US Court Finds Open Source Licences Enforceable; Big Impact Seen On US Copyright Law

By Steven Seidenberg for Intellectual Property Watch
The ruling has no precedential value. Nevertheless, the recent decision in Jacobsen v. Katzer will have a major impact on US copyright law, according to IP experts.

Jacobsen held that open source licences can be enforced under US copyright law. “It is first time that a US court of appeals has directly addressed issues about the enforceability of open source licences,” said Jim Thatcher, Of Counsel in the Seattle office of Woodcock Washburn. “There isn’t anywhere else for [US] courts to turn for guidance on this issue, so they will turn to this case and its logic for the enforceability of open source licensing terms.”

“[T]rust me, this is huge,” Lawrence Lessig, a copyright expert at Stanford Law School, wrote in his online blog.

Open source licences allow works to be freely used (and modified) by anyone, provided the user satisfies the licence terms. One typical licence condition is that anyone using or modifying the work must clearly indicate the work’s original name and author. Another common condition is that if a user modifies the work, the resulting product is covered by the same open source licence.

Open source licences have been around for years and are widely used. The world’s most popular web server software, Apache, is covered by an open source licence. So is the Firefox web browser, the Linux operating system, the Perl programming language, and the contents of Wikipedia, to list just a few. And there are approximately 100 million works licensed under various Creative Commons licences, including this article.

But although open source works play a vital role in the internet, the information technology industry and many other areas, it has been unclear whether US courts would enforce open source licences. Much of that uncertainty has now been dispelled by Jacobsen.

“For a long, long while, we’ve been waiting to get some judicial pronouncement on open source licences,” said Stuart Meyer, a partner in the Mountain View, California office of Fenwick & West. “This gives some clarity on how these non-traditional licences will be considered under US law.”

Humble Origins

The Jacobsen case arose from humble beginnings. From toy trains, to be exact.

Robert Jacobsen heads an open source group that created, thanks to the efforts of many participants, software enabling model railroad enthusiasts to program decoder chips which control model trains. This software, DecoderPro, can be used, modified and distributed, free of charge, under a little-used type of open source licence, the Artistic Licence.

Matthew Katzer sells a competing software product, which incorporated a modified version of some DecoderPro code. Katzer’s product, however, failed to comply with the terms of the Artistic Licence. Among other things, Katzer’s product failed to indicate that certain code came from DecoderPro, failed to credit the authors of the DecoderPro code, and failed to mention the open source project that created DecoderPro.

Jacobsen sued for copyright infringement suit and requested a preliminary injunction. A federal district court in California denied the injunction, finding that the terms of the open source licence were not enforceable under copyright law.

Jacobsen appealed, and the Federal Circuit Court of Appeals (often called the country’s “IP court”) reversed. The three judge panel unanimously held, on 13 August, that the terms of the open source licence were clear. It granted users the right to freely copy, modify and distribute the software “provided that” users met certain specified conditions. Katzer failed to meet these conditions, so he was not licensed to use the copyrighted software. Katzer’s unlicensed use of the software therefore could constitute copyright infringement.

Technically, the Federal Circuit’s ruling will have no precedential, effect. Because of an unusual quirk in US law, the court had to apply the legal standards of a sister appellate court, the 9th Circuit Court of Appeals; and the Federal Circuit’s interpretation of 9th Circuit law has no precedential value. “Even a future Federal Circuit case on this area of the law must look again to the regional [9th] circuit and not the Federal Circuit interpretation,” according to Harold Wegner, a partner in the Washington, DC office of Foley & Lardner.

High Impact Case

Nevertheless, many US copyright experts believe the Jacobsen ruling will make a big impact on the law – and not just because this is the only US appellate decision on the issue. “The reasoning they used in this case will be highly persuasive to future courts,” said Chris Ridder, residential fellow at Stanford Law School’s Center for Internet and Society. (Ridder represented Creative Commons Corporation in this case, which filed an amicus brief on behalf of Jacobsen.)

“Later courts would have to distinguish the facts in order to go into a different direction,” said Jeffrey Neuburger, a partner in the Manhattan office of Proskauer Rose.

Jacobsen is expected to have extra significance because it was decided by a court that specialises in IP and high technology matters. “The decision has the weight of the Federal Circuit, which often rules on technology cases,” Meyer said.

A key issue decided by the court was that the terms of the open source licence created conditions for the licence. These terms were not merely covenants independent of the licence, which could be enforced only under contract law.

This distinction is vital because it is far easier to enforce the licence terms under copyright law than contract law. Plaintiffs in the United States can get statutory damages for copyright infringement, but must prove damages for breach of contract. And plaintiffs regularly get injunctions to stop infringement, but rarely can obtain injunctions to stop breach of contract.

If an open source licensee had to rely on contract law, it might be unable to obtain any remedy against those who violated the licence terms. An injunction would be extremely tough to get, and damages would be hard to prove, especially if (as is the case with most open source works), the licensee was giving away the work for free. The Federal Circuit noted this problem: “[B]ecause a calculation of damages is inherently speculative, these types of licence restrictions might well be rendered meaningless absent the ability to enforce through injunctive relief.”

By allowing enforcement under copyright law, the court gave a major boost to the open source movement, according to many US copyright experts. “It confirms the expectations that millions of [open source] licensors have … that this is a valid and useful way to licence copyrighted works,” Ridder said.

“The decision legitimises these licences,” Meyer said. “They don’t receive second-class status because they are dedicating works to the public.”

The ruling is expected to encourage the growth of the open source movement in the United States. And it is expected to embolden open source licensors to go after those who violate their licence terms.

“Now that there is some precedent, it will be easier for others to assert rights under open source licences,” Meyer said. “It is likely to increase the amount of litigation to enforce open source licences.”

Steven Seidenberg may be reached at info@ip-watch.ch.