Just a reminder, these posts are not legal advice. This site is the personal blog of Mark Radcliffe and the opinions expressed are those of Mark Radcliffe and not those of his clients, DLA Piper or the clients of DLA Piper.

About Me:

Mark Radcliffe

I have been practicing law in Silicon Valley for over thirty years assisting startups and global companies develop and market innovative products and services. I have participated in multiple business cyles in Silicon Valley from hardware to software to internet to cloud. My projects have included developing the dual licensing business model for open source startup, developing the original domain dispute resolution policy for NSI and assisting Sun in open sourcing the Solaris operating system. Recently, I served on the US Japan Innovation and Entrepreneurship Council (one of ten members) to develop a plan to encourage the innovation in Japan and the United States. I have been working with the same attorneys since 1986 although we have merged with other law firms several times. I am now a partner at DLA Piper, a (relatively) new global law firm formed in 2005 from the merger of three law firms. The firm now has 4200 lawyers in 31 countries and 77 cities. My experience in corporate securities (particularly venture capital) and intellectual property enables me to assist companies structure the financing and intellectual property strategy for developing ane exploiting a new product or service. I and my team work with fifty startups at one time as well as Global Fortune 100. I have been fortunate enough to work with companies in software, cloud computing, semiconductor, health care IT and Web 2.0.

Although my earlier post focused on the effect of the Jacobsen decision for the open source industry, the case has significantly broader implications. The court’s reasoning applies to any copyright license which means that it will have an impact on licenses well beyond open source licenses: it will impact licenses for commercial software, books, music, television, and movies. The decision will also be important for licenses which govern the growing amount of user generated content on the Web; such content is frequently subject to standardized licenses, such as those created by the Creative Commons and websites like Wikipedia, which do not involve direct economic consideration. The decision sets forth the basic rule very clearly:

“Copyright licenses are designed to support the right to exclude: monetary 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 rather than as a dollar-denominated fee, is entitled to no less legal recognition.”

Jacobsen deals with the fundamental issue of the appropriate remedy for breach of a copyright license: the basic remedy for breaching a contract such as a license is monetary damages, but under some circumstances a copyright licensor can obtain remedies under copyright law. The courts have established a standard that the breach of obligations that are covenants rather “conditions” or “restrictions” on the scope of the license can only obtain contract remedies. However the line between covenants and “conditions” or “restrictions” has always been murky. The decision provides clear guidance: obligations in a license agreement which are expressly described as a “condition” or, even better, which are introduced by the phrase “provided that” meet the criteria in Jacobsen.

Copyright law remedies include injunctive relief, attorneys fees, actual damages and, potentially, statutory damages. The remedy of injunctive relief is particularly valuable for many licensors because such licensors frequently seek compliance with the terms of the contract. Courts may grant attorneys fees at their discretion and such fee awards can be significant and even exceed the damage awards. Actual damages can be difficult to determine for many copyrightable works and are particularly difficult for breaches of licenses to open source software or other works which are licensed without fee. Statutory damages,on the other hand, are not connected to actual damages and can be as much as $150,000 per copyright for willful infringement and are awarded by the court. However, such statutory damages are only available if the copyright is registered prior to the infringement (or in the case of a recently published work, the copyright is registered within three months of first publication).

Since many open source companies use the dual license model, the decision may be equally important to them for their commercial licenses. In addition, the decision will be important for software vendors with a pure commerical model as well as licensors of other copyrightable works such as books, music and film. These licensors should read Jacobsen carefully and revise these licenses appropriately to take advantage of the new clarity on these issues provided by the decision.

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  1. [...] on the scope of the license rather than just a contractual obligation (a “covenant”)  However, the other standard copyright law remedies such as attorneys fees, actual damages and, [...]

    Pingback by Law & Life: Silicon Valley » 2011: Top Ten FOSS Legal Developments — January 10, 2012 @ 5:34 pm

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