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License or Contract?: the form of the Open Source license September 7, 2011

Posted by Brandon in Tenet Forum - The Law.
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In looking at open source licenses, you may discover that there are basic assumptions overlooked in most of the research involving the General Public License, or GPL.  This question never seems to be asked: is the GPL an actual license, or is it a contract?  The answer may have implications for enforcement and remedies when the GPL is alleged to be breached.  Fortunately, there is some discussion of the topic, but the issue is yet to be resolved.  Problems may lie ahead for the open source community if these agreements are ultimately challenged.

Copyright v. Contract

Copyrighted works are often licensed, not sold.  Copyright licenses are governed by federal law, where the remedy for breaching an agreement is an injunction, attorney’s fees and statutory damages.   Contract law however is governed by state law, which can garner damages for violations of express and non-express terms, as well as specific performance.  The consequences of this is that if the GPL is deemed a license, the owners of the open source code may not be able to enforce the clauses governing free distribution or regulating the integrity of the code.

There is a small but growing debate whether the GPL is a license or a contract.  Some believe that the GPL is a type of contract known as a browsewrap agreement.  At lease one court has taken this view, noting that some terms may be viewed as covenants under a contract, not license conditions, for example by number of users.  See Netbula LLC v. Storage Technology Corp., 2008 WL 228036 (N.D. Cal., 2008). Otherwise, it could also be a unilateral contract without express acceptance, until the GPL code is modified or distributed, where the agreement then becomes a bilateral contract.

However, this view is undermined by the fact that there are many ambiguous or missing terms in the GPL, such as a termination provision. Also,  browsewrap agreements are not recognized in all jurisdictions.  More importantly, when it comes to damages, contracts may not be a preferable view of the GPL from the licensor’s point of view.  This is because there would be no expectation damages.  The licensor of open source code does not expect or demand any financial compensation.  There are no expected earnings to be made from the open source code itself.  It is given away for free.  For that reason, plaintiff’s may argue that the GPL is not a contract at all.

Unsurpringly, the enforcers of the GPL [the Free Software Foundation] and some circuit courts view the GPL as a license. See Eben Moglen, Enforcing the GNU GPL, The Free Software Foundation, September 10, 2001;  Jacobsen v Katzer, 535 F.3d 1373 (Fed. Cir., 2008).  The courts rest their analysis on the fact that open source licenses state “provided that”, which implies a condition to a license, not a covenant to a contract.  This is the property rights theory.  Any material breach of the GPL would result in revocation of the license, which leads to copyright infringement liability for the defendant licensee.  By viewing the GPL as a license, the owners of the code can refuse to extend the right to use for any subsequent user of GPL code.  This may get around issues of privity, where users who do not agree to the GPL directly with the owners of code may be free to use it.

However, the remedy would still be limited to damages and an injunction from further use.  There is a concern that the licensor could not enforce the distribution of his or her code by simply withdrawing consent to those who threaten to breach the GPL terms.  Specific performance is not available under the copyright act, only under contract, and even then it is a disfavored remedy.  Therefore, there is no easy answer for whether the GPL is a license or contract, because the law is always catching up to the technology and implications for both have downsides.

Massachusetts

Massachusetts for the moment has shelved the issue.  Until specific legislation has passed, Massachusetts courts will treat software licenses as contracts subject to the UCC.  See I. Lan Systems v. Netscout Service Level Corp 183 F. Supp. 2d 328, 331 (D. Mass., 2002).  At this time, there is no such legislation in Massachusetts, and therefore this state may not be a favorable venue for defending the GPL.

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