Jacobsen v. Katzer

United States Court of Appeals for the Federal Circuit
2008-1001

ROBERT JACOBSEN,

Plaintiff-Appellant,

v.

MATTHEW KATZER and
KAMIND ASSOCIATES, INC. (doing business as KAM Industries),

Defendants-Appellees.

Victoria K. Hall, Law Office of Victoria K. Hall, of Bethesda, Maryland, argued for
plaintiff-appellant.

R. Scott Jerger, Field Jerger LLP, of Portland, Oregon, argued for defendants-
appellees.

Anthony T. Falzone, Stanford Law School, Center for Internet and Society, of
Stanford, California, for amici curiae Creative Commons Corporation, et al. With him on
the brief was Christopher K. Ridder.

Appealed from: United States District Court for the Northern District of California

Judge Jeffrey S. White
 United States Court of Appeals for the Federal Circuit
2008-1001

ROBERT JACOBSEN,

Plaintiff-Appellant,

v.

MATTHEW KATZER and
KAMIND ASSOCIATES, INC. (doing business as KAM Industries),

Defendants-Appellees.

Appeal from the United States District Court for the Northern District of California in
case no. 06-CV-1905, Judge Jeffrey S. White.

__________________________

DECIDED: August 13, 2008
__________________________

Before MICHEL, Chief Judge, PROST, Circuit Judge, and HOCHBERG, * District Judge.

HOCHBERG, District Judge.

We consider here the ability of a copyright holder to dedicate certain work to free

public use and yet enforce an Aopen source@ copyright license to control the future

distribution and modification of that work. Appellant Robert Jacobsen (AJacobsen@) appeals

from an order denying a motion for preliminary injunction. Jacobsen v. Katzer, No. 06-CV-

01905 JSW, 2007 WL 2358628 (N.D. Cal. Aug. 17, 2007). Jacobsen holds a copyright to

computer programming code. He makes that code available for public download from a

*
The Honorable Faith S. Hochberg, District Judge, United States District Court
for the District of New Jersey, sitting by designation.
website without a financial fee pursuant to the Artistic License, an Aopen source@ or public

license. Appellees Matthew Katzer and Kamind Associates, Inc. (collectively

AKatzer/Kamind@) develop commercial software products for the model train industry and

hobbyists. Jacobsen accused Katzer/Kamind of copying certain materials from Jacobsen=s

website and incorporating them into one of Katzer/Kamind=s software packages without

following the terms of the Artistic License. Jacobsen brought an action for copyright

infringement and moved for a preliminary injunction.

The District Court held that the open source Artistic License created an Aintentionally

broad@ nonexclusive license which was unlimited in scope and thus did not create liability

for copyright infringement. The District Court reasoned:

The plaintiff claimed that by modifying the software the defendant had
exceeded the scope of the license and therefore infringed the copyright.
Here, however, the JMRI Project license provides that a user may copy the
files verbatim or may otherwise modify the material in any way, including as
part of a larger, possibly commercial software distribution. The license
explicitly gives the users of the material, any member of the public, Athe right
to use and distribute the [material] in a more-or-less customary fashion, plus
the right to make reasonable accommodations.@ The scope of the
nonexclusive license is, therefore, intentionally broad. The condition that the
user insert a prominent notice of attribution does not limit the scope of the
license. Rather, 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.

Jacobsen, 2007 WL 2358628 at *7 (internal citations omitted).

On this basis, the District Court denied the motion for a preliminary injunction. We

vacate and remand.

I.

Jacobsen manages an open source software group called Java Model Railroad

Interface (AJMRI@). Through the collective work of many participants, JMRI created a

2008-1001 2
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

ACOPYING@ 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. 1

1
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 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) (AVoluntary 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)).

2008-1001 3
 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 ADefendants’ 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.@ Id. at

*7. 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. In the district court, Jacobsen’s

operative complaint against Katzer/Kamind included not only his claim for copyright

infringement, but also claims seeking a declaratory judgment that a patent issued to Katzer

is not infringed by Jacobsen and is invalid. Therefore the complaint arose in part under the

patent laws. See 28 U.S.C. § 2201(a); Golan v. Pingel Enter., 310 F.3d 1360, 1367 (Fed.

Cir. 2002) (explaining that “[i]n the context of a complaint seeking a declaration of

noninfringement, the action threatened by the declaratory defendant . . . would be an action

for patent infringement,” and “[s]uch an action clearly arises under the patent laws”). Thus

the district court’s jurisdiction was based, at least in part, on 28 U.S.C. § 1338(a) as it

relates to the patent laws, and we have appellate jurisdiction under 28 U.S.C. § 1292(c)(1).

See 28 U.S.C. § 1338(a) (“The district courts shall have original jurisdiction of any civil

2008-1001 4
action arising under any Act of Congress relating to patents, plant variety protection,

copyrights and trademarks.”); id. at § 1295(a)(1) (The Federal Circuit shall have exclusive

jurisdiction “of an appeal from a final decision of a district court of the United States” if (1)

“the jurisdiction of that court was based, in whole or in part, on section 1338 of this title” and

(2) the case is not “a case involving a claim arising under any Act of Congress relating to

copyrights, exclusive rights in mask works, or trademarks and no other claims under

section 1338(a).”); id. at § 1292(c)(1) (Federal Circuit shall have jurisdiction over appeals

from interlocutory orders of the district courts refusing injunctions “in any case over which

the court would have jurisdiction of an appeal under section 1295”).

II.

This Court looks to the interpretive law of the regional circuit for issues not

exclusively assigned to the Federal Circuit. Hutchins v. Zoll Med. Corp., 492 F.3d 1377,

1383 (Fed. Cir. 2007). Under Ninth Circuit law, an order granting or denying a preliminary

injunction will be reversed only if the district court relied on an erroneous legal premise or

abused its discretion. Wright v. Rushen, 642 F.2d 1129, 1132 (9th Cir. 1981). A district

court=s order denying a preliminary injunction is reversible for factual error only when the

district court rests its conclusions on clearly erroneous findings of fact. Sports Form, Inc. v.

United Press Int=l, Inc., 686 F.2d 750, 753 (9th Cir. 1982).

In determining whether to issue a preliminary injunction, the Ninth Circuit requires

demonstration of (1) a combination of probability of success on the merits and the

possibility of irreparable harm; or (2) serious questions going to the merits where the

balance of hardships tips sharply in the moving party=s favor. Perfect 10, Inc. v.

Amazon.com, Inc., 487 F.3d 701, 713-14 (9th Cir. 2007); Dep=t of Parks & Recreation v.

2008-1001 5
Bazaar Del Mundo, Inc., 448 F.3d 1118, 1123 (9th Cir. 2006). In cases involving copyright

claims, where a copyright holder has shown likelihood of success on the merits of a

copyright infringement claim, the Ninth Circuit has held that irreparable harm is presumed.

LGS Architects, Inc. v. Concordia Homes of Nev., 434 F.3d 1150, 1155-56 (9th Cir. 2006).

But see MGM Studios, Inc. v. Grokster, Ltd., 518 F. Supp. 2d 1197, 1212 (C.D. Cal. 2007)

(noting that “the longstanding rule that irreparable harm can be a presumed after a showing

of likelihood of success for purposes of a copyright preliminary injunction motion may itself

have to be reevaluated in light of eBay [Inc. v. MercExchange, L.L.C., 547 U.S. 388

(2006)]”). Thus, for a preliminary injunction to issue, Jacobsen must either show (1) a

likelihood of success on the merits of his copyright infringement claim from which

irreparable harm is presumed; or (2) a fair chance of success on the merits and a clear

disparity in the relative hardships that tips sharply in his favor.

A.

Public licenses, often referred to as Aopen 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

2008-1001 6
Technology (AMIT@) 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. 2 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.

2
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).

2008-1001 7
 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 Aderived 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.@).

B.

The parties do not dispute that Jacobsen is the holder of a copyright for certain

materials distributed through his website. 3 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

3
Jacobsen=s copyright registration creates the presumption of a valid copyright.

2008-1001 8
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

Acopyright 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

See, e.g., Triad Sys. Corp. V. Se. Exp. Co., 64 F.3d 1330, 1335 (9th Cir. 1995).

2008-1001 9
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. 4

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

4
The District Court held that ADefendants’ 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 WL 2358628 at *7.
Thus, despite the use of the word Aconditions,@ the District Court treated the terms of the
Artistic License as contractual covenants which did not limit the scope of the license.

2008-1001 10
cause of action for non-economic rights, relying on Gilliam v. ABC, 538 F.2d 14, 20-21 (2d

Cir. 1976) (AAmerican 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.

III.

The Artistic License states on its face that the document creates conditions: AThe

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 Aprovided that@ the

conditions are met. Under California contract law, Aprovided that@ typically denotes a

condition. See, e.g., Diepenbrock v. Luiz, 159 Cal. 716 (1911) (interpreting a real property

lease reciting that when the property was sold, Athis 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 Ainteresting and ingenious@ argument for

interpreting this language as creating a mere covenant rather than a condition; and holding

that this argument Acannot 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

2008-1001 11
know about the collaborative effort to improve and expand the SourceForge project once

they learn of the Aupstream@ project from a Adownstream@ distribution, and they may join in

that effort.

The District Court interpreted the Artistic License to permit a user to Amodify the

material in any way@ and did not find that any of the Aprovided 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 Aunauthorized 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,

2008-1001 12
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 Aprovided 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. 5 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 (AAn 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

5
Open source licensing restrictions are easily distinguished from mere Aauthor
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 Athe right to

2008-1001 13
file, he is instructed to Amake other arrangements with the Copyright Holder.@

Katzer/Kamind did not make any such Aother 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.

IV.

obtain duplicate tracings@ from photographic negatives that contained copyright notices).

2008-1001 14
 For the aforementioned reasons, we vacate and remand. While Katzer/Kamind

appears to have conceded that they did not comply with the aforedescribed conditions of

the Artistic License, the District Court did not make factual findings on the likelihood of

success on the merits in proving that Katzer/Kamind violated the conditions of the Artistic

License. Having determined that the terms of the Artistic License are enforceable copyright

conditions, we remand to enable the District Court to determine whether Jacobsen has

demonstrated (1) a likelihood of success on the merits and either a presumption of

irreparable harm or a demonstration of irreparable harm; or (2) a fair chance of success on

the merits and a clear disparity in the relative hardships and tipping in his favor. 6

The judgment of the District Court is vacated and the case is remanded for further

proceedings consistent with this opinion.

VACATED and REMANDED

6
At oral argument, the parties admitted that there might be no way to calculate
any monetary damages under a contract theory.

2008-1001 15