The first federal court review of open source software licenses was recently undertaken by the U.S. Court of Appeals for the Federal Circuit. The decision, Jacobsen v. Katzer, No. 2008-1001, slip op. (Fed. Cir. Aug. 13, 2008), is important because it finds that infringers of open source licenses are subject to Copyright laws, as opposed to only being in breach of contract for a violation of an open source license.

The court determined that the “conditions” of the open source license were violated when the Defendant removed some of the license notices and other non-critical portions of the software. This was different from the “covenants” that are violated under a contract analysis.

Why does it matter? Remedies for breaching a contract are generally more limited, usually to the economic losses of a contractor. Violations of federal copyright laws, however, provide for more substantial remedies. Such remedies include statutory damages, infringer profits obtained as a result of the breach and other damages that would be more substantial than the aggrieved party’s economic loss.

This result is important, perhaps critical, to the open source movement. Had the court concluded that violations of open source licenses were simply breaches of contract violators would use open source software with virtually no liability concern. The reason? Open source copyright holders would virtually never be able to show “classic” economic loss, because their software is generally provided for free.

While a boon for open source authors, the opinion does create a problem for business and industry that may have taken liberties with open source licenses in the past. While always a good idea, now is a sensible time for IT departments to do an audit of its software licensing, both as to open source and more traditional (closed source) software packages to ensure compliance.

CategoryBlog, Copyright
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