Potential Trouble for Open Source Licenses: MDY v. Blizzard

A new decision was just published in MDY v. Blizzard (the makers of World of Warcraft): Decision (pdf), EFF Article

One part of the holding isn’t surprising: Purchasers of WoW aren’t owners but rather licensees of the software. But the other part is much more interesting and I think it narrows the basis for the Jacobsen v. Katzer holding.

Then

Remember, Jacobsen was about a Java developer who licensed his model train source code under the Perl Artistic License. A company copied it, but not according to the terms of the A.L. The case turned on whether the broken license terms were covenants or conditions. The court ruled they were conditions and thus there’d be liability for copyright infringement — as opposed to simply breach of contract. This is because, as pre-conditions which the defendant didn’t adhere to, there was no contract and thus the defendant’s behavior was copyright infringement. So in that case, conditions in a software license leading to liability for copyright infringement is a good thing, if you like open source.

And now

But now in Blizzard, the court found that the broken terms were covenants, which worked out for the defendant, MDY, who avoided secondary copyright liability. The court found its way there by interpreting the contract. But the opinion then states (jump to page 16—that’s where it gets good) that policy dictated that result as well: it would be a bad thing to allow software manufacturers to label any old term as a “condition” in order to use the hammer of copyright law. And so they seem to limit this legal strategy:

Were we to hold otherwise, Blizzard — or any software copyright holder — could designate any disfavored conduct during software use as copyright infringement. . . .We conclude that for 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.

But sometimes (Jacobsen) conditions are a good thing.

So now the questions are, is this dicta? Or a re-statement of existing law? Or instead, a new narrowing of the condition/copyright liability theory? And even if so, would it affect another Jacobsen-like case? Do the current crop of open source licenses’ conditions contain an appropriate “nexus [with] exclusive rights of copyright?”

See Also

Open source software and the covenant-condition dichotomy [Internet Cases]