I Covenant, No I Condition, Not To Infringe Your Copyright.

Not since the Sixth Circuit decided Mike’s Train House v. Lionel LLC, around Xmas/Hannukah 2006, has the notion of grown-ups, wearing judges’ robes, arguing over how to run model railroads, come into mind. Until now, with the CAFC’s ruling in Jacobsen v. Katzer, 8/13/2008 (a month that celebrates no holidays).

Jacobsen writes software to run your model train. (Yes, Virginia, examine the box for a ‘software not included’ caveat). Access to downloadable files of Jacobsen’s copyrighted programs is granted subject to an “Artistic License,” which is modeled after a Creative Commons or GPU license. A competitor downloaded software owned by Jacobsen, then incorporated it into their competing product.

The district court framed the issues presented by a preliminay injunction motion as whether noncompliance with the Artistic License terms was a breach of license, or an infringement of a copyright to the work. The Circuits are not aligned on what differentiates a license breach from a copyright infringement claim, and this decision by the CAFC does not add to the jurisprudence – but they called it “precedential” anyway.

The conundrum is that a license, governed by state contract law, may set conditions or limitations, which when not followed, create a cause of action for copyright infringement. However, none of those conditions are statutorily defined as infringing conduct per se. The license could require that each use include a “prominent notice” that the author of the work is a ‘flat-out genius’ and if that was omitted, then all the presumptions and remedies allowed by the copyright statute come into play. Judge Hochberg, sitting by designation, split the territory into “[C]ovenants and conditions [that] limit the scope of the license …[which] are governed by copyright law,” as distinct from mere “covenants, by contrast, [that] are governed by contract law.” Such semantic distinctions about intangible rights, are well, intangible too.

The variations of covenants viz. conditions, which are not “mere” covenants, amply prove the need for a clearer state of the law. If a condition, or covenant, does not promote a goal or policy of the copyright law, then it should not be the basis for a copyright cause of action. Conditions or covenants that serve business or philistine goals should not provoke a copyright infringement action, but only recourse to a contact case for damage to that business interest. Consider the Bobbs-Merrill decision, 100 years ago by our Supreme Court, where the covenant required resale price maintenance, “No dealer is licensed to sell it at a less price“. Resale price maintenance is really not what the drafters of the Copyright Clause intended to protect. In this Jacobsen decision, the CAFC views the conditions in the Artistic License as keyed to the original author gaining the value from derivative works, i.e., values “vital to enabl[ing] the copyright holder to ..benefit from the work of downstream users.” Later, the panel observed that the conditions in the license “support the right to exclude,” which again, is a goal or policy served by the Copyright Act.

The CAFC rested at ease with a “mere” semantic distinction between contract and copyright claims, unencumbered by any policy or statutory goal being served. Instead, the subtext of the panel’s opinion is that creative collaboration and the open licensing that supports that are just plain “good.” Whither the statute, or the goals of copyright that it serves?