A software developer, Robert Jacobsen, led a team that wrote a program to allow model train enthusiasts to use their computers to control their trains. The files for the program were made available free of charge but subject to a licence, known as the Artistic License 1.0.
Jacobson sued a commercial developer of train set software, Matthew Katzer and Kamind Associates, because of their use of some of the material from his software in its commercial product without attribution and without documentation tracking changes.
Jacobsen claimed that this broke the conditions of the Artistic License and was, therefore, copyright infringement.
A District Court ruling said the licence conditions had been broken, but that this was a breach of contract, not copyright infringement. It said that because the terms of the copyright licence were so broad they could not be held to have been breached.
The Court of Appeal has overturned that ruling, saying that the terms of the licence were conditions of it and not just covenants related to it, and the breaking of those conditions resulted in copyright infringement.
"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," the ruling said. "Generally, a 'copyright owner who grants a nonexclusive license to use his copyrighted material waives his right to sue the licensee for copyright infringement' and can sue only for breach of contract," it said, quoting a case between Sun and Microsoft.
"If, however, a license is limited in scope and the licensee acts outside the scope, the licensor can bring an action for copyright infringement."
"Thus, if the terms of the Artistic License allegedly violated are both covenants and conditions, they may serve to limit the scope of the license and are governed by copyright law. If they are merely covenants, by contrast, they are governed by contract law," it said. The Court said that the restrictions were conditions of the licence and introduced the possibility of copyright infringement.
Katzer and Kamind also argued that copyright could not be infringed because it is an economic right, and could not have protected a transaction in which no money changed hands. The Court disagreed.
"The lack of money changing hands in open source licensing should not be presumed to mean that there is no economic consideration," said the ruling. "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," it said.
Open source licences are designed to allow for the free distribution and modification of software but also to retain some control over that process. Creators generally want to ensure that their work is acknowledged, and that users are aware of what changes a third party has subsequently made to the software code.
The model is an alternative to traditional copyright and those behind open source licences such as the Creative Commons licence under which user-generated encyclopedia Wikipedia is published, call the movement copyleft as opposed to copyright. They often argue that the use of fewer intellectual property constraints allows for more and faster creativity and productivity.
Stanford Law Professor Larry Lessig called it a very important victory. "So for non-lawgeeks, this won't seem important," he wrote on his blog. "But trust me, this is huge."
Professor Lessig is the founder of Creative Commons.
"In non-technical terms, the Court has held that free licenses such as the CC [Creative Commons] licenses set conditions (rather than covenants) on the use of copyrighted work," he wrote. "When you violate the condition, the license disappears, meaning you're simply a copyright infringer. This is the theory of the GPL [another widely used free software licence] and all CC licenses. Put precisely, whether or not they are also contracts, they are copyright licenses which expire if you fail to abide by the terms of the license."