There are so few judicial opinions dealing with open source licenses that any single one is of great interest, but the pro-open source ruling of the Court of Appeals for the Federal Circuit in Jacobsen v. Katzer, No. 2008-1001 (Fed. Cir. Aug. 13, 2008) easily goes to the top of the charts of this small category. This is a highly significant opinion that will greatly bolster the efforts of the open source community to control the use of open source software according to the terms set out in open source licenses.

The central issue in the case is whether the conditions in the open source Artistic License limit the scope of the license (in which case a failure to comply with those conditions constitutes copyright infringement) or whether those conditions are in fact merely covenants, the breach of which gives rise only to a cause of action for damages. For an open source licensor, the difference between those two causes of action is particularly relevant because because  injunctive relief usually is not as easily available in a breach of contract action. In a copyright infringement action, however, statutory damages and injunctive relief are more readily available, regardless of whether actual damages can be shown.

The appeals court concluded that the Artistic License “on its face … creates conditions.” The court pointed to the literal language of the license, which expressly refers to “conditions under which a Package may be copied,” and the use of traditional language to create conditions, i.e., the use of the term “provided that,” which creates a condition under California law. The appeals court concluded that the district court failed to credit the explicit restrictions in the license that sought to govern the rights to modify and distribute code licensed under its terms:

The copyright holder here expressly stated the terms upon which the right to modify and distribute the material depended and invited direct contact if a downloader wished to negotiate other terms. These restrictions were both clear and necessary to accomplish the objectives of the open source licensing collaboration, including economic benefit. Moreover, the District Court did not address the other restrictions of the license, such as the requirement that all modification from the original be clearly shown with a new name and a separate page for any such modification that shows how it differs from the original.

In other words, the conditions of the Artistic License are “enforceable copyright conditions.”

This language will no doubt be frequently quoted in any discussion of open source licenses:

Copyright holders who engage in open source licensing have the right to control the modification and distribution of copyrighted material. As the Second Circuit explained in Gilliam v. ABC, 538 F.2d 14, 21 (2d Cir. 1976), the “unauthorized editing of the underlying work, if proven, would constitute an infringement of the copyright in that work similar to any other use of a work that exceeded the license granted by the proprietor of the copyright.” Copyright licenses are designed to support the right to exclude; money damages alone do not support or enforce that right. 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.
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.

The appeals court remanded to the district court for reconsideration of the appropriateness of injunctive relief.

(Note: the appeal ended up in the Federal Circuit due to an included patent law claim.)