The advantages of open source software (e.g., no license fee; access to robust development platform) as well as its risks (e.g., varying open source license terms; notice requirements; obligations to disclose developments) are, by now, generally appreciated. The Court of Appeals for the Federal Circuit in Jacobsen v. Katzer recently confirmed a previously suspected risk by finding that a violation of an open source software license can constitute copyright infringement, not merely a breach of contract, where the terms in the license create conditions on the software’s use. 535 F.3d 1373 (Fed. Cir. 2008). The Jacobsen decision should sound a cautionary warning to companies to investigate what, if any, open source software they use, and how, since their risk exposure now includes an injunction and damages for copyright infringement in addition to damages for breach of contract.

The Jacobsen decision.

In Jacobsen, the Federal Circuit focused on whether terms of an open source software license were “conditions of, or merely covenants to, the copyright license.” Id. at 1380. Contract law governs violations of the covenants in a copyright license whereas copyright law governs violations of the conditions of the copyright license. See id. This distinction is significant since injunctive relief generally is not available to remedy a breach of contract, but is an available remedy for copyright infringement. See generally id. at 1376-83.

The Federal Circuit concluded that the open source software license “on its face” created conditions. Id. at 1381. The Court noted language in the license that referred to “conditions” under which copies could be made, and rights granted “provided that” certain conditions were met. Id.While the Court determined that the terms of the open source software license were “enforceable copyright conditions,” it vacated and remanded to determine whether a preliminary injunction should be granted. Id. at 1383.

What does this mean for you?

The Jacobsen decision confirms previous speculation that a violation of an open source software license exposes a company to more than a breach of contract claim, but also to a claim of copyright infringement, and potentially, an injunction in addition to damages. To mitigate this risk, companies should initiate a comprehensive open source program to address practical considerations when open source software has been or may be used.

Initially, companies should conduct due diligence to determine if any software they use – internally or in their product and service offerings – is or utilizes open source software. Once open source software is identified, companies should review the applicable open source licenses to confirm that their use of such software complies with the terms and conditions of the license. Going forward, companies should implement guidelines regarding the use of open source software including a notification and approval process before open source code is used, and an inventory system to identify and record open source software use and related documentation including licenses. Finally, companies should make employees, especially product and service designers, and software developers, aware that while use of open source software may be convenient and without fee, given the Jacobsen decision, it is not without risk.