Contract and Copyright Remedies Available under Open Source Licenses
This document does not provide legal advice, and represents the views solely of the Google Open Source Program Office. Please consult with your own lawyer for legal advice.
What happens if you do not follow the terms of an open source license? Are you liable for breach of contract or copyright claims? This distinction is critical, as the remedies are different for both.1
Generally, a licensor who grants a nonexclusive license to copyrighted material waives the right to sue a licensee for copyright infringement, and may sue only for breach of contract.2 “If, however, a license is limited in scope and the licensee acts outside the scope, the licensor may bring an action for copyright infringement.”3 But how might a licensee act outside the scope of a license?
This chapter will present two cases, Jacobsen v. Katzer and MDY v. Blizzard Entm’t. The primary focus of these opinions is the difference between contractual covenants and contractual conditions. A covenant is an unqualified promise to perform or refrain from an act. A condition is an act or event, uncertain to occur, that must occur before a duty to perform arises. The Courts in these cases build upon the understanding that conditions define the scope of a contract, and use this for determining which acts of a licensee will therefore fall outside the scope of a contract and expose the licensee to the possibility of copyright infringement remedies.
The Jacobsen court examines the connection between the copyright license at issue and the economic rights of the licensor. The MDY court considers whether the condition violated has a nexus to the licensor’s exclusive rights of copyright. While reading these cases ask yourself, how are these tests related?
We commence with a comparison of the remedies for contract breach and copyright infringement to provide context. We conclude by reviewing the terms of a few open source licenses under the framework of covenants, conditions, and nexuses between conditions and the exclusive rights of copyright.
The Remedies Compared
Contract remedies are generally limited to an award of damages that will fulfill the “expectation interest” of the harmed party.4 In other words, the harmed party is owed the amount of money that will put them in as good a position as they would have been if the contract had been performed.5 Other available contract remedies include specific performance,6 for example injunctions to stop distributing a work of software, but specific performance will not be ordered if money is adequate to fulfill the harmed party’s expectation interest.7 Punitive damages are unrecoverable for breach of contract unless the breach itself is a tort for which punitive damages are recoverable.8
The remedies for copyright infringement, on the other hand, can include up to $150,000 in statutory damages per work infringed.9 Alternatively, a copyright holder can seek “to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement.10 A court may order injunctive relief, such as blocking a copyright infringer from making derivative works.11 A court may also impound all articles embodying a reproduction of the copyrighted work.12 A court may also award costs and attorney’s fees.13
Jacobsen v. Katzer
535 F.3d 1373
HOCHBERG, District Judge. We consider here the ability of a copyright holder to dedicate certain work to free public use and yet enforce an “open source” copyright license to control the future distribution and modification of that work.
Jacobsen manages an open source software group called Java Model Railroad Interface (“JMRI”). Through the collective work of many participants, JMRI created a computer programming application called DecoderPro, which allows model railroad enthusiasts to use their computers to program the decoder chips that control model trains. DecoderPro files are available for download and use by the public free of charge from an open source incubator website called SourceForge; Jacobsen maintains the JMRI site on SourceForge. The downloadable files contain copyright notices and refer the user to a “COPYING” file, which clearly sets forth the terms of the Artistic License.
Katzer/Kamind offers a competing software product, Decoder Commander, which is also used to program decoder chips. During development of Decoder Commander, one of Katzer/Kamind’s predecessors or employees is alleged to have downloaded the decoder definition files from DecoderPro and used portions of these files as part of the Decoder Commander software. The Decoder Commander software files that used DecoderPro definition files did not comply with the terms of the Artistic License. Specifically, the Decoder Commander software did not include (1) the authors’ names, (2) JMRI copyright notices, (3) references to the COPYING file, (4) an identification of SourceForge or JMRI as the original source of the definition files, and (5) a description of how the files or computer code had been changed from the original source code. The Decoder Commander software also changed various computer file names of DecoderPro files without providing a reference to the original JMRI files or information on where to get the Standard Version.14
Jacobsen moved for a preliminary injunction, arguing that the violation of the terms of the Artistic License constituted copyright infringement and that, under Ninth Circuit law, irreparable harm could be presumed in a copyright infringement case. The District Court reviewed the Artistic License and determined that “Defendants’ alleged violation of the conditions of the license may have constituted a breach of the nonexclusive license, but does not create liability for copyright infringement where it would not otherwise exist.” [cite]. The District Court found that Jacobsen had a cause of action only for breach of contract, rather than an action for copyright infringement based on a breach of the conditions of the Artistic License. Because a breach of contract creates no presumption of irreparable harm, the District Court denied the motion for a preliminary injunction.
Jacobsen appeals the finding that he does not have a cause of action for copyright infringement. Although an appeal concerning copyright law and not patent law is rare in our Circuit, here we indeed possess appellate jurisdiction.
Public licenses, often referred to as “open source” licenses, are used by artists, authors, educators, software developers, and scientists who wish to create collaborative projects and to dedicate certain works to the public. Several types of public licenses have been designed to provide creators of copyrighted materials a means to protect and control their copyrights. Creative Commons, one of the amici curiae, provides free copyright licenses to allow parties to dedicate their works to the public or to license certain uses of their works while keeping some rights reserved.
Open source licensing has become a widely used method of creative collaboration that serves to advance the arts and sciences in a manner and at a pace that few could have imagined just a few decades ago. For example, the Massachusetts Institute of Technology (“MIT”) uses a Creative Commons public license for an OpenCourseWare project that licenses all 1800 MIT courses. Other public licenses support the GNU/Linux operating system, the Perl programming language, the Apache web server programs, the Firefox web browser, and a collaborative web-based encyclopedia called Wikipedia. Creative Commons notes that, by some estimates, there are close to 100,000,000 works licensed under various Creative Commons licenses. The Wikimedia Foundation, another of the amici curiae, estimates that the Wikipedia website has more than 75,000 active contributors working on some 9,000,000 articles in more than 250 languages.
Open source software projects invite computer programmers from around the world to view software code and make changes and improvements to it. Through such collaboration, software programs can often be written and debugged faster and at lower cost than if the copyright holder were required to do all of the work independently. In exchange and in consideration for this collaborative work, the copyright holder permits users to copy, modify and distribute the software code subject to conditions that serve to protect downstream users and to keep the code accessible.15 By requiring that users copy and restate the license and attribution information, a copyright holder can ensure that recipients of the redistributed computer code know the identity of the owner as well as the scope of the license granted by the original owner. The Artistic License in this case also requires that changes to the computer code be tracked so that downstream users know what part of the computer code is the original code created by the copyright holder and what part has been newly added or altered by another collaborator.
Traditionally, copyright owners sold their copyrighted material in exchange for money. The lack of money changing hands in open source licensing should not be presumed to mean that there is no economic consideration, however. 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. The Eleventh Circuit has recognized the economic motives inherent in public licenses, even where profit is not immediate. See Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1200 (11th Cir. 2001) (Program creator “derived value from the distribution [under a public license] because he was able to improve his Software based on suggestions sent by end-users… . It is logical that as the Software improved, more end-users used his Software, thereby increasing [the programmer’s] recognition in his profession and the likelihood that the Software would be improved even further.“).
The parties do not dispute that Jacobsen is the holder of a copyright for certain materials distributed through his website.16 Katzer/Kamind also admits that portions of the DecoderPro software were copied, modified, and distributed as part of the Decoder Commander software. Accordingly, Jacobsen has made out a prima facie case of copyright infringement. Katzer/Kamind argues that they cannot be liable for copyright infringement because they had a license to use the material. Thus, the Court must evaluate whether the use by Katzer/Kamind was outside the scope of the license. See LGS Architects, 434 F.3d at 1156. The copyrighted materials in this case are downloadable by any user and are labeled to include a copyright notification and a COPYING file that includes the text of the Artistic License. The Artistic License grants users the right to copy, modify, and distribute the software:
provided that [the user] insert a prominent notice in each changed file stating how and when [the user] changed that file, and provided that [the user] do at least ONE of the following:
a) place [the user’s] modifications in the Public Domain or otherwise make them Freely Available, such as by posting said modifications to Usenet or an equivalent medium, or placing the modifications on a major archive site such as ftp.uu.net, or by allowing the Copyright Holder to include [the user’s] modifications in the Standard Version of the Package.
b) use the modified Package only within [the user’s] corporation or organization.
c) rename any non-standard executables so the names do not conflict with the standard executables, which must also be provided, and provide a separate manual page for each nonstandard executable that clearly documents how it differs from the Standard Version, or
d) make other distribution arrangements with the Copyright Holder.
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. 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. Sun Microsystems, Inc., v. Microsoft Corp., 188 F.3d 1115, 1121 (9th Cir. 1999); Graham v. James, 144 F.3d 229, 236 (2d Cir. 1998). If, however, a license is limited in scope and the licensee acts outside the scope, the licensor can bring an action for copyright infringement. See S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1087 (9th Cir.1989); Nimmer on Copyright, § 1015[A](1999).
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. See Graham, 144 F.3d at 236-37 whether breach of license is actionable as copyright infringement or breach of contract turns on whether provision breached is condition of the license, or mere covenant); Sun Microsystems, 188 F.3d at 1121 (following Graham; independent covenant does not limit scope of copyright license). The District Court did not expressly state whether the limitations in the Artistic License are independent covenants or, rather, conditions to the scope; its analysis, however, clearly treated the license limitations as contractual covenants rather than conditions of the copyright license.17
Jacobsen argues that the terms of the Artistic License define the scope of the license and that any use outside of these restrictions is copyright infringement. Katzer/Kamind argues that these terms do not limit the scope of the license and are merely covenants providing contractual terms for the use of the materials, and that his violation of them is neither compensable in damages nor subject to injunctive relief. Katzer/Kamind’s argument is premised upon the assumption that Jacobsen’s copyright gave him no economic rights because he made his computer code available to the public at no charge. From this assumption, Katzer/Kamind argues that copyright law does not recognize a cause of action for non-economic rights, relying on Gilliam v. ABC, 538 F.2d 14, 20-21 (2d Cir. 1976) “American copyright law, as presently written, does not recognize moral rights or provide a cause of action for their violation, since the law seeks to vindicate the economic, rather than the personal rights of authors.“). The District Court based its opinion on the breadth of the Artistic License terms, to which we now turn.
The Artistic License states on its face that the document creates conditions: “The intent of this document is to state the conditions under which a Package may be copied.” (Emphasis added.) The Artistic License also uses the traditional language of conditions by noting that the rights to copy, modify, and distribute are granted “provided that” the conditions are met. Under California contract law, “provided that” typically denotes a condition. See, e.g., Diepenbrock v. Luiz, 159 Cal. 716, 115 P. 743 (1911) (interpreting a real property lease reciting that when the property was sold, “this lease shall cease and be at an end, provided that the party of the first part shall then pay [certain compensation] to the party of the second part”; considering the appellant’s “interesting and ingenious” argument for interpreting this language as creating a mere covenant rather than a condition; and holding that this argument “cannot change the fact that, attributing the usual and ordinary signification to the language of the parties, a condition is found in the provision in question”) (emphases added).
The conditions set forth in the Artistic License are vital to enable the copyright holder to retain the ability to benefit from the work of downstream users. By requiring that users who modify or distribute the copyrighted material retain the reference to the original source files, downstream users are directed to Jacobsen’s website. Thus, downstream users know about the collaborative effort to improve and expand the SourceForge project once they learn of the “upstream” project from a “downstream” distribution, and they may join in that effort.
The District Court interpreted the Artistic License to permit a user to “modify the material in any way” and did not find that any of the “provided that” limitations in the Artistic License served to limit this grant. The District Court’s interpretation of the conditions of the Artistic License does not credit the explicit restrictions in the license that govern a downloader’s right to modify and distribute the copyrighted work. The copyright holder here expressly stated the terms upon which the right to modify and distribute the material depended and invited direct contact if a downloader wished to negotiate other terms. These restrictions were both clear and necessary to accomplish the objectives of the open source licensing collaboration, including economic benefit. Moreover, the District Court did not address the other restrictions of the license, such as the requirement that all modification from the original be clearly shown with a new name and a separate page for any such modification that shows how it differs from the original.
Copyright holders who engage in open source licensing have the right to control the modification and distribution of copyrighted material. As the Second Circuit explained in Gilliam v. ABC, 538 F.2d 14, 21 (2d Cir. 1976), the “unauthorized editing of the underlying work, if proven, would constitute an infringement of the copyright in that work similar to any other use of a work that exceeded the license granted by the proprietor of the copyright.” Copyright licenses are designed to support the right to exclude; money damages alone do not support or enforce that right. 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.
In this case, a user who downloads the JMRI copyrighted materials is authorized to make modifications and to distribute the materials “provided that” the user follows the restrictive terms of the Artistic License. A copyright holder can grant the right to make certain modifications, yet retain his right to prevent other modifications. Indeed, such a goal is exactly the purpose of adding conditions to a license grant.18 The Artistic License, like many other common copyright licenses, requires that any copies that are distributed contain the copyright notices and the COPYING file. See, e.g., 3-10 Nimmer on Copyright § 10.15 (“An express (or possibly an implied) condition that a licensee must affix a proper copyright notice to all copies of the work that he causes to be published will render a publication devoid of such notice without authority from the licensor and therefore, an infringing act.“).
It is outside the scope of the Artistic License to modify and distribute the copyrighted materials without copyright notices and a tracking of modifications from the original computer files. If a downloader does not assent to these conditions stated in the COPYING file, he is instructed to “make other arrangements with the Copyright Holder.” Katzer/Kamind did not make any such “other arrangements.” The clear language of the Artistic License creates conditions to protect the economic rights at issue in the granting of a public license. These conditions govern the rights to modify and distribute the computer programs and files included in the downloadable software package. 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.
For the aforementioned reasons, we vacate and remand. […] The judgment of the District Court is vacated and the case is remanded for further proceedings consistent with this opinion.
The test for determining copyright liability for breach of a license stated by the Federal Circuit in Jacobsen relies on distinguishing covenants from conditions. This excerpt from a later case clarifies the distinction under California law:
"A covenant 'is another word for a contractual promise.' A promise for contract purposes 'is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.' Implied covenants are disfavored and will only be found if they effectuate the intent of the parties, are a legal necessity and 'after examining the contract as a whole it is  obvious that the parties had no reason to state the covenant[.]' A condition, on the other hand, 'is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due.' Under California law a conditional obligation is one 'when the rights or duties of any party thereto depend upon the occurrence of an uncertain event.'" [Netbula, LLC v. Storage Tech. Corp., No. C06-07391 MJJ, 2008 U.S. Dist. LEXIS 4119, at 9 (N.D. Cal. Jan. 17, 2008)](https://advance.lexis.com/api/document/collection/cases/id/4RN5-M7P0-TXFP-C34C-00000-00?page=9&reporter=1293&context=1000516)* (internal citations omitted).
When might a license term be a condition rather than a covenant?
See Sun Microsystems, Inc. v. Microsoft Corp., 81 F. Supp. 2d 1026, 1032-33 (N.D. Cal. 2000)* (finding breached compatibility obligations to be a covenant, emphasizing that the license grant was not stated as being conditioned on the compatibility obligations and emphasizing the presence of a cure provision within the agreement); Montalvo v. LT’s Benjamin Records, Inc., 56 F. Supp. 3d 121, 130 (D.P.R. 2014) (holding failure to pay royalties to be a breach of a covenant); *Sleash, LLC v. One Pet Planet, LLC, No. 3:14-cv-00863-ST, 2014 U.S. Dist. LEXIS 109253, at 51 (D. Or. Aug. 6, 2014) (finding one contract term to be a covenant where the term appeared in a separate section from the license grant and finding another contract term to be a covenant where the term was stated in promissory, as opposed to conditional, terms).
But see Accusoft Corp. v. Quest Diagnostics, Inc., No. 12-cv-40007-TSH, 2015 U.S. Dist. LEXIS 156693, at 76 (D. Mass. Aug. 19, 2015)* (finding a number of EULA terms to be conditions under Massachusetts law, as the terms clearly limited the scope of the license and were stated with emphatic, conditional language); Alaska Stock, LLC v. Pearson Educ., Inc., 975 F. Supp. 2d 1027, 1044 (D. Alaska 2013) (holding that a term limiting “the number of publications in which an image could appear [was] no different from the Ninth Circuit’s example of the person who made a hundred copies of a book while licensed to make only one” and was therefore a condition); Jacobsen v. Katzer, 535 F.3d 1373, 1381 (Fed. Cir. 2008) (“Under California contract law, ‘provided that’ typically denotes a condition.“).
The Jacobsen court recognizes that open source licensing schemes can confer an economic benefit upon licensors. Jacobsen v. Katzer, 535 F.3d 1373, 1382 (Fed. Cir. 2008)(“The clear language of the Artistic License creates conditions to protect the economic rights at issue in the granting of a public license. These conditions govern the rights to modify and distribute the computer programs and files included in the downloadable software package. 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.“).
What if there was no economic benefit conferred by a software license, or by a given condition of a software license? For example, what if an author conditioned redistribution of their program upon the redistributor doing ten push-ups for each distribution? How would the court interpret non-performance of the condition? Would that be an act outside the scope of the copyright license, and therefore infringement?
The Restatement (Second) of Contracts defines a condition as “an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due.” § 224. How might the non-occurrence of a condition be excused in the software licensing context? Under an open source license, would the excused non-occurrence of a condition mean that breach of that condition could not give rise to copyright infringement?
MDY Industries, LLC v. Blizzard Entertainment, Inc., et al
629 F.3d 928 (9th Cir. 2010)
CALLAHAN, Circuit Judge:
Blizzard Entertainment, Inc. (“Blizzard”) is the creator of World of Warcraft (“WoW”), a popular multiplayer online role-playing game in which players interact in a virtual world while advancing through the game’s 70 levels. MDY Industries, LLC and its sole member Michael Donnelly (“Donnelly”) (sometimes referred to collectively as “MDY”) developed and sold Glider, a software program that automatically plays the early levels of WoW for players.
MDY brought this action for a declaratory judgment to establish that its Glider sales do not infringe Blizzard’s copyright or other rights, and Blizzard asserted counterclaims under the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 1201 et seq., and for tortious interference with contract under Arizona law. The district court found MDY and Donnelly liable for secondary copyright infringement, violations of DMCA §§ 1201(a)(2) and (b)(1), and tortious interference with contract. We reverse the district court except as to MDY’s liability for violation of DMCA § 1201(a)(2) and remand for trial on Blizzard’s claim for tortious interference with contract.
A. World of Warcraft
In November 2004, Blizzard created WoW, a “massively multiplayer online role-playing game” in which players interact in a virtual world. WoW has ten million subscribers, of which two and a half million are in North America. The WoW software has two components: (1) the game client software that a player installs on the computer; and (2) the game server software, which the player accesses on a subscription basis by connecting to WoW’s online servers. WoW does not have single-player or offline modes.
WoW players roleplay different characters, such as humans, elves, and dwarves. A player’s central objective is to advance the character through the game’s 70 levels by participating in quests and engaging in battles with monsters. As a player advances, the character collects rewards such as in-game currency, weapons, and armor. WoW’s virtual world has its own economy, in which characters use their virtual currency to buy and sell items directly from each other, through vendors, or using auction houses. Some players also utilize WoW’s chat capabilities to interact with others.
B. Blizzard’s use agreements
C. Development of Glider and Warden
Donnelly is a WoW player and software programmer. In March 2005, he developed Glider, a software “bot” (short for robot) that automates play of WoW’s early levels, for his personal use. A user need not be at the computer while Glider is running. As explained in the Frequently Asked Questions (“FAQ”) on MDY’s website for Glider:
Glider … moves the mouse around and pushes keys on the keyboard. You tell it about your character, where you want to kill things, and when you want to kill. Then it kills for you, automatically. You can do something else, like eat dinner or go to a movie, and when you return, you’ll have a lot more experience and loot.
Glider does not alter or copy WoW’s game client software, does not allow a player to avoid paying monthly subscription dues to Blizzard, and has no commercial use independent of WoW. Glider was not initially designed to avoid detection by Blizzard.
The parties dispute Glider’s impact on the WoW experience. Blizzard contends that Glider disrupts WoW’s environment for non-Glider players by enabling Glider users to advance quickly and unfairly through the game and to amass additional game assets. MDY contends that Glider has a minimal effect on non-Glider players, enhances the WoW experience for Glider users, and facilitates disabled players’ access to WoW by auto-playing the game for them.
In summer 2005, Donnelly began selling Glider through MDY’s website for fifteen to twenty-five dollars per license. Prior to marketing Glider, Donnelly reviewed Blizzard’s EULA and client-server manipulation policy. He reached the conclusion that Blizzard had not prohibited bots in those documents.
In September 2005, Blizzard launched Warden, a technology that it developed to prevent its players who use unauthorized third-party software, including bots, from connecting to WoW’s servers. Warden was able to detect Glider, and Blizzard immediately used Warden to ban most Glider users. MDY responded by modifying Glider to avoid detection and promoting its new anti-detection features on its website’s FAQ. It added a subscription service, Glider Elite, which offered “additional protection from game detection software” for five dollars a month.
Thus, by late 2005, MDY was aware that Blizzard was prohibiting bots. MDY modified its website to indicate that using Glider violated Blizzard’s ToU. In November 2005, Donnelly wrote in an email interview, “Avoiding detection is rather exciting, to be sure. Since Blizzard does not want bots running at all, it’s a violation to use them.” Following MDY’s anti-detection modifications, Warden only occasionally detected Glider. As of September 2008, MDY had gross revenues of $3.5 million based on 120,000 Glider license sales.
D. Financial and practical impact of Glider
Blizzard claims that from December 2004 to March 2008, it received 465,000 complaints about WoW bots, several thousand of which named Glider. Blizzard spends $940,000 annually to respond to these complaints, and the parties have stipulated that Glider is the principal bot used by WoW players. Blizzard introduced evidence that it may have lost monthly subscription fees from Glider users, who were able to reach WoW’s highest levels in fewer weeks than players playing manually. Donnelly acknowledged in a November 2005 email that MDY’s business strategy was to make Blizzard’s anti-bot detection attempts financially prohibitive:
The trick here is that Blizzard has a finite amount of development and test resources, so we want to make it bad business to spend that much time altering their detection code to find Glider, since Glider’s negative effect on the game is debatable … . [W]e attack th[is] weakness and try to make it a bad idea or make their changes very risky, since they don’t want to risk banning or crashing innocent customers.
On December 1, 2006, MDY filed an amended complaint seeking a declaration that Glider does not infringe Blizzard’s copyright or other rights. In February 2007, Blizzard filed counterclaims and third-party claims against MDY and Donnelly for, inter alia, contributory and vicarious copyright infringement, violation of DMCA §§ 1201(a)(2) and (b)(1), and tortious interference with contract.
In July 2008, the district court granted Blizzard partial summary judgment, finding that MDY’s Glider sales contributorily and vicariously infringed Blizzard’s copyrights and tortiously interfered with Blizzard’s contracts. The district court also granted MDY partial summary judgment, finding that MDY did not violate DMCA § 1201(a)(2) with respect to accessing the game software’s source code.
In September 2008, the parties stipulated to entry of a $6 million judgment against MDY for the copyright infringement and tortious interference with contract claims. They further stipulated that Donnelly would be personally liable for the same amount if found personally liable at trial. After a January 2009 bench trial, the district court held MDY liable under DMCA §§ 1201(a)(2) and (b)(1). It also held Donnelly personally liable for MDY’s copyright infringement, DMCA violations, and tortious interference with contract.
On April 1, 2009, the district court entered judgment against MDY and Donnelly for $6.5 million, an adjusted figure to which the parties stipulated based on MDY’s DMCA liability and post-summary judgment Glider sales. The district court permanently enjoined MDY from distributing Glider. MDY’s efforts to stay injunctive relief pending appeal were unsuccessful. On April 29, 2009, MDY timely filed this appeal. On May 12, 2009, Blizzard timely cross-appealed the district court’s holding that MDY did not violate DMCA §§ 1201(a)(2) and (b)(1) as to the game software’s source code.
We review de novo the district court’s (1) orders granting or denying summary judgment; (2) conclusions of law after a bench trial; and (3) interpretations of state law. Padfield v. AIG Life Ins., 290 F.3d 1121, 1124 (9th Cir. 2002); Twentieth Century Fox Film Corp. v. Entm’t Distrib., 429 F.3d 869, 879 (9th Cir. 2005); Laws v. Sony Music Entm’t, Inc., 448 F.3d 1134, 1137 (9th Cir. 2006). We review the district court’s findings of fact for clear error. Twentieth Century Fox, 429 F.3d at 879.
We first consider whether MDY committed contributory or vicarious infringement (collectively, “secondary infringement”) of Blizzard’s copyright by selling Glider to WoW players.19 See ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1454 (7th Cir. 1996) (“A copyright is a right against the world. Contracts, by contrast, generally affect only their parties.“).* *To establish secondary infringement, Blizzard must first demonstrate direct infringement. See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1019, 1022 (9th Cir. 2001). To establish direct infringement, Blizzard must demonstrate copyright ownership and violation of one of its exclusive rights by Glider users. Id. at 1013. MDY is liable for contributory infringement if it has “intentionally induc[ed] or encourag[ed] direct infringement” by Glider users. MGM Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005). MDY is liable for vicarious infringement if it (1) has the right and ability to control Glider users’ putatively infringing activity and (2) derives a direct financial benefit from their activity. Id. If Glider users directly infringe, MDY does not dispute that it satisfies the other elements of contributory and vicarious infringement.
As a copyright owner, Blizzard possesses the exclusive right to reproduce its work. 17 U.S.C. § 106(1). The parties agree that when playing WoW, a player’s computer creates a copy of the game’s software in the computer’s random access memory (“RAM”), a form of temporary memory used by computers to run software programs. This copy potentially infringes unless the player (1) is a licensee whose use of the software is within the scope of the license or (2) owns the copy of the software. See Sun Microsystems, Inc. v. Microsoft Corp., 188 F.3d 1115, 1121 (9th Cir. 1999) (”Sun I”); 17 U.S.C. § 117(a). As to the scope of the license, ToU § 4(B), “Limitations on Your Use of the Service,” provides:
You agree that you will not … (ii) create or use cheats, bots, “mods,” and/or hacks, or any other third-party software designed to modify the World of Warcraft experience; or (iii) use any third-party software that intercepts, “mines,” or otherwise collects information from or through the Program or Service.
By contrast, if the player owns the copy of the software, the “essential step” defense provides that the player does not infringe by making a copy of the computer program where the copy is created and used solely “as an essential step in the utilization of the computer program in conjunction with a machine.” 17 U.S.C. § 117(a)(1).
A. Essential step defense
We consider whether WoW players, including Glider users, are owners or licensees of their copies of WoW software. If WoW players own their copies, as MDY contends, then Glider users do not infringe by reproducing WoW software in RAM while playing, and MDY is not secondarily liable for copyright infringement.
In Vernor v. Autodesk, Inc., we recently distinguished between “owners” and “licensees” of copies for purposes of the essential step defense. Vernor v. Autodesk, Inc., 621 F.3d 1102, 1108-09 (9th Cir. 2010; see also MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 519 n.5 (9th Cir. 1993); Triad Sys. Corp. v. Se. Express Co., 64 F.3d 1330, 1333, 1335-36 (9th Cir. 1995); Wall Data, Inc. v. Los Angeles County Sheriff’s Dep’t, 447 F.3d 769, 784-85 (9th Cir. 2006). In Vernor, we held “that* *a software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable use” restrictions. 621 F.3d at 1111 (internal footnote omitted).
Applying Vernor, we hold that WoW players are licensees of WoW’s game client software. Blizzard reserves title in the software and grants players a non-exclusive, limited license. Blizzard also imposes transfer restrictions if a player seeks to transfer the license: the player must (1) transfer all original packaging and documentation; (2) permanently delete all of the copies and installation of the game client; and (3) transfer only to a recipient who accepts the EULA. A player may not sell or give away the account.
Blizzard also imposes a variety of use restrictions. The game must be used only for non-commercial entertainment purposes and may not be used in cyber cafes and computer gaming centers without Blizzard’s permission. Players may not concurrently use unauthorized third-party programs. Also, Blizzard may alter the game client itself remotely without a player’s knowledge or permission, and may terminate the EULA and ToU if players violate their terms. Termination ends a player’s license to access and play WoW. Following termination, players must immediately destroy their copies of the game and uninstall the game client from their computers, but need not return the software to Blizzard.
Since WoW players, including Glider users, do not own their copies of the software, Glider users may not claim the essential step defense. 17 U.S.C. § 117(a)(1). Thus, when their computers copy WoW software into RAM, the players may infringe unless their usage is within the scope of Blizzard’s limited license.
B. Contractual covenants vs. license conditions
“A copyright owner who grants a nonexclusive, limited license ordinarily waives the right to sue licensees for copyright infringement, and it may sue only for breach of contract.” Sun I, 188 F.3d at 1121 (internal quotations omitted). However, if the licensee acts outside the scope of the license, the licensor may sue for copyright infringement. Id. (citing S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1087 (9th Cir. 1989)). Enforcing a copyright license “raises issues that lie at the intersection of copyright and contract law.” Id. at 1122.
We refer to contractual terms that limit a license’s scope as “conditions,” the breach of which constitute copyright infringement. Id. at 1120. We refer to all other license terms as “covenants,” the breach of which is actionable only under contract law. Id. We distinguish between conditions and covenants according to state contract law, to the extent consistent with federal copyright law and policy. Foad Consulting Group v. Musil Govan Azzalino, 270 F.3d 821, 827 (9th Cir. 2001).
A Glider user commits copyright infringement by playing WoW while violating a ToU term that is a license condition. To establish copyright infringement, then, Blizzard must demonstrate that the violated term — ToU § 4(B) — is a condition rather than a covenant. Sun I, 188 F.3d at 1122. Blizzard’s EULAs and ToUs provide that they are to be interpreted according to Delaware law. Accordingly, we first construe them under Delaware law, and then evaluate whether that construction is consistent with federal copyright law and policy.
A covenant is a contractual promise, i.e., a manifestation of intention to act or refrain from acting in a particular way, such that the promisee is justified in understanding that the promisor has made a commitment. See Travel Centers of Am. LLC v. Brog, No. 3751-CC, 2008 Del. Ch. LEXIS 183, *9 (Del. Ch. Dec. 5, 2008); see also Restatement (Second) of Contracts § 2 (1981). A condition precedent is an act or event that must occur before a duty to perform a promise arises. AES P.R., L.P. v. Alstom Power, Inc., 429 F. Supp. 2d 713, 717 (D. Del. 2006) (citing Delaware state law); see also Restatement (Second) of Contracts § 224. Conditions precedent are disfavored because they tend to work forfeitures. AES, 429 F. Supp. 2d at 717 (internal citations omitted). Wherever possible, equity construes ambiguous contract provisions as covenants rather than conditions. See* Wilmington Tr. Co. v. Clark*, 325 A.2d 383, 386 (Del. Ch. 1974). However, if the contract is unambiguous, the court construes it according to its terms. AES, 429 F. Supp. 2d at 717 (citing 17 Am. Jur. 2d Contracts § 460 (2006)).
Applying these principles, ToU § 4(B)(ii) and (iii)’s prohibitions against bots and unauthorized third-party software are covenants rather than copyright-enforceable conditions. See Greenwood v. CompuCredit Corp., 615 F.3d 1204, 1212, (9th Cir. 2010) (”[H]eadings and titles are not meant to take the place of the detailed provisions of the text,” and … “the heading of a section cannot limit the plain meaning of the text.” (quoting Bhd. of R.R. Trainmen v. Balt. & Ohio R.R., 331 U.S. 519, 528-29, 67 S. Ct. 1387, 91 L. Ed. 1646 (1947))). Although ToU § 4 is titled, “Limitations on Your Use of the Service,” nothing in that section conditions Blizzard’s grant of a limited license on players’ compliance with ToU § 4’s restrictions. To the extent that the title introduces any ambiguity, under Delaware law, ToU § 4(B) is not a condition, but is a contractual covenant. Cf. Sun Microsystems, Inc. v. Microsoft Corp., 81 F. Supp. 2d 1026, 1031-32 (N.D. Cal. 2000) (”Sun II”) (where Sun licensed Microsoft to create only derivative works compatible with other Sun software, Microsoft’s “compatibility obligations” were covenants because the license was not specifically conditioned on their fulfillment).
To recover for copyright infringement based on breach of a license agreement, (1) the copying must exceed the scope of the defendant’s license and (2) the copyright owner’s complaint must be grounded in an exclusive right of copyright (e.g., unlawful reproduction or distribution). See Storage Tech. Corp. v. Custom Hardware Eng’g & Consulting, Inc., 421 F.3d 1307, 1315-16 (Fed. Cir. 2005). Contractual rights, however, can be much broader:
[C]onsider a license in which the copyright owner grants a person the right to make one and only one copy of a book with the caveat that the licensee may not read the last ten pages. Obviously, a licensee who made a hundred copies of the book would be liable for copyright infringement because the copying would violate the Copyright Act’s prohibition on reproduction and would exceed the scope of the license. Alternatively, if the licensee made a single copy of the book, but read the last ten pages, the only cause of action would be for breach of contract, because reading a book does not violate any right protected by copyright law.
Id. at 1316. Consistent with this approach, we have held that* *the potential for infringement exists only where the licensee’s action (1) exceeds the license’s scope (2) in a manner that implicates one of the licensor’s exclusive statutory rights. See, e.g., Sun I, 118 F.3d at 1121-22 (remanding for infringement determination where defendant allegedly violated a license term regulating the creation of derivative works).20
Here, ToU § 4 contains certain restrictions that are grounded in Blizzard’s exclusive rights of copyright and other restrictions that are not. For instance, ToU § 4(D) forbids creation of derivative works based on WoW without Blizzard’s consent. A player who violates this prohibition would exceed the scope of her license and violate one of Blizzard’s exclusive rights under the Copyright Act. In contrast, ToU § 4©(ii) prohibits a player’s disruption of another player’s game experience. Id. A player might violate this prohibition while playing the game by harassing another player with unsolicited instant messages. Although this conduct may violate the contractual covenants with Blizzard, it would not violate any of Blizzard’s exclusive rights of copyright. The anti-bot provisions at issue in this case, ToU § 4(B)(ii) and (iii), are similarly covenants rather than conditions. A Glider user violates the covenants with Blizzard, but does not thereby commit copyright infringement because Glider does not infringe any of Blizzard’s exclusive rights. For instance, the use does not alter or copy WoW software.
Were we to hold otherwise, Blizzard — or any software copyright holder — could designate any disfavored conduct during software use as copyright infringement, by purporting to condition the license on the player’s abstention from the disfavored conduct. The rationale would be that because the conduct occurs while the player’s computer is copying the software code into RAM in order for it to run, the violation is copyright infringement. This would allow software copyright owners far greater rights than Congress has generally conferred on copyright owners.21
We conclude that for a licensee’s violation of a contract to constitute copyright infringement, there must be a nexus between the condition and the licensor’s exclusive rights of copyright.22 Here, WoW players do not commit copyright infringement by using Glider in violation of the ToU. MDY is thus not liable for secondary copyright infringement, which requires the existence of direct copyright infringement. Grokster, 545 U.S. at 930.
It follows that because MDY does not infringe Blizzard’s copyrights, we need not resolve MDY’s contention that Blizzard commits copyright misuse. Copyright misuse is an equitable defense to copyright infringement, the contours of which are still being defined. See Practice Mgmt. Info. Corp. v. Am. Med. Ass’n, 121 F.3d 516, 520 (9th Cir. 1997). The remedy for copyright misuse is to deny the copyright holder the right to enforce its copyright during the period of misuse. Since MDY does not infringe, we do not consider whether Blizzard committed copyright misuse.
We thus reverse the district court’s grant of summary judgment to Blizzard on its secondary copyright infringement claims. Accordingly, we must also vacate the portion of the district court’s permanent injunction that barred MDY and Donnelly from “infringing, or contributing to the infringement of, Blizzard’s copyrights in WoW software.”
MDY provides the Ninth Circuit’s test for determining whether a licensee’s breach of a copyright license will give rise to claims for copyright infringement. See MDY Indus., LLC v. Blizzard Entm’t, Inc., 629 F.3d 928, 940-41 (9th Cir. 2010) (”[T]he potential for infringement exists only where the licensee’s action (1) exceeds the license’s scope (2) in a manner that implicates one of the licensor’s exclusive statutory rights. […] [F]or a licensee’s violation of a contract to constitute copyright infringement, there must be a nexus between the condition and the licensor’s exclusive rights of copyright.“).
Both the Ninth Circuit in MDY and the Federal Circuit in Jacobsen rely on the following holdings from Sun I: (1) a licensee must act outside the scope of a copyright license in order to be liable for copyright infringement, and (2) a copyright license’s terms must be distinguished as either covenants or limitations on the scope of the license. Are the Ninth Circuit and the Federal Circuit both reading Sun I the same way?
Are the Jacobsen “covenant vs. condition” and the MDY “nexus” tests in conflict? Is MDY’s expansion of the test to require a nexus between the breached condition and an exclusive right of copyright necessary in order to avoid absurd results? See MDY Indus., LLC v. Blizzard Entm’t, Inc., 629 F.3d 928, 941 (9th Cir. 2010) (“Were we to hold otherwise, Blizzard — or any software copyright holder — could designate any disfavored conduct during software use as copyright infringement, by purporting to condition the license on the player’s abstention from the disfavored conduct. The rationale would be that because the conduct occurs while the player’s computer is copying the software code into RAM in order for it to run, the violation is copyright infringement. This would allow software copyright owners far greater rights than Congress has generally conferred on copyright owners.“)
Does the Ninth Circuit’s recognition of a “distinct nexus between payment and all commercial copyright licenses” break the MDY test? How does this reconcile with Jacobsen’s acknowledgement of the economic benefit conferred by an open source licensing scheme? See Jacobsen v. Katzer, 535 F.3d 1373, 1382 (Fed. Cir. 2008) (“The clear language of the Artistic License creates conditions to protect the economic rights at issue in the granting of a public license. These conditions govern the rights to modify and distribute the computer programs and files included in the downloadable software package. 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.“).
In Jacobsen, the Federal Circuit held that certain terms of the Artistic License should be regarded as conditions: the requirement that licensees “duplicate all of the original copyright notices and associated disclaimers,” and the requirement that modifiers of the software insert “prominent notices in each changed file stating how and when you changed that file.”23 Would a court applying MDY’s nexus test* *find that these conditions of the artistic license bear a nexus to the licensor’s exclusive rights of copyright? If so, which rights? See 17 U.S.C. § 106(2) (exclusive right to prepare derivative works); and see 17 U.S.C. §§ 1202 (b)(1) and -©(1) (prohibiting removal of copyright management information and defining copyright management information to comprise copyright notices).
What, aside from breach of contractual conditions, will constitute actions outside the scope of a copyright license? See Storage Tech. Corp. v. Custom Hardware Eng’g & Consulting, Inc., 421 F.3d 1307, 1315-16 (Fed. Cir. 2005) (”[C]onsider a license in which the copyright owner grants a person the right to make one and only one copy of a book with the caveat that the licensee may not read the last ten pages. Obviously, a licensee who made a hundred copies of the book would be liable for copyright infringement because the copying would violate the Copyright Act’s prohibition on reproduction and would exceed the scope of the license. Alternatively, if the licensee made a single copy of the book, but read the last ten pages, the only cause of action would be for breach of contract, because reading a book does not violate any right protected by copyright law.“).
What other kinds of complaints are grounded in an exclusive right of copyright? See* Adobe Sys. v. A & S Elecs., Inc., 153 F. Supp. 3d 1136, 1144 (N.D. Cal. 2015)* (finding that defendant exceeded scope of license and committed copyright infringement by selling CD keys - non-copyright protected 25-digit numbers - which facilitated the sale and use of software that defendant had no right to distribute).
Suppose a Licensor were to permit a Licensee to create derivative works of the Licensor’s program, provided that Licensee not sell any copies. What happens if Licensee owns a single, lawfully made copy of Licensor’s program and sells it on eBay? Does the first sale doctrine overcome the nexus between the breached condition and the Licensor’s exclusive rights of copyright if the exclusive right at issue is exhausted? See Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351, 1374 (2013); 17 U.S.C.S. § 109.
Common open source license terms: Covenants or Conditions?
Jacobsen and MDY provide possible frameworks for evaluating whether breach of a copyright license will be regarded as copyright infringement or breach of contract alone. How would courts apply these tests to the terms of common open source licenses? This section will highlight a few terms from popular open source licenses to emphasize the importance of this test in the world of open source licensing.
The MIT License
Permission is hereby granted, free of charge, to any person obtaining a copy of this software and associated documentation files (the “Software”), to deal in the Software without restriction, including without limitation the rights to use, copy, modify, merge, publish, distribute, sublicense, and/or sell copies of the Software, and to permit persons to whom the Software is furnished to do so, subject to the following conditions:
The above copyright notice and this permission notice shall be included in all copies or substantial portions of the Software.
THE SOFTWARE IS PROVIDED “AS IS”, WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT. IN NO EVENT SHALL THE AUTHORS OR COPYRIGHT HOLDERS BE LIABLE FOR ANY CLAIM, DAMAGES OR OTHER LIABILITY, WHETHER IN AN ACTION OF CONTRACT, TORT OR OTHERWISE, ARISING FROM, OUT OF OR IN CONNECTION WITH THE SOFTWARE OR THE USE OR OTHER DEALINGS IN THE SOFTWARE.
What terms MIT license that could be considered covenants or conditions? Would the Jacobsen court regard the requirement that licensees include the copyright notice in all copies or portions of the software to be a condition? Is there a connection between this term and an economic interest of the licensor?
Applying the MDY test, is there an essential nexus between the MIT license’s notice reproduction requirement and one of the exclusive rights of copyright? Has the Digital Millennium Copyright Act expanded the exclusive rights of copyright? See Infra, MDY Discussion, point 5.
The GPL v.2
This License applies to any program or other work which contains a notice placed by the copyright holder saying it may be distributed under the terms of this General Public License. The “Program”, below, refers to any such program or work, and a “work based on the Program” means either the Program or any derivative work under copyright law: that is to say, a work containing the Program or a portion of it, either verbatim or with modifications and/or translated into another language. (Hereinafter, translation is included without limitation in the term “modification”.) Each licensee is addressed as “you”.
You may modify your copy or copies of the Program or any portion of it, thus forming a work based on the Program, and copy and distribute such modifications or work under the terms of Section 1 above, provided that you also meet all of these conditions:
b) You must cause any work that you distribute or publish, that in whole or in part contains or is derived from the Program or any part thereof, to be licensed as a whole at no charge to all third parties under the terms of this License.
These requirements apply to the modified work as a whole. If identifiable sections of that work are not derived from the Program, and can be reasonably considered independent and separate works in themselves, then this License, and its terms, do not apply to those sections when you distribute them as separate works. But when you distribute the same sections as part of a whole which is a work based on the Program, the distribution of the whole must be on the terms of this License, whose permissions for other licensees extend to the entire whole, and thus to each and every part regardless of who wrote it.
- You may copy and distribute the Program (or a work based on it, under Section 2) in object code or executable form under the terms of Sections 1 and 2 above provided that you also do one of the following:
a) Accompany it with the complete corresponding machine-readable source code, which must be distributed under the terms of Sections 1 and 2 above on a medium customarily used for software interchange; or,
b) Accompany it with a written offer, valid for at least three years, to give any third party, for a charge no more than your cost of physically performing source distribution, a complete machine-readable copy of the corresponding source code, to be distributed under the terms of Sections 1 and 2 above on a medium customarily used for software interchange; or,
c) Accompany it with the information you received as to the offer to distribute corresponding source code. (This alternative is allowed only for noncommercial distribution and only if you received the program in object code or executable form with such an offer, in accord with Subsection b above.)
The source code for a work means the preferred form of the work for making modifications to it. For an executable work, complete source code means all the source code for all modules it contains, plus any associated interface definition files, plus the scripts used to control compilation and installation of the executable.
Is Section 2 requirement that independent and separate works, when combined with GPL v.2-licensed code to form a larger whole, must be licensed under the GPL v.2, a covenant or a condition? How about the Section 3 requirement that distribution of any GPL v.2-licensed code in binary form (as an executable program or as part of an executable program) be accompanied with distribution of the complete source code for the entire binary? See* *Infra, Jacobsen Discussion, point 2.
Does the re-licensing requirement in Section 2 have a nexus to the licensor’s exclusive rights of copyright? How about the source-mirroring requirement in Section 3? See *Versata Software, Inc. v. Ameriprise Fin., Inc., No. A-14-CA-12-SS, 2014 U.S. Dist. LEXIS 30934, at *14-15 (W.D. Tex. Mar. 10, 2014)* (“The ‘viral’ component of the GPL is separate and distinct from any copyright obligation. Copyright law imposes no open source obligations, and Ameriprise has not sued Versata for infringing XimpleWare’s copyright by distributing VTD-XML without permission. Instead, Ameriprise has sued based on Versata’s breach of an additional obligation: an affirmative promise to make its derivative work open source because it incorporated an open source program into its software. Ameriprise’s claim therefore requires an ‘extra element’ in addition to reproduction or distribution: a failure to disclose the source code of the derivative software.“).
Do the GPLv2’s relicensing terms govern derivative works alone, or is the requirement broader, extending to works that would not be considered derivative works under copyright law? See 7 Wash J.L. Tech. & Arts 265, 271 (2012) (”[T]he reference in Section 2(b) to a “work that in whole or in part contains … the Program,” could be construed as including any work that incorporates code from the Program, no matter how insignificant and with no regard to whether the included code would be protectable under the Copyright Act.“). If the re-licensing requirement is intended to apply to works that are not derivative works, could the requirement still be a condition? Would it still have a nexus to the licensor’s exclusive rights of copyright?
The GPL v.3
- Protecting Users’ Legal Rights From Anti-Circumvention Law.
No covered work shall be deemed part of an effective technological measure under any applicable law fulfilling obligations under article 11 of the WIPO copyright treaty adopted on 20 December 1996, or similar laws prohibiting or restricting circumvention of such measures.
When you convey a covered work, you waive any legal power to forbid circumvention of technological measures to the extent such circumvention is effected by exercising rights under this License with respect to the covered work, and you disclaim any intention to limit operation or modification of the work as a means of enforcing, against the work’s users, your or third parties’ legal rights to forbid circumvention of technological measures. […]
You may not propagate or modify a covered work except as expressly provided under this License. Any attempt otherwise to propagate or modify it is void, and will automatically terminate your rights under this License (including any patent licenses granted under the third paragraph of section 11).
However, if you cease all violation of this License, then your license from a particular copyright holder is reinstated (a) provisionally, unless and until the copyright holder explicitly and finally terminates your license, and (b) permanently, if the copyright holder fails to notify you of the violation by some reasonable means prior to 60 days after the cessation.
Moreover, your license from a particular copyright holder is reinstated permanently if the copyright holder notifies you of the violation by some reasonable means, this is the first time you have received notice of violation of this License (for any work) from that copyright holder, and you cure the violation prior to 30 days after your receipt of the notice.
Termination of your rights under this section does not terminate the licenses of parties who have received copies or rights from you under this License. If your rights have been terminated and not permanently reinstated, you do not qualify to receive new licenses for the same material under section 10.
Read Section 3 of the GPLv3. How would a court apply the MDY and Jacobsen tests to a contractual condition bears a nexus to an exclusive right of copyright, but not to the licensor’s exclusive rights of copyright in the copyrighted work being licensed? Could a licensor’s expectation interest in the scheme of Section 3 be fulfilled without specific performance?
Section 8 of the GPLv3 includes a remedy scheme that permanently reinstates a license if a licensee meets the criteria for curing the violation. Does the mere existence of this provision require treating all of the GPL’s terms as covenants rather than conditions? Sun Microsystems, Inc. v. Microsoft Corp., 81 F. Supp. 2d 1026, 1033 (N.D. Cal. 2000) (“If Sun could sue for copyright infringement immediately upon Microsoft’s failure to fully meet the compatibility requirements, the remedies scheme would be frustrated and Microsoft would not get the full benefit of its bargained for cure periods.“).
- See Infra, The Penalties Compared
- Restat 2d of Contracts, § 347.
- Id. at Comment a.
- Restat 2d of Contracts, § 345(d).
- Restat 2d of Contracts, § 359(1).
- Restat 2d of Contracts, § 355.
17 USC 504©(2); See also Capitol Records, Inc. v. Thomas-Rasset, 692 F.3d 899 (8th Cir. 2012)(affirming statutory damages award of $222,000; holding the $150,000 statutory cap to apply on a ‘per work infringed’ basis).
- 17 USC 504(b).
- 17 USC 502.
- 17 USC 503(a)(1)(B).
- 17 USC 505.
FN1. Katzer/Kamind represents that all potentially infringing activities using any of the disputed material have been voluntarily ceased. The district court held that it could not find as a matter of law that Katzer/Kamind’s voluntary termination of allegedly wrongful activity renders the motion for preliminary injunction moot because it could not find as a matter of law that it is absolutely clear that the alleged behavior could not recur. Jacobsen, 2007 U.S. Dist. LEXIS 63568, 2007 WL 2358628 at *5*. We agree that this matter is not moot. See also *Adarand Constructors, Inc. v. Slater, 528 U.S. 216, 222 (2000) (“Voluntary cessation of challenged conduct moots a case … only if it is absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur.” (emphasis in original)).
FN2. For example, the GNU General Public License, which is used for the Linux operating system, prohibits downstream users from charging for a license to the software. See Wallace v. IBM Corp., 467 F.3d 1104, 1105-06 (7th Cir.2006).
FN3. Jacobsen’s copyright registration creates the presumption of a valid copyright. See, e.g.,* Triad Sys. Corp. v. Se. EXP. Co., 64 F.3d 1330, 1335 (9th Cir. 1995)*.
FN4. The District Court held that “Defendants’ alleged violation of the conditions of the license may have constituted a breach of the nonexclusive license … [and] the Court finds that Plaintiff’s claim properly sounds in contract.” *Jacobsen, 2007 U.S. Dist. LEXIS 63568, 2007 WL 2358628 at *7*. Thus, despite the use of the word “conditions,” the District Court treated the terms of the Artistic License as contractual covenants which did not limit the scope of the license.
FN5. Open source licensing restrictions are easily distinguished from mere “author attribution” cases. Copyright law does not automatically protect the rights of authors to credit for copyrighted materials. See* Gilliam, 538 F.2d at 20-21* (“American copyright law, as presently written, does not recognize moral rights or provide a cause of action for their violation, since the law seeks to vindicate the economic, rather than the personal rights of authors.“); Graham, 144 F.3d at 236. Whether such rights are protected by a specific license grant depends on the language of the license. See* County of Ventura v. Blackburn, 362 F.2d 515, 520 (9th Cir. 1966)* (copyright infringement found where the county removed copyright notices from maps licensed to it where the license granted the county “the right to obtain duplicate tracings” from photographic negatives that contained copyright notices).
FN1. Alternatively, MDY asks that we determine whether there are any genuine issues of material fact that warrant a remand for trial on Blizzard’s secondary copyright infringement claims. We find none.
FN2. See also* S.O.S., 886 F.2d at 1089* (remanding for infringement determination where licensee exceeded the license’s scope by preparing a modified version of software programs without licensor’s authorization); LGS Architects, Inc. v. Concordia Homes, Inc., 434 F.3d 1150, 1154-57 (9th Cir. 2006) (licensor likely to prove infringement where licensee used architectural plans for project outside the license’s scope, where licensee’s use may have included unauthorized reproduction, distribution, and public display of the plans); Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505, 511 (9th Cir. 1985) (hotel infringed copyright by publicly performing copyrighted music with representations of movie scenes, where its public performance license expressly prohibited the use of accompanying visual representations).
FN3. A copyright holder may wish to enforce violations of license agreements as copyright infringements for several reasons. First, breach of contract damages are generally limited to the value of the actual loss caused by the breach. See 24 Richard A. Lord, Williston on Contracts § 65:1 (4th ed. 2007). In contrast, copyright damages include the copyright owner’s actual damages and the infringer’s actual profits, or statutory damages of up to $150,000 per work. 17 U.S.C. § 504; see* Frank Music Corp. v. MGM, Inc., 772 F.2d 505, 512 n.5 (9th Cir. 1985). Second, copyright law offers injunctive relief, seizure of infringing articles, and awards of costs and attorneys’ fees. 17 U.S.C. §§ 502-03, 505. Third, as amicus Software & Information Industry Association highlights, copyright law allows copyright owners a remedy against “downstream” infringers with whom they are not in privity of contract. See ProCD, Inc., 86 F.3d at 1454*.
FN4. A licensee arguably may commit copyright infringement by continuing to use the licensed work while failing to make required payments, even though a failure to make payments otherwise lacks a nexus to the licensor’s exclusive statutory rights. We view payment as sui generis, however, because of the distinct nexus between payment and all commercial copyright licenses, not just those concerning software.
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