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Re: SFLC stipulated dismissal of Comtrend without any settlement


From: Alexander Terekhov
Subject: Re: SFLC stipulated dismissal of Comtrend without any settlement
Date: Tue, 04 May 2010 16:15:29 -0000

Hyman Rosen wrote:
> 
> On 4/13/2010 4:21 PM, RJack wrote:
> > Since you and Hyman are incapable of understanding the meaning and
> > operation of a "condition precedent" as used in copyright contracts,
> > you will forever remain confused concerning licensing fundamentals.
> 
> It is you who are incapable of understanding it, as demonstrated
> by the fact that a court sees things our way:
> <http://www.cafc.uscourts.gov/opinions/08-1001.pdf>

"Under California contract law..."

http://www.crynwr.com/cgi-bin/ezmlm-cgi?3:mss:15936

------- 
This is not legal advice... 

As an attorney spending a great deal of time on software related IP 
licensing and litigation matters, I find the CAFC decision in the 
Jacobsen case to be troubling. While I am sympathetic to the court's 
apparent desire to validate the concept of open source licensing and 
its alternative forms of consideration, I do not believe that the 
court's ruling justifies a euphoric response by the open source 
community. 

First, the CAFC's decision is a clear repudiation of the "bare 
license" theory long espoused by Mr. Moglen and his followers. The 
CAFC's decision reflects the fact that open source licenses, like any 
other form of software licenses, are contracts. I agree with this 
aspect of the decision as it is well supported by precedent at all 
levels. Neither Mr. Moglen, nor any of his followers have cited legal 
precedent in support of the bare license theory. The CAFC's decision 
should serve as clear notice that the bare license theory is nothing 
more than Moglen's wishful thinking. The necessary implication of this 
finding by the court is that open source licenses must be interpreted 
in the context of applicable state law, and to an extent, the common 
law of the Federal Circuit in which the open source agreement is 
interpreted. (This is directly in conflict with the CAFC's willful 
failure to follow state law and Ninth Circuit precedent regarding the 
interpretation of restrictions as conditions precedent). 

Second, the CAFC's opinion creates a great deal of uncertainty for 
software licensing (whether proprietary or open source). Let's take 
the GPLv3 as an example. As most peoople are aware, there are a 
variety of disagreements over exactly what is required of a licensee 
to comply with various provisions of the GPL. Section 2 of the GPL 
appears to "condition" the rights granted under the license on the 
licensee's compliance with the "conditions" stated in the license. 
Under the CAFC's decision in Jacobsen, it stands to reason that a 
licensee that fails to fully satisfy the "conditions" stated in the 
GPLv3 would infringe the licensor's copyrights rather than merely 
breaching the license. Thus, even if the licensee unintentionally 
violated the terms of the GPLv3 because the meaning of the terms are 
not clear, the licensee would be liabile for infringement. 

Why does this matter? State courts, the federal circuit courts of 
appeal and the US Supreme Court have all uniformly and routinely 
interpreted license restrictions as covenants rather than conditions 
precedent. In other words, the courts presume that the restrictions 
are covenants rather than conditions precedent unless the agreement 
clearly defines the restrictions as conditions. the CAFC's decision 
wholly ignores this long held principle of law. 

Most licenses, open source or proprietary, contain provisions whose 
meanings are open to viable debate. In the past, parties to a 
software license have largely understood that a licensee that breaches 
a license agreement's terms is liable to the licensor for damages 
decided under contract law. Proprietary licenses typically include 
provisions which define or otherwise limit the scope of damages that 
may be recovered in the event of a breach. On the other hand, a party 
that is liable for infringement of a copyright is subject to 
injunctive relief and damages equal to the owner's actual damages 
(plus the infringer's profits not covered by the owner's actual 
damages) OR statutory damages of up to $150,000 per incidence of 
infringement. Any contractually agreed limitations on damages would 
be irrelevant in the infringement setting. 

The CAFC's Jacobsen decision unwittingly attempts to radically change 
the risks of licensing software. The CAFC states that any failure to 
comply with a license provision that the license even generally calls 
a "condition" is an infringement rather than a breach. Thus, any 
licensee that violates the "conditions" of a license, even if 
unintentional, is subject to infringement damages. If the CAFC's 
decision stands and is generally followed in the Circuits and state 
courts, (which it should not be), every license from this point 
forward will need to clearly state which, if any, restrictions are 
"conditions precedent" and which restrictions are merely covenants 
(all other restrictions). Moreover, the provisions that are 
conditions precedent will need to be defined with a high degree of 
care to minimize a licensee's risk of unintentionally infringing the 
copyrights as a result of miinterpreting the provisions. 

Another side note - many licesne agreement issues are brought in state 
courts. Section 301(a) of the Copyright Act, however, preempts any 
state court from hearing or deciding any cause of action which is 
equivalent to a copyright claim. If the CAFC's position is indeed the 
law of the land, then any cause of action relating to a breach of a 
provision in a license agreement that merely mentions the word 
"condition" (or some synonym thereof), or that could conceivably be 
interpreted as a condition precedent, will need to be decided by a 
federal court. Otherwise, the parties run the risk of going through a 
full trial in state court only to find that the state court has no 
jurisdiction to even hear the matter in the first place because the 
breach in fact constitutes an infringement. 

Ultimately, the only people that will benefit from this decision are 
attorneys. All open source licenses will need to be modified if the 
decision stands .... 
------- 

2. http://www.crynwr.com/cgi-bin/ezmlm-cgi?3:mss:15939 

------- 

>> If the CAFC's position is indeed the law of the land, then 
>> any cause of action relating to a breach of a provision in a license 
>> agreement that merely mentions the word "condition" (or some synonym 
>> thereof), or that could conceivably be interpreted as a condition 
precedent, 
>> will need to be decided by a federal court. Otherwise, the parties 
run the 
>> risk of going through a full trial in state court only to find that 
the 
>> state court has no jurisdiction to even hear the matter in the first 
place 
>> because the breach in fact constitutes an infringement. 
>That is a technical matter that I have no opinion on. 

[Marc Whipple] I am a lawyer, but this is not legal advice. Always 
consult an attorney licensed in your jurisdiction and familiar with the 
relevant law before making legal decisions. 

I think you probably mean, "I do not consider myself able to offer an 
informed opinion on this point," but the way it was phrased sounds a 
little dismissive. If you didn't mean it that way, accept my apology if 
I've over-read your statement. 

That being said, calling this a "technical matter" is oversimplification 
to a rather radical degree. As an attorney who often walks the line 
between questions of Federal and State jurisdiction it was one of my 
first concerns when I read a summary of the decision this morning. The 
utter pre-emption of matters even remotely concerned with the Copyright 
Act means that this is a question of the utmost importance to anyone who 
has anything to do with such licenses. I haven't read the full decision 
yet, and so won't comment on whether the assertion the OP makes is 
accurate, but if it is, he is right to be concerned. Among other things 
it would mean that the enforcement of OS licenses just got, at the bare 
minimum, a lot more expensive. 
------- 

regards, 
alexander. 
       
P.S. "Every computer program in the world, BusyBox included, exceeds the
originality standards required by copyright law."

Hyman Rosen <address@hidden> The Silliest GPL 'Advocate'

P.P.S. "Of course correlation implies causation! Without this 
fundamental principle, no science would ever make any progress."

Hyman Rosen <address@hidden> The Silliest GPL 'Advocate'

--
http://gng.z505.com/index.htm 
(GNG is a derecursive recursive derecursion which pwns GNU since it can 
be infinitely looped as GNGNGNGNG...NGNGNG... and can be said backwards 
too, whereas GNU cannot.)


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