Be Careful What You Wish For: How the Jacobsen v. Katzer Decision Could Hurt the Free Software Movement

Last week, the U.S. Court of Appeals for the Federal Circuit, in Jacobsen v. Katzer, issued a very important decision in a case of first impression relating to the enforcement of software licenses.   In particular, it was the first federal appellate court decision to clarify whether failure to follow obligations imposed by an open-source license results in copyright infringement or breach of contract.  The distinction is important, as it controls the remedies available for such a failure, and can impact the question of whether lawsuits can be filed in state or federal court.  As Larry Lessig says, “trust me, this is huge.”  This may be true in ways that the free software movement did not foresee – and ways that the movement may very well regret. 

In this decision, called a “major victory for open source,” the court held that failure to abide by provisions requiring attribution in the Artistic License  (which wins the award for best software license name) will result in copyright infringement, because the license provisions were labeled and drafted as “conditions.” This decision is considered a victory  for both open source software licenses and the Creative Commons  licenses for literary and musical works, because it clears up questions about the enforceability of their licenses under copyright law. However, in strengthening copyright holders’ ability to make license provisions a condition of the copyright license, the free software movement may have won the battle, but lost the war.

As Braden Cox of ACT explained, because the “rationale of the decision is not limited to only open source,” this decision is a boon for all copyright owners who impose conditions on the license to their products. This could deprive the free software movement of one of its most important sources of new products: reverse engineering popular proprietary products.  Under Jacobsen, conditions, including a prohibition against reverse engineering, MAY now be enforceable under copyright.

This practice has already been under pressure in light of decisions such as Davidson & Assocs. v. Jung, 422 F.3d 630, 639 (8th Cir. 2005), which held that license provisions prohibiting reverse engineering (in that case, in relation to the Blizzard gaming system) are not preempted by copyright law.

While there are examples of important free software that did not originate by reverse engineering proprietary software (e.g., the Apache web server,  the Firefox browser ), many of the most important free software projects began by reverse engineering proprietary software systems.  For example, Richard Stallman and the GNU Project reverse engineered  Unix tools to create the “unix-like” GNU system which is a major component of what Stallman calls "the GNU/Linux operating system."  Stallman considered installation and use of Unix, a proprietary operating system, a “justifiable evil,” “applying the same reasoning that leads to the conclusion that violence in self defense is justified,” but he did not apparently apply the same rigorous analysis to his decision to copy Unix system tools rather than create his own system.

Another example of an important free software program that could not have been created without reverse engineering is the Samba project, which is a set of services that allow a non-Windows server “host to interact with a Microsoft Windows client or server as if it is a Windows file and print server.”   Samba was created by using the “french café” method of reverse engineering: having Microsoft clients and servers communicate with each other and using a “network sniffer” to discover the details of the network communications between them, akin to “sitting in a French Café and just listening to the conversations” in order to learn French.   

Yet another example of an important open source program that relied on reverse engineering is the Open Office suite of productivity applications, including a word processor and spreadsheet, which both reverse engineered the Microsoft Office data formats and “emulate[d] its look and feel where suitable.”   

The ability to reverse engineer software has been considered subject to the “fair use” defense under U.S. copyright law, 17 U.S.C. § 107,  including by the Ninth Circuit in Sega Enterprises, LTD v. Accolade, Inc., 977 F.2d 1510 (9th Cir. 1993).   Many software providers consequently have made it a condition of their license agreements that the licensee not engage in reverse engineering, as “private parties are free to contractually forego the limited ability to reverse engineer a software product under the exemptions of the Copyright Act.”  Bowers v. Baystate Techs., Inc., 320 F.3d 1317, 1325-26 (Fed. Cir. 2003), quoted in  Davidson, 422 F.3d at 639.  This is where the Jacobsen decision could impact reverse engineering practices. 

If a software license is “conditioned” on not reverse engineering the software, then after Jacobsen, breach of such a license “condition” could result in a finding of copyright infringement, rather than simply a breach of the license contract.  It’s not the reverse engineering per se that would constitute the copyright infringement, just as it’s not the lack of attribution that constituted copyright infringement in the Jacobsen case, but rather the unlicensed exercise of one of the exclusive rights granted under copyright law (i.e., the right to make copies or derivative works, which takes place during the process of reverse engineering).  And just like with the attribution provision in the Artistic License, as the Federal Circuit explained, “these types of license restrictions might well be rendered meaningless absent the ability to enforce through injunctive relief.” 

This is the result that Eben Moglen has long argued for, stating “[l]icenses are not contracts: the work's user is obliged to remain within the bounds of the license not because she voluntarily promised, but because she doesn't have any right to act at all except as the license permits.”   But if this result prevents development of new free software projects that rely on reverse engineering popular commercial programs, then it could deprive the free software movement of one of its most significant sources of new projects. 

Make no mistake – this decision strengthens the hand of copyright holders, a large number of which are the types of commercial organizations that insist on being paid for their hard work when their products are successful in the marketplace.  By pressing for a short-term victory, the free software movement may have sown the seeds of its own defeat.

This is not legal advice

Comments

[RJack]

The claim:

>This is the result that Eben Moglen has long argued for, stating “[l]icenses are not contracts: the work's user is obliged to remain within the bounds of the license not because she voluntarily promised, but because she doesn't have any right to act at all except as the license permits.”<

is off the mark.

All licenses are contracts. That a contract has "conditions" (precedent or subsequent} makes it no less a contract. 17 USC 301(a) and contract law applies whether a contract term is a condition or a covenant.

There is no difference between one contract that states, "You may copy my work if you promise to murder your mother" and another that states, "You may copy my work provided that you murder your mother". One contains a covenant the other a condition but they are both illegal terms.

I repeat, if it is a license it is a contract.

[Noah Clements]

I would tend to agree with you about license and contract, in fact I wrote about it here http://blog.actonline.org/2007/09/revisiting-lice.html and here http://www.actonline.org/documents/GPLv3-License-or-Contract.pdf.

I would not equate the provision in the GPL that you make source available with murdering your mother - you are hardcore! Really, it is when we are talking about terms that are not illegal, but also that do not directly implicate one of copyright's exclusive rights that was an open question.

Whereas I argued that if a particular license term did not directly limit the exercise of one of copyright's exclusive rights (copying, distribution, creating derivative works), breach of that term would implicate only contract rights, Moglen argued otherwise. Both the Blizzard v. MDY case (breach of license term that said you could not use bots in World of Warcraft was copyright infringement) http://docs.justia.com/cases/federal/district-courts/arizona/azdce/2:2006cv02555/322017/82/0.pdf and the Jacobsen appeals court decision, came down on the side of the argument that Moglen had long argued for. I think this is wrong, and I am not alone - see http://technollama.blogspot.com/2008/08/licence-breach-equals-copyright.html - but copyright holders, including the FSF, would disagree. But there are implications when copyright holders can specify that breach of certain terms will result in copyright infringement. Whether courts will make a special exception for terms that prohibit reverse engineering remains to be seen.

[Rjack]

> I would not equate the provision in the GPL that you make
source available with murdering your mother... <

Nor would I. The point of my hyperbole was that copyright
preemption, illegal terms ("against public policy"), mutual
mistake, and impossibility of terms (among a thousand other
rules) have yet to be examined under the Federal Circuit's
implementation of "condition" versus "covenant".

A provision in a contract that demands you make source available
to a party in privity is a right "in personam". A provision in a
contract that demands you make source available to the general
public becomes "in rem" in scope. Strangers to the contract are
directly affected. This is a prima facie case of extending the
scope of your copyright to control that of another's exclusive
grant (copyright misuse).

Even worse is the demand in GPL 2(b) that you "license[d] as a
whole at no charge to all third parties underthe terms of this
License."

Now a license is a contract so how in the world do you (a private
party to the contract) bind "all third parties"? ("It goes
without saying that a contract cannot bind a nonparty."; Equal
Employment Opportunity Comm'n v. Waffle House, Inc. 122 S.Ct.
754, 764 (2002).

The demand requiring licensing to all third parties also creates
a right "in rem". The ProCD decision clearly distinguished this
kind of contractual overreach when applying 17 USC 301(a). ("A
copyright is a right against the world. Contracts, by contrast,
generally affect only their parties; strangers may do as they
please, so contracts do not create "exclusive rights. . .
Like the Supreme Court in Wolens, we think it prudent to refrain
from adopting a rule that anything with the label "contract" is
necessarily outside the preemption clause: the variations and
possibilities are too numerous to foresee. . . But whether a
particular license is generous or restrictive, a simple two-party
contract is not "equivalent to any of the exclusive rights within
the general scope of copyright" and therefore may be enforced."),
ProCD v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996).

[RJack]

Lawrence Lessig quipped:

"In non-technical terms, the Court has held that free licenses such as the CC licenses set conditions (rather than covenants) on the use of copyrighted work. When you violate the condition, the license disappears, meaning you're simply a copyright infringer. This is the theory of the GPL 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."

Sorry Lawrence. You know naught concerning that of which you speak. If the contract disappears then 17 USC 301(a) wouldn't apply to overreaching conditional terms. But it is Hornbook contract law that failure to satisfy a condition does not negate the existence of a contract:

"That the government's promise to issue the loan guarantee was contingent upon High Plains and Wells Fargo's performance of
numerous conditions does not make the promise any less binding.
Indeed, the essence of a unilateral contract is that one party's
promise is conditional upon the other party's performance of
certain acts and when the other party performs, the first party
is bound. See M.K. Metals, Inc. v. Container Recovery Corp., 645
F.2d 583, 588 (8th Cir.1981) (" '(a) contract condition which
qualifies a duty of performance by a party does not make the
existence or validity of the contract hinge on the condition' ")
(citation omitted); Moratzka v. United States (In re Matthieson),
63 B.R. 56, 60 (D.Minn.1986) ("[A] condition precedent is a
condition precedent to performance under the contract, not
formation of the contract. When a condition precedent is not
satisfied, it relieves a party to the contract of the obligation
to perform. It does not negate the existence of the contract or
the binding contractual relationship of the parties."). Although
these cases did not involve unilateral contracts, they set out a
general principle of contract law concerning conditional
performance that is applicable to all types of contracts." Wells
Fargo Bank, N.A., v. The United States; 88 F.3d 1012 (CAFC 1996)

[RJack]

The Holy Grail for an author of an open source license is to design a
copyright license that controls the copying and distribution of
derivative works in the domain of the general public. There seems to
be a misconception concerning the right of an author to control these
rights. There is no exclusive right in the Copyright Right Act
providing for the copying and distribution of derivative works. 17 USC
sec. 103 of the Act provides for mutually exclusive 17 USC sec. 106
rights for a "preexisting" author and a "modifying" author in the
creation of a derivative work. Congress left the distribution of
derivation works as a matter of contract law between the preexisting
and modifying authors in privity (in personam).

"A right in personam means a right available against a determinate
individual or determinate individuals. All contractual rights, as well
as some others, fall thereunder. A right in rem means a right
available against persons generally, or, as frequently expressed,
against the world at large. All the rights that come within the branch of law designated Torts fall within this category."; Modern American Law (Law of Torts)

The House Report on the Copyright Act of 1976:

"Preemption of State law
The intention of section 301 is to preempt and abolish any rights
under the common law or statutes of a State that are equivalent to
copyright and that extend to works coming within the scope of the
Federal copyright law. The declaration of this principle in section
301 is intended to be stated in the clearest and most unequivocal
language possible, so as to foreclose any conceivable
misinterpretation of its unqualified intention that Congress shall act
preemptively, and to avoid the development of any vague borderline
areas between State and Federal protection. . ."

17 USC 301(a) forbids the creation of new copyrights "in rem" (the
general public), one need only read ProCD v. Zeidenberg, 86 F.3d 1447
(7th Cir. 1996) for context. Private in personam (in privity) rights
are not preempted. General public regulation of copyrights (think: The
General Public License - GPL) is DOA because of Congressional
preemption desires.

So why do Lawrence Lessig and Eben Moglen persist in claiming they can
control the distribution of derivative works outside of contract
privity with a "public" adhesion contract?

[RJack]

> Whereas I argued that if a particular license term did not directly
limit the exercise of one of copyright's exclusive rights (copying,
distribution, creating derivative works), breach of that term would
implicate only contract rights, Moglen argued otherwise. <

You are absolutely correct! Here's why. First, a justification of
analogy to patent law:

"[n36]. . . There is no precedent in the law of copyright. . . The
closest analogy is provided by the patent law cases to which it is
appropriate to refer because of the historic kinship between patent
law and copyright law."; Sony Corp. of Am. v. Universal City Studios,
Inc., 464 U.S. 417 (1984).

Secondly:

"The scope of every patent is limited to the invention described in
the claims contained in it, read in the light of the specification.
These so mark where the progress claimed by the patent begins and
where it ends that they have been aptly likened to the description in
a deed, which sets the bounds to the grant which it contains. It is to
the claims of every patent, therefore, that we must turn when we are
seeking to determine what the invention is, the exclusive use of which
is given to the inventor by the grant provided for by the statute,—'He
can claim nothing beyond them.'
. . .
Whatever the right of the owner may be to control by restriction the
materials to be used in operating the machine, it must be a right
derived through the general law from the ownership of the property in
the machine, and it cannot be derived from or protected by the patent
law, which allows a grant only of the right to an exclusive use of the
new and useful discovery which has been made,—this and nothing
more."; In Motion Picture Patents Co. v. Universal Film Mfg. Co., 243
U.S. 502 (1917).

We see:

"—'He can claim nothing beyond them.' . . . [I]t cannot be derived from or protected by the patent law. . . —*this and nothing more*."

Hmmm....

[alexander]

@Noah Clements

According to the CAFC, a license stating that "you can reproduce and/or perform my song _provided that_ the sound level doesn't exceed 80 dB" creates a copyright (not a contract) liability at 80.0000000000000001+ dB and more because "provided that" is treated as a "condition" by three CAFC's fellows.

However:

"Technically, the Federal Circuit's ruling will have no precedential, effect. Because of an unusual quirk in US law, the court had to apply the legal standards of a sister appellate court, the 9th Circuit Court of Appeals; and the Federal Circuit's interpretation of 9th Circuit law has no precedential value. "Even a future Federal Circuit case on this area of the law must look again to the regional [9th] circuit and not the Federal Circuit interpretation," according to Harold Wegner, a partner in the Washington, DC office of Foley & Lardner."

[Rjack]

>> According to the CAFC, a license stating that "you can reproduce and/or perform my song _provided that_ the sound level doesn't exceed 80 dB" creates a copyright (not a contract) liability at 80.0000000000000001+ dB and more because "provided that" is treated as a "condition" by three CAFC's fellows. <<

Violation of a condition subsequent in a copyright license gives rise to a contract claim for rescission of the license. Only after contract rescission is effected would a claim for copyright infringement be actionable. There is much less to the Federal Circuit's decision than first impression implies:

California Civil Code

1435. Conditions may be precedent, concurrent, or subsequent.

1436. A condition precedent is one which is to be performed before
some right dependent thereon accrues, or some act dependent thereon
is performed.

1437. Conditions concurrent are those which are mutually dependent,
and are to be performed at the same time.

1438. A condition subsequent is one referring to a future event,
upon the happening of which the obligation becomes no longer binding
upon the other party, if he chooses to avail himself of the
condition.

[RJack]

What no precedental CAFC law?

"[In} Bandag, Inc. v. Al Bolser's Tire Stores, Inc., 750 F.2d 903, at 909 (Fed.Cir.1984), this court said:

Accordingly, we deem it appropriate here to decide non-patent matters
in the light of the problems faced by the district court from which
each count originated, including the law there applicable. In this
manner, we desire to avoid exacerbating the problem of intercircuit
conflicts in non-patent areas. A district court judge should not be
expected to look over his shoulder to the law in this circuit, save as
to those claims over which our subject matter jurisdiction is
exclusive. [Footnote omitted.]
...
The freedom of the district courts to follow the guidance of their
particular circuits in all but the substantive law fields assigned
exclusively to this court is recognized in the foregoing opinions and
in this case."; ATARI, INC., v. JS & A GROUP, INC., 747 F.2d 1422, 223
USPQ 1074 (Fed. Cir. 1984) (en banc)