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    Jacobsen v. Katzer, a Railway to Open Sources Victory

    Jacobsen v. Katzer, a Railway to Open Sources Victory.

    Ruben Benhamou


    In an interesting decision Jacobsen v. Katzer (No. 2008-1001 dated on August 13, 2008) the Court of Appeals for the Federal Circuit (CAFC) in United States held that developers releasing codes under an Open Source (OS) License do not automatically waive their right to sue for copyright infringement.


    Jacobsen is the manager of the OS software project JMRI (Java Model Railroad Interface), software designed for controlling model railroad signals. Jacobsen decided to make it available to any user in the world under the Artistic License (a specific kind of OS Licence) in order that his work might be used and improved by anyone.

    Katzer works in the same field, developing and selling model train software via his own company. The latter filed a patent to protect a new technology and brought lawsuits against a few alleged fraudulent users. Before initiating any proceedings, Katzer warned the alleged fraudulent users with letters and Jacobsen received one of them as a request to pay $200.000 for infringement of Katzer's patent.

    Upon receipt of such a letter, it may appear that childhood hobby can turn to into something quite expensive and costly!

    Jacobsen decided to file a preemptive suit against Katzer based on the ground that Katzer's patent was built upon technology already developed and used under Jacobsen's JMRI software.

    Jacobsen appealed to other developers online in order to prove the prior art community and his appeal struck a chord not only with the OS developers community but also with renowned lawyers that helped him to bring suit in the U.S. District Court.

    The United States Code section 35 and related sections of 37 the Code of Federal Regulations require from any patent applicant or inventor to inform the US patent Office (USPTO) about any relevant background “prior art” at the time of application.

    Jacobsen argued that Katzer should have revealed the part of Jacobsen's JMRI software features incorporated in his patent since he could not have ignored its existence at the time of the patent prosecution process. Jacobsen maintained that Katzer purposely failed to submit the “prior art”, evidence that other developers were indeed the former inventors. Therefore, Katzer could not be entitled to claim any right upon a patent which is not valid and furthermore Katzer turned out to be the actual fraudulent user of Jacobsen's invention.

    The underlying main issue of the case boils down to determine the scope of remedies offered to developers for breach of OS licenses in US courts. The scope of remedies dramatically differs and depends on the cause of action which, in our case and according to the District Court, is a mere violation of contract Law, whereas the Court of Appeal's view was copyright infringement.


    Breach of contract remedy is usually limited to monetary damages and the amount of such damages is to be assessed only to reflect the actual loss. Thus, one would easily understand how difficult, if not impossible, it is for an OS developer to prove and assess an actual loss relating to use of an OS software that is freely distributed online.


    On the other hand, should the cause of action be grounded on copyright infringement then Intellectual Property law, that favours Intellectual Property owners, would apply. In such event an OS developer would benefit from a broader scope of remedies including, but not limited to, penalties assessed regardless of actual loss, injunctive relief, etc. For example, if Katzer were to receive an injunctive relief the Court may require him to comply with the terms of the OS License. Furthermore, it should be noted that attorney’s fees are more easily recovered under proceedings for copyright infringement.  .


    In August 2007, the District Court held that the OP License conditions are remedied through a contract claim only, thus an injunction was refused and minimal damages were granted to Jacobsen.


    One year later, the CAFC reversed the District Court's decision, its reasoning mainly hinging on the construction under California law of specific terms used in the OS license. Terms are decisive signs and this case was the opportunity for the CAFC to shed light on the repercussion of their use.


    The wording of the JMRI's OS License provisions limits the scope of the License to an extent that Katzer, as any user, had no choice other than to adhere to the License as a whole or to renounce to the use of the software.


    In particular, the term "provided that" is to be construed under California law as imposing enforceable "conditions", and since the restrictions of use of the JMRI's License are introduced by the aforesaid term, they could not refer under no circumstance to mere covenants which, in such an event could have required Katzer's agreement according to contractual law.

    Katzer was bound to the Artistic License terms in JMRI's OS license, since he used Jacobsen's software outside the imposed conditions and by doing so he was held liable not only for copyright infringement but also for breach of contract. The case has been remanded for the District Court and there is little doubt that an injunctive relief will be issued and monetary damages will be granted.

    Undeniably, this case is a significant turning point that strengthens the rights of OS developers who have awaited recognizance for a presumed monetary value of OS License regardless of whether their inventions are subject to royalties or may be freely distributed.

    The CFCA amended  the framework where any user are now entitled to use OS software and the manner in which lawyers should draft OS Licenses, for any future submissions of  infringement under copyright law.




    * It should be clarified that the review presented here above does not constitute any kind of legal counsel, and as such should not be substituted for any appropriate legal counsel which may be necessary.