On 13 August 2008, the US Court of Appeals for the Federal Circuit upheld the restrictions contained within the Artistic Licence. The Artistic Licence, commonly used for PERL software packages, is one of the top ten licences used for open source software.

In Jacobsen V Katzer and Kamind Associates, Inc, United States Court of Appeals for the Federal Circuit, 2008-1001, the court held that the restrictions in the licence operate as conditions rather than mere covenants. If the conditions are violated, the licence disappears since its grant is conditional upon observance of them.

Having determined that the terms of the Artistic Licence are enforceable copyright conditions, the case has been remitted back to the District Court. The court will determine the likelihood of success on the merits and questions of potential irreparable harm in the context of an application for a preliminary injunction to prevent the defendants' further use of the software.

The District Court held that the plaintiff did not have a cause of action for copyright infringement based on breach of the conditions of the Artistic Licence but only for breach of contract. Since a breach of contract under US law creates no presumption of irreparable harm, the District Court denied the motion for a preliminary injunction. The Court of Appeals has decided that the District Court's reasoning was wrong. It will now have to consider the application for an injunction again.

Professor Lawrence Lessig said of the decision: "In non-technical terms, the court has held that free licenses such as the [Creative Commons (CC)] licences set conditions (rather than covenants) on the use of copyrighted work. When you violate the condition, the license disappears, meaning you're simply a copyright infringer. This is the theory of the General Public Licence (GPL) and all CC licences. Put precisely, whether or not they are also contracts, they are copyright licenses which expire if you fail to abide by the terms of the license."

IT expert Bill Jones says, "An English court would probably take a similar approach to the US Court of Appeals. Ignoring restrictions in open source licences make a user vulnerable, not just to a claim for damages, but also to injunctive remedies. It is clearly important that businesses know what open source software they are using and what licences govern that use."

This is not the only case on the enforceability of open source licences. Actions in Germany in 2004 involving a subsidiary of Sitecom, and in 2007 involving Skype, successfully enforced GPL licences. The same result followed from a number of actions in the US by the Software Freedom Law Center filed in 2007 to enforce the GPL in respect of BusyBox software, the most notorious of which was against Verizon.