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Uncertain Implications of Ninth Circuit Ruling on Copyright Licensing

If you have ever actually read through a software end user license agreement, you know that they are often full of restrictions on how you can use the software. Typically, the agreement states that the license to use the software is contingent upon compliance with all of those restrictions. If you violate any of those provisions, you are breaching the agreement. But are you also committing copyright infringement? According to the Ninth Circuit Court of Appeals, it depends.

In its recent opinion in MDY Industries v. Blizzard Entertainment, the Ninth Circuit held that violation of a provision in a license agreement is only copyright infringement if the provision violated has a "nexus" to one of the exclusive rights granted under copyright law -- reproduction, public performance or display, distribution, and creation of derivative works. That means, for example, that failure to obey a license provision prohibiting cheating in a copyrighted video game is not copyright infringement. But violation of a prohibition on creating derivative works of the game would be. This holding has important implications. As EFF has pointed out, the court's decision will help prevent copyright owners from using copyright law to enforce onerous requirements on licensees. (Copyright law provides much stronger legal remedies than contract law.) But on the other hand, it is not clear what the decision means for public licensing schemes.
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Public copyright licenses, such as those provided by Creative Commons, allow creators to grant public access to their works under certain conditions. Often those conditions are directly tied to the exclusive rights of copyright, such as the requirement that the user not modify or create derivative works based on the material. But other public license provisions, such as the requirement of attribution, are not rooted in the exclusive rights of the copyright owner. (American copyright law does not provide for attribution rights.) In 2008, the Federal Circuit held in Jacobsen v. Katzer that the provisions of public licenses, including attribution requirements, were conditions to the license. Accordingly, a violation of those provisions was a violation of copyright.

But the MDY case seems to call that principle into question. It is possible to distinguish the holdings of the two cases (see e.g., Jeff Neuburger's analysis), but the tension here is undeniable.

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