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Jacobsen v. Katzer: Federal Circuit Affirms Economic Interest of Open Source Copyright Holder

Copyright Patent

Jacobsen v. Katzer

Federal Circuit, August 13, 2008, No. 2008-1001
Slip Opinion

On August 13, the Federal Circuit ruled that open source license terms can create enforceable copyright conditions.  In Jacobsen v. Katzer, the Federal Circuit addressed the Northern District of California's rejection of Jacobsen's motion for preliminary injunction against competitor Matthew Katzer and Kamind Associates, Inc ("Katzer/Kamind") for infringement of the terms of an open source license ("Artistic License").  Jacobsen held the copyright to computer programming code, which he made available for free subject to the Artistic License.  According to Jacobsen, Katzer/Kamind incorporated portions of the code into one of their software packages without following the terms of the license. The district court concluded that the Artistic License was an unlimited non-exclusive license.  The district court held the terms of the license created mere covenants, not copyright conditions, and the defendants were thus not liable for copyright infringement.  At most, they had breached a non-exclusive license.  Breach of contract, unlike copyright infringement, creates no presumption of irreparable harm, and the court rejected Jacobsen's motion for a preliminary injunction. The Federal Circuit reversed and remanded the district court.

The Open Source Initiative provides commentary, stating that "the District Court decision was wrong and wrong in a way that could have been a disaster for open source community."

On appeal, the Federal Circuit reconsidered whether the terms in the Artistic License created conditions or merely covenants.  Katzer/Kamind's admission that it had incorporated Jacobsen's code into its own product established a prima facie case for copyright infringement, so the court examined whether Katzer/Kamind's use fell outside of the scope of the license.  Katzer/Kamind argued that terms of the license did not create conditions, reasoning that code made available for free could not provide the copyright holder economic rights.

The Federal Circuit rejected this argument.  Although money does not change hands in open source licensing, the court said, the copyright holder enjoys economic benefits, including enhanced reputation and market share.  A copyright holder has an economic interest in requiring users to copy and restate license and attribution information, and license terms are vital to protecting this interest.   Moreover, the Artistic License explicitly described its terms as conditions and used the traditional language of conditions.  The court ruled therefore that the terms were conditions rather than mere covenants, concluding that "[t]he 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."

At Proskauser Rose's blog New Media & Technology, Jeff Neuburger suggests that this decision will "greatly bolster the efforts of the open source community to control use of open source software according to the terms set out in the open source licenses."

Zohar Efroni from Stanford's Center for Internet and Society also described Jacobsen v Katzer/Kamind as "landmark decision" because it "unequivocally held that free licensing does not mean that [the licensor has received] no economic consideration[.]"