One of the frustrations of lawyers serving the open source industry is that they have few cases which interpret open source licenses. As Eben Moglen has pointed out, such cases are few because licensees need the license be in effect to avoid copyright infringement. However, with the increasing use of open source software, many lawyers believe that issues such as the scope of the license are likely to come before courts. The first example of these disputes arose in a decision published on August 17, 2007 in San Francisco regarding the Artistic License. Unfortunately, this case was wrongly decided and if allowed to stand may deprive open source licensors of the ability to get a court order (an injunction) to stop violation of the terms of their license, an important remedy for breach of such licenses.
Although you would expect that the first of these cases would focus on one of the wide range of commercial software being made available under open source licenses and probably deal with the most widely used license, the GPL. You would be wrong. The first case involves model railroad software and the rarely used Artistic License. The facts of the case are complicated, but can be gleaned from the pleadings at
http://jmri.sourceforge.net/k/docket/index.html (the decision is available there too). The plaintiff alleged a number of causes of action, but the most important was the alleged breach of the Artistic License (and copyright infringement for acting beyond the scope of the license) due to the removal of all of the original copyright notices to the original authors and the substitution of Katzen's company's name.
The decision makes two important points: (1) the Artistic License is a contract and (2) the failure to include the copyright notices was not a "restriction" on the scope of the license. The first point is important because the Free Software Foundation and some lawyers have taken the position that open source licenses are not contracts. They have good reasons for wishing to avoid some contract formalities, but this position has complicated discussions about the enforceability and remedies for open source licenses. This decision does not settle the issue for the GPL because it does not apply to the GPL and it is only a District Court decision, (lawyers really prefer to have an appellate decision, such as from the Ninth Circuit or the Supreme Court) but it does suggest how courts would approach the issue.
The second point is very important because it deals with remedies. Generally, the remedy for contract violations under US law is damages, not "injunctive relief" (which means that the court order a party to cease their violation). On the other hand, copyright infringement generally includes a presumption that injunctive relief is appropriate. Thus, the question of whether the violation of a license is a contract violiation or copyright infringement (it can be both) is very important, because licensors would prefer to obtain an injunction prohibiting the breach of the license. The question turns on a nuanced legal issue of whether the term in the license is a "restriction on the scope" of the license or a covenant. In the first case, the failure to comply with the provision means that the licensee is outside the scope of the license and thus is a copyright infringer (as well as liable for breach of the contract). On the other hand, if the term is merely a covenant, then the failure to comply with it is a breach of contract. The most celebrated case dealing with this issue involved the Java license between Sun and Microsoft in which the court found that the obligation on Microsoft to meet the Java compatability tests was a covenant, not a restriction on the scope of the license and the court denied Sun an injunction on those grounds (Sun got an injunction for unfair competition).
However, in this case, the court found that the condition to include a proper notice was not a restriction on the scope of the license and, thus, Katzen was not liable for copyright infringement. The court then denied the injunction. The court did not provide an analysis of why it reached this conclusion. I believe that this decision is simply wrong. The use of the term "condition" in the Artistic License should mean that the terms imposed are restrictions on the scope of the license. In fact, the judge in the Sun case even noted that restrictions are provisions which use language such as "subject to" or "conditional". This decision, if upheld, will remove an important (and expected) remedy from open source licensors. Just to be clear, the decision at present deals only with the Artistic License and the provisions dealing with this issue in other licenses may be interpreted differently. However, the decision is unfortunate and I recommend that the open source community support Jacobsen in having this decision reconsidered. Thanks to Roberta Cairney for bringing this decision to my attention; she has been in the forefront of many important copyright issues.