In an opinion recently handed down by the Ninth Circuit, the court assessed whether violation of license terms constitutes infringement or breach of contract, and came to the opposite conclusion from the court in Jacobsen v. Katzer.
The court wrote that this question turned on whether the violated terms were “conditions,” which limit a license’s scope, or “covenants,” which are contractual promises. The court wrote that state law (in this case, Delaware) governed this question. Accordingly, the breach of a condition could constitute infringement, whereas violation of a covenant would only be a breach of contract. “[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.” The court noted that conditions precedent are generally disfavored under law, because they “tend to work forfeitures.”
On face, this is a different conclusion from Jacobsen v. Katzer, which concluded that attribution requirements in the Artistic License were conditions, supporting a claim of copyright infringement. (The court there did not foreclose the possibility of violating those requirements also being a contract claim.)
However, there were two obvious differences. First, WoW was not distributed software, and its “conditions” were actually an acceptable use policy. The court’s opinion turned on the fact that the prohibited conduct had more to do with the use of the service than an exercise of copyright. Second, the court treated the question of license versus covenant was a question of state law. State law governs contract claims, whereas federal law governs copyright claims. So if it is a state law question, it is likely to follow the contract rules, disfavoring conditions.
What does this mean for open source? Condition versus covenant is a big issue in open source licensing. Open source licenses, say some, are conditional licenses and not contracts — though not every lawyer agrees with this premise. The difference is one of remedies. Copyright claims can more easily result in injunctive relief, and are grounds for statutory damages even when there is no economic harm.