Although open source software licenses have been used for years, there have been relatively few court decisions on open source issues. The Court of Appeals for the Federal Circuit recently provided some guidance in this area. An August 13 decision in Jacobsen v. Katzer, 535 F.3d 1373 (Fed Cir. 2008), held that the Artistic License, one of the common forms of open source licenses, only granted the user a copyright license if certain conditions were met; if they were not, then no license was granted and unauthorized copying, modification, and distribution could lead to copyright liability.

In the trial court, the defendants had convinced the judge that the Artistic License was intentionally broad. Any failure to follow the terms of the license, the district court held, might only lead to a breach of the license but would not create liability for copyright infringement. Further, defendants argued, since the license was free, any breach would not be compensable in damages. As a breach of contract, defendants argued that injunctive relief would not be available either. The district court denied the plaintiff’s request for a preliminary injunction.

The Federal Circuit took the plaintiff’s appeal from the Northern District of California because the original complaint included a patent non-infringement declaratory relief claim, which was not at issue in the appeal.

Copyright issues not being exclusive to the Federal Circuit, the Federal Circuit applied Ninth Circuit law. The Federal Circuit explained that there are important economic aspects to open source licenses even though money does not change hands. The copyright holder can enjoy faster development than might otherwise be possible, quickly gain market share and reputational benefits, and have the software improved free of charge by experts who may be better at software development and debugging than the original developer.

Moving on to whether a license had been granted to defendants, the Federal Circuit observed that the Artistic License expressly states, “The intent of this document is to state the conditions under which a Package may be copied,” and that the grant clause itself states that a user is given the right to copy, modify, and distribute the software “provided that” at least one of four enumerated conditions are met (attribution, internal use within an organization only, renaming modified executables and documenting changes, or making other arrangements directly with the copyright holder). The Federal Circuit held that absent a user meeting one of these conditions, no license was granted and a copyright claim was available to the plaintiff. The Federal Circuit held that these limitations were not merely contractual covenants.

Using rather broad language, the Federal Circuit described such conditions as being “vital to enable the copyright holder to retain the ability to benefit from the work of downstream users.” The restrictions were held to be “clear and necessary to accomplish the objectives of the open source licensing collaboration, including economic benefit.” The Federal Circuit held that injunctive relief might be even more important in an open source regime than under a traditional licensing arrangement, as open source licenses “might well be rendered meaningless absent the ability to enforce through injunctive relief.” As a result, the Federal Circuit vacated.

The law of open source licenses remains far from settled, and other courts may come to a different conclusion. Thus, time will tell whether or not the Jacobsen case will stand as a watershed decision legitimizing the fundamental basis of open source licenses.