Federal Circuit Addresses Open Source Copyright Licenses

August 13, 2008. The U.S. Court of Appeals (FedCir) issued its opinion [16 pages in PDF] in Jacobsen v. Katzer, a copyright case involving the ability of a copyright holder to dedicate certain work to free public use and yet enforce an open source copyright license to control the future distribution and modification of that work.

The District Court denied the copyright holder's motion for a preliminary injunction against a copier who did not comply with the terms of an open source license. The Court of Appeals vacated and remanded the judgment of the District Court.

Laurence Lessig, the founder of Creative Commons, which filed an amicus brief [PDF], wrote in his web site that "this is huge".

The Court of Appeals reasoned that the open source license in this case allowed anyone to download and use the copyrighted software, for free, but subject to certain conditions, such as restating the license and providing attribution. The key aspect of this opinion is the Court's conclusion that these are conditions, rather than covenants. That is, by violating these conditions, the copier no longer had a license to copy, and was therefore engaging in copyright infringement. And, with infringement, injunctive relief is available. If the Court had concluded that the terms were covenants, the copier would have still had a license, but violated covenants, for which the cause of action would be breach of contract, and the remedy would be damages, but not injunctive relief.

Background. Robert Jacobsen, the plaintiff below, and appellant in this proceeding, holds a copyright to computer programming code -- software for model trains. He makes that code available for public download from a web site without a financial fee pursuant to the Artistic License, an open source license. He is also the manager of the Java Model Railroad Interface (JMRI), an open source software group.

Matthew Katzer and Kamind Associates, Inc., the defendants below, and appellees in this proceeding, develop competing commercial software products for model trains.

They downloaded code from Jacobsen's web site and incorporated it into software without adhering to the terms of the Artistic License.

Jacobsen filed a complaint in U.S. District Court (NDCal) against Katzer and Kamind alleging copyright infringement.

Jacobsen also sought a declaratory judgment of non-infringement and invalidity of a Katzer patent. Hence, the Federal Circuit, rather than the 9th Circuit, has appellate jurisdiction in this case, even though no patent issue is involved in this appeal. However, the Federal Circuit applied the copyright law of the 9th Circuit.

Jacobsen moved for a preliminary injunction. The defendants argue that there is no copyright infringement because they had a license to use the material.

The District Court denied the motion, holding that the open source Artistic License created an intentionally broad nonexclusive license which was unlimited in scope and thus did not create liability for copyright infringement.

See also, hyperlinks to District Court pleadings in Jacobsen's JMRI web site.

Court of Appeals: Nature of Open Source Licenses. The Court of Appeals vacated the judgment of the District Court. First, the Court of Appeals explained open source licensing.

It wrote that "Public licenses, often referred to as ``open source´´ licenses, are used by artists, authors, educators, software developers, and scientists who wish to create collaborative projects and to dedicate certain works to the public."

"Open source licensing has become a widely used method of creative collaboration that serves to advance the arts and sciences", wrote the Court of Appeals.

"Open Source software projects invite computer programmers from around the world to view software code and make changes and improvements to it. Through such collaboration, software programs can often be written and debugged faster and at lower cost than if the copyright holder were required to do all of the work independently. In exchange and in consideration for this collaborative work, the copyright holder permits users to copy, modify and distribute the software code subject to conditions that serve to protect downstream users and to keep the code accessible." (Footnote omitted.)

"By requiring that users copy and restate the license and attribution information, a copyright holder can ensure that recipients of the redistributed computer code know the identity of the owner as well as the scope of the license granted by the original owner. The Artistic License in this case also requires that changes to the computer code be tracked so that downstream users know what part of the computer code is the original code created by the copyright holder and what part has been newly added or altered by another collaborator."

The Court continued that "Traditionally, copyright owners sold their copyrighted material in exchange for money. The lack of money changing hands in open source licensing should not be presumed to mean that there is no economic consideration, however. There are substantial benefits, including economic benefits, to the creation and distribution of copyrighted works under public licenses that range far beyond traditional license royalties. For example, program creators may generate market share for their programs by providing certain components free of charge. Similarly, a programmer or company may increase its national or international reputation by incubating open source projects. Improvement to a product can come rapidly and free of charge from an expert not even known to the copyright holder."

Court of Appeals: Analysis of Infringement Claim. The Court of Appeals then addressed whether the defendants' copying constituted copyright infringement. It concluded that it did.

It wrote that "The heart of the argument on appeal concerns whether the terms of the Artistic License are conditions of, or merely covenants to, the copyright license." That is, a copyright owner who grants a nonexclusive license to use his copyrighted material waives his right to sue the licensee for infringement, and can sue only for breach of contract. "If, however, a license is limited in scope and the licensee acts outside the scope, the licensor can bring an action for copyright infringement."

It reasoned that since the Artistic License states expressly that it creates "conditions", and it "uses the traditional language of conditions", its terms are conditions, not covenants.

The Court continued that "The conditions set forth in the Artistic License are vital to enable the copyright holder to retain the ability to benefit from the work of downstream users. By requiring that users who modify or distribute the copyrighted material retain the reference to the original source files, downstream users are directed to Jacobsen's website."

It wrote that "Copyright holders who engage in open source licensing have the right to control the modification and distribution of copyrighted material."

The Court of Appeals added that "The choice to exact consideration in the form of compliance with the open source requirements of disclosure and explanation of changes, rather than as a dollar-denominated fee, is entitled to no less legal recognition. Indeed, because a calculation of damages is inherently speculative, these types of license restrictions might well be rendered meaningless absent the ability to enforce through injunctive relief."

It concluded, "The clear language of the Artistic License creates conditions to protect the economic rights at issue in the granting of a public license. These conditions govern the rights to modify and distribute the computer programs and files included in the downloadable software package. The attribution and modification transparency requirements directly serve to drive traffic to the open source incubation page and to inform downstream users of the project, which is a significant economic goal of the copyright holder that the law will enforce. Through this controlled spread of information, the copyright holder gains creative collaborators to the open source project; by requiring that changes made by downstream users be visible to the copyright holder and others, the copyright holder learns about the uses for his software and gains others' knowledge that can be used to advance future software releases."

This case is Robert Jacobsen v. Matthew Katzer, et al., U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 2008-1001, an appeal from the U.S. District Court for the Northern District of California, D. C. No. 06-CV-1905, Judge Jeffrey White presiding.

Judge Faith Hochberg, U.S. District Court (DNJ), sitting by designation, wrote the opinion of the Court of Appeals, in which Judges Michel and Prost joined.