Major Victory for Open Source in Jacobsen Decision

On August 13, the Court of Appeals for the Federal Circuit (CAFC) issued its decision in the Jacobsen v. Katzer case.
http://www.cafc.uscourts.gov/opinions/08-1001.pdf
This case was the first real test of the remedies for breach of open source licenses in US courts (for more background, see http://lawandlifesiliconvalley.blogspot.com/2007/08/new-open-source-legal-decision-jacobsen.html). Unfortunately, the District Court decision was wrong and wrong in a way that could have been a disaster for open source community. The District Court found that the requirements in the Artistic License for notice were merely a contractual covenant rather than a condition on the scope of the license (the courts sometimes use the word "restriction" on the scope of the license and "condition" at other times, but they have the same meaning). Consequently, under the District Court's analysis, Katzer's actions were not copyright infringement. Thus, Jacobsen was limited to the traditional remedy for breach of contract, monetary damages, rather than the copyright remedy of injunctive relief (injunctive relief means that the court will order Katzer to comply with the terms of the contract).

The CAFC reversed the District Court's decision and its reasoning is very helpful for the open source community. The court found that the limitations in the Artistic License were "conditions" on the scope of the license and, thus, Katzer was liable for copyright infringement (as well as breach of contract). The CAFC noted that the Artistic License imposed its obligations through the use of the words "provided that" which is generally viewed as imposing a condition. Although the reasoning is limited to the Artistic License and the interpretation of each open source license will depend on the wording of its provisions, this decision is a welcome change to the District Court decision. The case has been remanded for the District Court to determine if the other criteria for injunctive relief have been met, but the CAFC's decision strongly suggests that they have been met.

The open source community should thank the lawyers who worked hard and on a pro bono basis (i.e. free) to achieve this victory. Any such list is bound to be incomplete and I apologize in advance for anyone that I have missed, but I think that the major contributors were: Victoria Hall (Jacobsen's counsel), Chris Ridder and Anthony Falzone (Creative Commons counsel, authors of the amici brief), Karen Copenhaver (Choate Hall, counsel for the Linux Foundation who assisted on the Creative Commons amici brief), Allison Randal and Roberta Cairney (counsel for Perl Foundation who assisted on the Creative Commons amici brief), Larry Rosen (Rosenlaw & Einschlag, who assisted on the Creative Commons amici brief), Scott Peterson (HP, member of OSI's Legal Advisory Council who assisted on the Creative Commons amici brief), David Gross (DLA Piper, counsel for OSI who assisted on the Creative Commons amici brief) and Steve Chiari (DLA Piper, counsel for OSI who assisted on the Creative Commons amici brief).

New Open Source Legal Decision: Jacobsen & Katzer and How Model Train Software Will Have an Important Effect on Open Source Licensing

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.