Wednesday, January 9, 2008

License v. Contract --- Jacobsen v. Katzer

A license is not a contract. This much I know.

Rather, a license is a permission granted by one party to another allowing use of a property without fear of lawsuit brought by the granting party. A license does not include a return promise (i.e., consideration) from the licensee. So, as we all learned in law school, a license cannot be a contract under law. This is not to say that a license cannot be an element of a contract under which two parties trade promises, one of such promises being a license. This is commonly known as a "license agreement." But a bald license, a one-way promise, is enforceable outside of contract law. It is something apart. It exists and is enforceable under property law doctrine.

What makes things difficult is that the scope of a license's grant, and the conditions and restrictions on the license (or all of them together) can make what is intended to be a one-way license look a lot like a contract. The precise wording used becomes critical. As an example, consider a situation in which the owner of software wants to give another party the right to copy, modify and distribute the software, but the owner does not want the software disributed in France. This can be accomplished with a license (with or without conditions and restrictions), a contract, or something ambiguously in-between.

Look at the following language sets, each of which accomplishes the software owner's primary goal in a different way.

1. License. "Owner grants to Licensee the right to copy, modify and distribute the software in any nation outside of France."

2. License with Condition. "Owner grants to Licensee the right to copy, modify and distribute the software, so long as the Licensee does not distribute the software in France."

3. License with Restriction. "Owner grants to Licensee the right to copy, modify and distribute the software. Licensee may not distribute the software in France."

4. Contract. "Owner grants to Licensee the right to copy, modify and distribute the software. In return, Licensee promises to not distribute the software in France."

5. Ambiguously Between a License and a Contract. "Owner grants to Licensee the right to copy, modify and distribute the software, but Licensee shall not distribute the software in France."

So what? Why does it matter whether the relationship between the licensor and licensee is characterized as "license" or "contract?" The answer is that if characterized as a contract, all those elements of contract, like offer, acceptance, mutuality of consideration (and its substitutes), performance, breach, termination and forfeiture need to be analyzed under established contract law doctrine. If the arrangement is characterized as a license, then property law doctrine-- which, wouldn't you know it, favors property owners-- applies. Perhaps most importantly, the appropriate remedy to which an aggrieved party is entitled can depend on whether you are talking about a license or a contract, or an arrangement that includes both.

Those of us who concern ourselves which such things have read with interest the recent District Court opinion in Jacobsen v. Katzer, which characterized the Artistic License-- a document generally thought of as a conditional public software license-- as a contract rather than a conditional license.

In the case, plaintiff software owner Robert Jacobsen sued Matthew Katzer, a software developer, on a grab-bag of actions including copyright infringement. Jacobsen had made his software available to the world under the Artistic License which, according to Jacobsen, grants everyone in the world the right to copy, modify and distribte the software so long as certain conditions are satisfied, including the licensee placing notices in any distributed copies. Jacobson argued that Katzer, by failing to comply with these conditions, enjoys no protection from the Artistic License and is liable for infringing copyrights in the software after distributing the software incorporated into his own product. According to Jacobsen, Katzer must be enjoined and is liable for damages, both under copyright law.

The district court saw it another way, reading the Artistic License as defining a contract that included a return promise from the licensee rather than a one-way conditional license offered by licensor. According to the district court, under the terms of the Artistic License, Jacobsen broadly promised everyone in the world he would not sue them for copyright infringement for copying, modifying or distributing his software. He did this in return for a promise to include an attribution to the owner in the code. Under this reasoning, Jacobsen may have a claim against Katzer for breach of a contract, but not for copyright infringment. According to the District Court, Katzner may not be enjoined from further distribution under copyright law because Jacobsen has promised to never bring a claim of copyright infringment against anyone. Katzer is liable for damages and Jacomsen can find injunctive relief only under contract law doctrine.

The case has been briefed by Jacobsen for appeal at the Federal Circuit. The Creative Commons and others who want the US courts to apply a consistent approach when interpreting public softare licenses have filed an amicus brief.

Here are some links:

1. Artistic License

2. Source Forge Page with Pleadings

3. Jacobsen's Appeal Brief

4. Creative Commons Amicus Brief

5. Mark Radcliffe's Blog

6. District Court opinion

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