Court ruling of the Local Court of Munich of 19 May 2004
In the first ever ruling in Germany, and it seems worldwide, the Local Court of Munich ("Court") has ruled on the effectiveness of licence restrictions in the GNU General Public Licence ("GPL") for open source software.
The "maintainer" of a core team of open source software developers ("Claimant") had filed an injunction against a commercial vendor of software ("Defendant") who was offering open source software products without complying with the GPL licence terms of making available the source code and attaching the proper copyright notices.
Given the open source nature of the software, the Claimant only held a joint copyright together with all other prior contributors to the software. In accordance with the German Copyright Act the court clarified that the Claimant may plead his (co-) copyright independent of any consent by the other co-authors, to the extent he is seeking injunctive relief against copyright infringement. Note however that pursuant to the German Copyright Act a co-author cannot independently file performance claims (including claims for damages) based on an alleged infringement of his jointly held copyright.
The court upheld the injunction, ruling that the GPL licence terms had been validly agreed between the parties by way of standard terms and conditions (the "T&Cs") and that the Defendant was in breach of the licence. The court upheld Section 4 of the GPL (that the licence would automatically terminate if the licensee did not comply with the GPL), rejecting the Defendant's argument that Section 4 GPL was an overly burdensome clause of the T&Cs, which would have invalidated it under German law. The court expressly highlighted that Section 4 was a valid licence restriction and that nothing in the Claimant's conduct constituted a general waiver of its rights under German copyright and contract law. The Claimant had therefore validly granted a non-exclusive licence that was subject to automatic termination in the event of a breach of the GPL.
The court further confirmed that Sections 2 and 3 of the GPL (the obligation to disclose the source code including in the onward licence to any third party) are valid and effective obligations / conditions of using and licensing open source software. These clauses are effectively the principles of the entire open source idea. The German court was able to justify this by reference to German copyright law under which a licence can be granted to everybody free of charge.
Inevitably legal discussions will commence as to the appropriate balance between the automatic termination clause and the principle of exhaustion. From a German copyright perspective, the rationale behind the principle of exhaustion is to facilitate the circulation of copyright protected works. An automatic termination can potentially make the chain of onward licences and sub-licences of such copyright works collapse. The court ruled on the basis of the specific circumstances that the automatic termination could not substantially impact on the onward licence, because effectively any onward licensee would easily be able to procure a licence directly from the original software developer. In the court's view, this results from Section 4 sentence 3 of the GPL whereby any third party licensee's licence shall not terminate (even if the original licence is subject to automatic termination) as long as such a third party licensee recognises and complies with the GPL. It remains to be seen whether legal authors and courts will follow this example of a case-by-case approach.
The second set of discussions will relate to the law of contract and the T&Cs: to what extent will the German doctrine on T&Cs impact the GPL, in particular will the GPL be subject to a far-reaching judicial review and the application of the strict regime on statutory warranties and limitation of liability (as applicable even in a B2B licensing relation)? Or, in other words, given that the GPL liability disclaimer would not be enforceable if the German rules on T&Cs apply, does the licensor of open source effectively assume statutory warranties for software defects and unlimited liability for any default pursuant to German statutory law? If so, can a licensor modify the open source licence in this respect by adding on own licence terms (which would conflict with the GPL) or, ultimately, choose a law other than German as the applicable law, at least in a B2B scenario?
This first decision on the open source licences in Germany and, as it indeed appears, in the world is bound to trigger a broad discussion among legal authors, which will hopefully be further developed by follow-up decisions in the German courts and elsewhere.