Federal Circuit Finds Breach of Open Source License Creates Copyright Cause of Action
In Jacobsen v. Katzer, 535 F.3d 1373 (Fed. Cir. 2008), Robert Jacobsen holds a copyright to computer programming code that he makes available for free public download upon acceptance of the terms of an Artistic License (an “open source” or public license).
Matthew Katzer and Kamind Associates, Inc. (collectively “Katzer”) developed competing commercial software products, components of which Jacobsen accused Katzer of copying. Jacobsen alleged that Katzer copied these materials from his website and incorporated them into one of Katzer’s software packages without following the terms of the Artistic License. In particular, Katzer’s allegedly infringing software did not include (1) the authors’ names, (2) the open source software group’s copyright notices, (3) references to Jacobsen’s original copying file, (4) an identification of the open source software group or its parent site as the original source of the definition files, and (5) a description of how the files or computer code had been changed from the original source code. Jacobsen brought an action in the District Court for the Northern District of California for copyright infringement and moved for a preliminary injunction.
The District Court held that the open source Artistic License created an “intentionally broad” nonexclusive license that was unlimited in scope because it provided that a user could copy the files verbatim or could otherwise modify the material in any way, including as part of a larger, possibly commercial software distribution. The District Court found that the Artistic License did not create liability for copyright infringement and that Jacobsen, thus, had a cause of action only for breach of contract, rather than an action for copyright infringement based on a breach of the conditions of the Artistic License. Because a breach of contract creates no presumption of irreparable harm, the District Court also denied the motion for a preliminary injunction.
Jacobsen appealed to the Federal Circuit regarding the finding that he did not have a cause of action for copyright infringement. The Federal Circuit accepted jurisdiction due to the presence of patent infringement issues not in issue on the instant appeal from the denial of a preliminary injunction.
On appeal, the Federal Circuit found a prima facie showing of copyright infringement because the parties did not dispute that Jacobsen was the holder of a copyright for certain materials distributed through his website, and Katzer admitted that portions of the DecoderPro software were copied, modified, and distributed as part of the Decoder Commander software. Katzer argued that it could not be liable for copyright infringement because it had a license to use the material. The issue before the Federal Circuit was therefore whether Katzer’s use was outside the scope of the license.
The Federal Circuit noted that open source licensing enables collaboration and advancement of the arts and sciences with great ease and speed by enabling global computer programmers to view software code and make changes and improvements. In return, a copyright holder can ensure that recipients of the redistributed computer code know the identity of the owner as well as the scope of the license granted by the original owner by requiring that users copy and restate the license and attribution
The argument on appeal centered on whether the terms of the Artistic License were conditions of, or merely covenants to, the copyright license. Citing Graham v. James, 144 F.3d 229, 236 (2d Cir. 1998), the Federal Circuit noted that, if the alleged violated terms of the Artistic License were both covenants and conditions, they could serve to limit the scope of the license and would be governed by copyright law. In contrast, if the alleged violated terms were merely covenants, they would be governed by contract law and the relief would be limited to breach of contract remedies.
Jacobsen asserted that the terms of the Artistic License defined the scope of the license and that any use outside those restrictions was copyright infringement. Katzer argued that these terms did not limit the scope of the license and were nothing more than covenants that provided contractual terms for the use of the materials. In rejecting Katzer’s argument, the Federal Circuit noted that the Artistic License stated on its face that the document created conditions, and it used traditional language of conditions under California law. Further, the conditions the Artistic License set forth were vital to enable the copyright holder to retain the ability to benefit from the work of downstream users. Thus, the Federal Circuit held that the District Court incorrectly 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 Federal Circuit found that this interpretation of the conditions of the Artistic License did not credit the explicit restrictions in the license that govern a downloader’s right to modify and distribute the copyrighted work.
Katzer’s argument was also based on the assumption that Jacobsen’s copyright gave him no economic rights because he made his computer code available to the public at no charge, and Katzer argues that copyright law does not recognize a cause of action for non-economic rights. The Federal Circuit, however, found the restrictions of the Artistic License both clear and necessary to accomplish the objectives of the open source licensing collaboration, including economic benefit. As recognized by the Federal Circuit, the basic idea is that copyright holders who engage in open source licensing have the right to control the modification and distribution of copyrighted material. A copyright holder can grant the right to make certain modifications, yet retain his right to prevent other modifications. 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.” Gilliam v. ABC, 538 F.2d 14, 21 (2d Cir. 1976).
As such, the Federal Circuit vacated and remanded since, although Katzer conceded that it did not comply with the conditions of the Artistic License, the District Court did not make factual findings on the likelihood of success on the merits in proving that Katzer violated the conditions of the Artistic License. Because the Federal Circuit determined that the conditions of the Artistic License were enforceable copyright conditions, it remanded to the District Court to determine whether Jacobsen is entitled to a preliminary injunction under these standards.
Significance for Software Developers and Patent Owners
Jacobsen represents a significant victory for the open source community by confirming both that the open source licenses are enforceable, and by whom. John Markoff, Ruling Is a Victory for Supporters of Free Software, P. C7, New York Times (August 14, 2008). Previously, it was uncertain as to whether such licenses for freely distributed software were enforceable, a question that The Federal Circuit in Jacobsen answered in the affirmative. As such, industries that rely upon or use open source licenses need to evaluate whether their use or distribution is in compliance with the terms of a particular open source license. Of particular concern for patent owners are open source licenses which are hostile to patent ownership or otherwise require broad indemnifications for all downstream users of distributed software. For instance, under GNU General Public License version 3 (GPLv3), Article 11, contains specific licensing requirements for patents infringed by the distributed work and requires the distributor to ensure such a license is obtained or to decline to take such a license. Other open source licenses are less restrictive, but like the Apache License version 2.0, require licensing of patents owned by the contributor who is distributing the software. Thus, industries which rely upon open source software in their products cannot assume that the licenses are not enforceable, and will need to evaluate their compliance with the license terms to ensure that they do not run afoul of the terms.