(c) Larry Ewing, Simon Budig und Anja Gerwinsk
(c) Larry Ewing, Simon Budig und Anja Gerwinsk

Robert Jacobsen was a model train enthusiast and a computer programmer. Combining these interests, he created DecoderPro, a software application for programming model trains. Jacobsen distributed the source code for DecoderPro online under an open source license. Another company, KAM industries, downloaded the DecoderPro source code and used parts of it to create another software application, calling the new application “Decoder Commander.” KAM industries then sold Decoder Commander to consumers.

This may seem like a familiar story in the software development world. In recent years, many developers have chosen to forgo traditional software licenses in favor of “copyleft” licenses, which allow licensees to use the copyrighted source code without charge, provided that certain conditions in the license are met. Given the plethora of open-source code that can do everything from run your computer to control complex databases, many entrepreneurs may find it tempting to copy freely available source code instead of programming from scratch. Doing so, however, may end up costing start-up companies more than they expect.

The Nature of Open-Source Licenses

Source code distributed under an open-source license may come with restrictions on its use.  The licensee must comply with the terms of the license, which may vary significantly. Common open-source licenses include the GNU General Purpose License (GPL), the Lesser General Purpose License (LGPL), the BSD License, and the Artistic License. The most widely used open-source license is the GPL, which is also one of the most onerous “copy-left” licenses.

Under the GPL, licensees may use and modify the copyrighted software, with the caveat that any modified versions of the software must be made available for third party use free of charge. In other words, if any portion of a software application contains open source code covered by the GPL, then the entire software must be freely available to the public. For this reason, the GPL is sometimes called a “viral license“.

Of course, not all open-source licenses are as onerous as the GPL license. Some impose minimal restraints on the licensee. For example, the BSD License only requires the licensee to include the BSD statement in modified software, and does not limit commercial redistribution of modified software.

Violating the Open-Source License

Returning to our model train story, the DecoderPro source code was distributed under the Artistic License, which allows re-distribution subject to specific conditions listed in the license. KAM Industries did not comply with the terms of the Artistic License, and removed the license terms from its new application, Decoder Commander. Jacobsen eventually sued KAM Industries for breaching the Artistic License. In Jacobsen v. Katzer, 535 F.3d 1373, the Federal Circuit sided with Jacobsen, and held KAM Industries liable for both copyright infringement and breach of contract.

The takeaway lesson is to be very careful about incorporating open-source code into your commercial product. In general:

  1. Make sure you understand the terms of the open-source license you are accepting.
  2. Document any code that you did not write yourself. If you have employees or contractors who are coding for your company, make sure that  your employees and contractors are not incorporating open-source code without your knowledge
  3. If you are making a commercial product, avoid open-source code distributed under viral licenses. Your company might be held liable for copyright infringement for making unauthorized copies of the code if you do not comply with the license, which typically requires giving your product away for free.