The recent decision in Software Freedom Conservancy Inc. vs. Best Buy, et al (see http://sfconservancy.org/docs/2010-07-27_dj-opinion.pdf ) has been greeted with hosannas by many in the open source community as “proving” that the GPLv2 is enforceable. I don’t want to be negative, but the value of the precedential value of the case is very limited because it is “default” judgment. The ruling is effective between SFC and Westinghouse Digital Electronics, LLC, but will have little effect on disputes between other parties. The decision has two lessons: (1) register your copyright as soon as possible (see below) and (2) don’t annoy a federal judge by dropping out of case. The decision does emphasize the importance of registering the copyright in open source software in the Copyright Office because it enables the copyright owner to seek statutory damages (avoiding the difficult question of how to determine “lost profits” for a software programs distributed for free) as well as attorneys’ fees.
The court ruled that Westinghouse Digital Electronics, LLC (“Westinghouse”) had infringed on the copyright in the BusyBox software by failing to comply with the terms of the GPLv2 in its distribution of the Westinghouse high definition televisions (“HDTV”). Although Westinghouse had originally “answered” the complaint, it then withdrew from participation in the suit, apparently due to financial difficulties, and ceased to respond to discovery requests from the plaintiff. If the failure to respond to discovery requests is due to “willfulness, bad faith or fault,” the court can grant a default judgment and Judge Scheidlin granted the motion. The financial problems of Westinghouse are evident through its use of the “assignment for benefit of creditors” procedure. The “assignment for benefit of creditors” is a California state law procedure similar to federal bankruptcy law to wind down companies. In this procedure, the company assigns its assets to a third party licensed by California who, then, disposes of the assets and then pays off the creditors of the company. Unlike bankruptcy law, the assignment for benefit of creditors does not “stay” litigation.
As part of the default judgment, the court granted four different forms of relief: an injunction prohibiting Westinghouse from copying and distributing the BusyBox software; statutory damages of $30,000 which it tripled to $90,000; “reasonable attorneys’ fees and costs; and forfeiture of all Westinghouse HDTVs which contain BusyBox software. Statutory damages are unique to copyright law; if the infringement takes place after the “registration” of the copyright in the software (or other work) in the Copyright Office, the copyright owner may seek such “statutory” damages rather than “actual damages” (which are the general basis for damages in the common law system). In addition, the copyright owner who is eligible for statutory damages can also obtain the award of reasonable attorneys’ fees and costs (the award of attorneys’ fees and costs is very unusual under US law).
The default judgment requires that all of the “well pleaded facts” in the complaint are accepted as true. The court also noted that Westinghouse’s failure to participate in discovery meant that the court could not determine appropriate damages and, thus, awarded the maximum damages and, then, trebled the damages on the basis that the infringement by Westinghouse was “willful”. As a default judgment, the decision has little precedential value because all of the facts are taken as “true”.
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