Open source licensing of software got a recent boost from an unlikely source, the Court of Appeals for the Federal Circuit. The CAFC normally decides patent and trademark issues but rarely deals with copyrights. In an appeal from the Northern District of California, the CAFC reversed and remanded for further factual findings after holding, as a matter of law, that provisions in an open source license of certain software, which allows model railroaders to program decoder chips that control model railroads, were conditions, not covenants. Jacobsen v. Katzer, 535 F.3d 1373 (Fed. Cir. 2008). Accordingly, failure to comply with the "conditions" resulted in actions outside the scope of the license which were, in turn, an infringement of the software copyright. The trial court had held the software terms were covenants so that a breach could only be enforced by a money judgment. Since open source, or "public" licenses, are by their nature free of charge, such a breach failed to yield any recognizable damages. Finding no copyright infringement, the trial court thus denied the plaintiff’s motion for a preliminary injunction.
Open source licenses are a creature of the Internet age and are generally used to facilitate the efficient and expeditious improvement of software that might otherwise take much longer for a discrete circle of developers. Such open source software, although free, is not public domain. The licenses typically contain provisions protecting the integrity of the core, original software code, provided that downstream users are informed of such original source (generally by use of a specified copyright notice) and carry forth the open source license. The license terms also require notice of any changes made and that the revised software likewise be made freely available unless the revised software is used solely within the user’s organization. However, because of their royalty-free nature, it has been unclear whether and how their terms may be enforceable.
The CAFC first dealt with the conceptual conundrum of economic harm by finding a substantial benefit to the software proprietor from the notice provisions, since downstream users are then directed to the proprietor’s website. "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."
Once it established the economic framework, the CAFC had no trouble in finding that failure to comply with the "provided for" copyright notice and modification tracking provisions fell outside the scope of the license and, hence, was an infringement of the proprietor’s / open source licensor’s copyright. The CAFC concluded with a concise summary of the public policy reasons to strongly preserve, protect and enforce open source licenses: "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." In short, the public license secures to the software owner the economic advantages which form the basic incentive of the copyright laws while, in turn, making the fruits of his or her economic labors freely and widely available to the public at large.
The case had two interesting sidelights. The CAFC considered, but did not decide, whether the eBay case would have undermined the Ninth Circuit’s presumption of irreparable harm once likelihood of success in a copyright action is established. Second, the CAFC found itself to be the appropriate appellate tribunal, to the exclusion of the Ninth Circuit, because the overall action included a request for a declaration that a patent held by the defendant was invalid and not infringed. It is, thus, always possible that the Ninth Circuit would have reached a different holding on the open source issue if confronted in a case without a patent component.
Although other courts may certainly feel free to decide this issue differently, the CAFC’s influence in the IP realm suggests that open source software developers may now feel much more confident about the enforceability of their creations in still other circuits and may, as a practical matter, choose to anchor appeals in the CAFC by joining any such copyright claims with at least one count, if viable, for patent infringement or invalidity.