The US Court of Appeals for the Federal Circuit has ruled that an open source software licence was enforceable and can attract liability for copyright infringement.

In this case, the plaintiff Jacobsen had developed model railroad design software. He made it available for public download free of charge, under the so-called “Artistic License” (a form of open source licence). The licence permits users to copy, modify or distribute the licensed content provided that they restate the attribution information found in the software, repeat all copyright notices and document any modifications made to the software from its original form.

Jacobsen alleged that the defendants Katzer and Kamind Associates downloaded his code, included it in their competing software program and failed to comply with the terms of the Artistic License. He sued Katzer and Kamind for copyright infringement and sought a preliminary injunction.

The lower court ruled that the defendants’ alleged violation of the licence merely gave rise to an action for breach of contract and not for copyright infringement. While copyright infringement would give rise to a presumption of irreparable harm under relevant US law, a breach of contract would not. Since irreparable harm is a requirement for the award of an injunction, the lower court denied Jacobsen’s motion for a preliminary injunction.

On appeal, the court made a determination as to whether the terms of the licence were conditions or mere covenants. It noted that the licence imposed its obligations through the use of the words “provided that” — language that is generally viewed as imposing a condition rather than a covenant. Therefore, under the terms of the licence, the defendants could be liable for copyright infringement as well as for breach of contract, and the plaintiff could potentially obtain an injunction against the defendants to prevent them from distributing their infringing commercial software.

Also significant in the judgment is the appeals court’s discussion of consideration in open source licensing. Even though open source software is often offered royalty-free, the court opined that open source licensing is supported by economic consideration: “[t]here are substantial benefits, including economic benefits, to the creation and distribution of copyrighted works under public licenses that range far beyond traditional license royalties.” These benefits can include growth in market share and professional reputation.

The appeals court declined to award the plaintiff an injunction because the lower court had not made factual findings on the likelihood of success on the merits in proving that the defendants violated the conditions of the licence. Instead, it reversed the lower’s decision and remanded the case back to the lower court for further determination.

McCarthy Tétrault Notes:

This decision confirms the risk avoidance advice that Canadian intellectual property (IP) practitioners have been providing to clients with respect to open source software. Namely, open source licences are to be treated as enforceable contracts and their contravention will likely attract infringement liability under copyright law. Thus far, however, Canadian case law has not drawn a meaningful distinction between contractual covenants or conditions in interpreting IP licences for purposes of assessing whether infringement has taken place. Accordingly, all terms, conditions or restrictions found in an open source licence should be adhered to carefully in order to avoid liability for infringement in Canada.