motion for a preliminary injunction.

Professor Lawrence Lessig described the decision as ‘huge’. He went on:
‘In non-technical terms, the Court has held that free licenses such as the CC licenses set conditions (rather than covenants) on the use of copyrighted work. When you violate the condition, the license disappears, meaning you’re simply a copyright infringer. This is the theory of the GPL and all CC licenses. Put precisely, whether or not they are also contracts, they are copyright licenses which expire if you fail to abide by the terms of the license. Important clarity and certainty by a critically important US Court.’

This is not the only case on the enforceability of open source licences.  Actions in Germany in 2004 (involving a subsidiary of Sitecom) and in 2007 (involving Skype) successfully enforced GPL licences, as did a number of actions in the US by the Software Freedom Law Center filed in 2007 to enforce the GPL in respect of BusyBox software, the most notorious of which was against Verizon.

The Court’s endorsement of enforceability was fulsome:

The Artistic License states on its face that the document creates conditions: ‘The intent of this document is to state the conditions under which a Package may be copied.’ (emphasis added.) The Artistic License also uses the traditional language of conditions by noting that the rights to copy, modify, and distribute are granted ‘provided that’ the conditions are met. Under California contract law, ‘provided that’ typically denotes a condition. See, e.g., Diepenbrock v. Luiz, 159 Cal. 716 (1911) (interpreting a real property lease reciting that when the property was sold, ‘this lease shall cease and be at an end, provided that the party of the first part shall then pay [certain compensation] to the party of the second part’; considering the appellant’s ‘interesting and ingenious’ argument for interpreting this language as creating a mere covenant rather than a condition; and holding that this argument ‘cannot change the fact that, attributing the usual and ordinary signification to the language of the parties, a condition is found in the provision in question’) (emphases added).
The conditions set forth in the Artistic License are vital to enable the copyright holder to retain the ability to benefit from the work of downstream users. By requiring that users who modify or distribute the copyrighted material retain the reference to the original source files, downstream users are directed to Jacobsen’s website. Thus, downstream users know about the collaborative effort to improve and expand the SourceForge project once they learn of the ‘upstream’ project from a ‘downstream’ distribution, and they may join in that effort.
The District Court interpreted the Artistic License to permit a user to ‘modify the material in any way’ and did not find that any of the ‘provided that’ limitations in the Artistic License served to limit this grant. The District Court’s interpretation of the conditions of the Artistic License does not credit the explicit restrictions in the license that govern a downloader’s right to modify and distribute the copyrighted work. The copyright holder here expressly stated the terms upon which the right to modify and distribute the material depended and invited direct contact if a downloader wished to negotiate other terms. These restrictions were both clear and necessary to accomplish the objectives of the open source licensing collaboration, including economic benefit. Moreover, the District Court did not address the other restrictions of the license, such as the requirement that all modification from the original be clearly shown with a new name and a separate page for any such modification that shows how it differs from the original.
Copyright holders who engage in open source licensing have the right to control the modification and distribution of copyrighted material. As the Second Circuit explained in Gilliam v. ABC, 538 F.2d 14, 21 (2d Cir. 1976), the ‘unauthorized editing of the underlying work, if proven, would constitute an infringement of the copyright in that work similar to any other use of a work that exceeded the license granted by the proprietor of the copyright.’ Copyright licenses are designed to support the right to exclude; money damages alone do not support or enforce that right. The choice to exact consideration in the form of compliance with the open source requirements of disclosure and explanation of changes, rather than as a dollar-denominated fee, is entitled to no less legal recognition. Indeed, because a calculation of damages is inherently speculative, these types of license restrictions might well be rendered meaningless absent the ability to enforce through injunctive relief.
In this case, a user who downloads the JMRI copyrighted materials is authorized to make modifications and to distribute the materials ‘provided that’ the user follows the restrictive terms of the Artistic License. A copyright holder can grant the right to make certain modifications, yet retain his right to prevent other modifications. Indeed, such a goal is exactly the purpose of adding conditions to a license grant. The Artistic License, like many other common copyright licenses, requires that any copies that are distributed contain the copyright notices and the COPYING file. See, e.g., 3-10 Nimmer on Copyright ‘ 10.15 (‘An express (or possibly an implied) condition that a licensee must affix a proper copyright notice to all copies of the work that he causes to be published will render a publication devoid of such notice without authority from the licensor and therefore, an infringing act.’).
It is outside the scope of the Artistic License to modify and distribute the copyrighted materials without copyright notices and a tracking of modifications from the original computer files. If a downloader does not assent to these conditions stated in the COPYING file, he is instructed to ‘make other arrangements with the Copyright Holder.’ Katzer/Kamind did not make any such ‘other arrangements.’ The clear language of the Artistic License creates conditions to protect the economic rights at issue in the granting of a public license. These conditions govern the rights to modify and distribute the computer programs and files included in the downloadable software package. The attribution and modification transparency requirements directly serve to drive traffic to the open source incubation page and to inform downstream users of the project, which is a significant economic goal of the copyright holder that the law will enforce. Through this controlled spread of information, the copyright holder gains creative collaborators to the open source project; by requiring that changes made by downstream users be visible to the copyright holder and others, the copyright holder learns about the uses for his software and gains others’ knowledge that can be used to advance future software releases.

For the full judgment, click here.