Comparative Law of Licenses and Contracts in the US, UK and EU FOSDEM’18 4 Feb 2018 Pamela Chestek Andrew Katz Michaela MacDonald

US

Non-exclusive license Contract (agreement) Non-exclusive license A license is a grant of permission to use copyrighted material. The license can be express (written or oral) or implied by conduct. A non-exclusive license is a defense to an allegation of infringement. If accused of infringement, one can avoid liability by showing that the accused acts were within the scope of the license grant. A contract requires offer, acceptance and mutual consideration. Without consideration, the offer is revocable (unless the other party can show detrimental reliance). Case law says that the non-monetary benefits to the open source licensor is consideration. A “unilateral” contract is accepted by performance

license agreement A license can be (but rarely will be) the only subject matter of a contract.

License agreement The defendant will not have a license defense, and therefore will be liable for copyright infringement, if the conditions of the license are not met. If the breach does not cause the license to fail, then there is only a breach of contract claim. An example might be, in terms of use, a prohibition on creating derivative works versus a prohibition on disparaging the website owner. It then becomes an exercise in determining whether the license grant was conditioned on complying with the breached terms or instead the breached term was a “covenant” of the contract, where only contract damages are available.

An example of a condition ... “You may convey a work based on the Program, or the modifications to produce it from the Program, in the form of source code under the terms of section 4, provided that you also meet all of these conditions:” Courts look for specific language, “provided that,” “on the condition that.” It can also be a question of whether the conduct implicates a the copyright right. “You agree that you will not . . . (ii) create or use cheats, bots, "mods," and/or hacks, or any other third-party software designed to modify the World of Warcraft experience” was a covenant, not a condition of the copyright license needed to play the game

Fair License <Copyright Information> Usage of the works is permitted provided that this instrument is retained with the works, so that any entity that uses the works is notified of this instrument. DISCLAIMER: THE WORKS ARE WITHOUT WARRANTY.

BSD 3-Clause License Copyright <YEAR> <COPYRIGHT HOLDER> Redistribution and use in source and binary forms, with or without modification, are permitted provided that the following conditions are met: 1. Redistributions of source code must retain the above copyright notice, this list of conditions and the following disclaimer. 2. Redistributions in binary form must reproduce the above copyright notice, this list of conditions and the following disclaimer in the documentation and/or other materials provided with the distribution. 3. Neither the name of the copyright holder nor the names of its contributors may be used to endorse or promote products derived from this software without specific prior written permission. THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND CONTRIBUTORS "AS IS" AND ANY EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE DISCLAIMED. IN NO EVENT SHALL THE COPYRIGHT HOLDER OR CONTRIBUTORS BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES; LOSS OF USE, DATA, OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER IN CONTRACT, STRICT LIABILITY, OR TORT (INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT OF THE USE OF THIS SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.

US Bare license? Contract? Fair License ?? BSD X Apache GPL

Law of England and Wales. Northern Ireland is similar. Not Scotland English Law Law of England and Wales. Northern Ireland is similar. Not Scotland

Rationale ‘Bare licence’ is a promise not to sue. Enforceable by estoppel – licensee acts in reliance of the licence, may no longer be revoked. Acting outside the scope of the licence is copyright infringement. Courts look for specific language, “provided that,” “on the condition that.” It can also be a question of whether the conduct implicates a the copyright right. “You agree that you will not . . . (ii) create or use cheats, bots, "mods," and/or hacks, or any other third-party software designed to modify the World of Warcraft experience” was a covenant, not a condition of the copyright license needed to play the game

Carlill -v- Carbolic Smoke Ball Co. Unilateral contract Promise to pay £100 to anyone using the smoke ball who contracts influenza. Consideration is the economic benefit to the suppliers in selling more smoke balls. Courts look for specific language, “provided that,” “on the condition that.” It can also be a question of whether the conduct implicates a the copyright right. “You agree that you will not . . . (ii) create or use cheats, bots, "mods," and/or hacks, or any other third-party software designed to modify the World of Warcraft experience” was a covenant, not a condition of the copyright license needed to play the game

Is it necessary to imply a contract? No - “An implication may only be made if this is necessary, and then only of what is necessary and no more.” Robin Ray v. Classic FM Courts look for specific language, “provided that,” “on the condition that.” It can also be a question of whether the conduct implicates a the copyright right. “You agree that you will not . . . (ii) create or use cheats, bots, "mods," and/or hacks, or any other third-party software designed to modify the World of Warcraft experience” was a covenant, not a condition of the copyright license needed to play the game

English Law Bare licence? Contract? Fair License Yes No BSD Apache GPL

Civil law jurisdictions EU Civil law jurisdictions

European legal systems OS licences are interpreted as enforceable bilateral contracts Bare licence not an independent, sui generis concept

Rationale OS licence is “an agreement whereby the licensor grants the licensee permission to perform certain acts with respect to a copyright protected work, acts which would otherwise be prohibited on the basis of the licensor’s exclusive right on the work.” Guibault, L., van Daalen, O. Unravelling the Myth around Open Source Licenses (2005 TMC Asser Press)

EU Bare license? Contract? Fair License No Yes BSD Apache GPL

We are lawyers but not your lawyer. We could be wrong. Summary We are lawyers but not your lawyer. We could be wrong. The following slides are our best guess on the application of various legal principles.

Taxonomy US English Law EU Bare License A defense, not a document No acceptance required. Defence to infringement claim N/A Unilateral Contract Acceptance by conduct Acceptance by conduct. Communication not necessary No acceptance required – does not apply to software licences Bilateral Contract Acceptance by any means Acceptance must be communicated

Revocability US English Law EU Bare License Revocable at any time unless licensee has relied on it Revocable at any time (unless licensee has relied on it) N/A Unilateral Contract Not revocable after partial performance Potentially irrevocable German law (free revocation) / Italian law (promise is irrevocable) Bilateral Contract Terminates only on material breach

Third Party Beneficiary Rights US English Law EU Bare License No N/A Unilateral Contract Depends on wording Yes Yes? Bilateral Contract Being tested for copyleft licenses

Specific performance by licensee US English Law EU Bare License N/A No Unilateral Contract Rarely granted, but theoretically possible Yes (at discretion of court) Yes – statutory remedy Bilateral Contract

Costs follow event (discretionary) Legal Costs US English Law EU Bare License No Costs follow event (discretionary) N/A Unilateral Contract Bilateral Contract

Exclusion of liability English Law EU Bare License N/A Enforceable (mainly) Unilateral Contract Most likely Subject to reasonableness (UCTA), and Consumer protection Requirement of proportionality, consumer protection Bilateral Contract