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From: Alexander Terekhov (terekhov_at_[hidden])
Date: 2004-11-23 12:06:56

FYI (given ongoing "S.S." stuff and so forth topicalities ;-) )

Alexander Terekhov wrote:
> Boost license is not a contract. It's a bunch of unilateral
> permissions. Well, but given the utterly silly ruling of the
> Munich district court against the Sitecom in the GPL case
> recently... you never know. Hopefully, it will be corrected
> on appeal (if the Sitecom will choose to appeal it).
(The first-ever ruling on the legal validity of the GPL - A Critique
 of the Case By Professor Dr Thomas Hoeren, Visiting Fellow at the
 Oxford Internet Institute)


1. The decision of the District Court of Munich is celebrated as the
first-ever judgement on the validity of the GPL. That is surprising.
The decision is the judgement of only a single district court in
Germany. And it is only a summary and preliminary decision based on
injunctive remedies. Furthermore, the judgement refers to only one
special case within the Open Source scene. There was only one main
developer involved in this project, so there was no need to decide,
for example, on the complicated questions of rights ownership
involved in Linux.

2. Given the high importance that the Open Source community
attributed to the judgement, the Court’s legal arguments are
extremely poor. I do not want to deal with the many spelling and
grammatical mistakes in the original version of the decision; such
things happen in the heat of the moment. But it is even more
astonishing that most of the relevant legal literature has not been
considered. The Court essentially refers only to an essay from
Metzger/Jäger written in 1999, apart from two essays from Omsels and
Plaß. None of the critical voices about the effectiveness of the GPL
have been heard.

3. Apart from these formalities, the argumentation of the judges
raises many questions and prompts many criticisms.

a. The homepage of the plaintiff included a link to the GPL version 2
(June 1991), an American document of the FSF. However, the US version
of the GPL was not considered by the Court. Instead the Court used an
unofficial German translation without devoting even a single sentence
to justifying this approach. The judges also did not mention the
history of the GPL, nor did they ask how the GPL might be interpreted
under US rules on the interpretation of contractual documents. They
simply applied German methodology and concepts to a document whose
legal roots are deeply intermingled with US law and the US Open Source

b. The court interpreted the GPL in the light of the German model of
“condition subsequent” based upon Sect. 158 of the German Civil Act
(BGB). The court argued that infringements of the GPL would lead to an
automatic loss of rights, based upon a condition subsequent. The user
of open source products gets the license to use the product only on the
condition that, and as long as, he sticks to the rules of the GPL. The
Court held that this extremely tight link between the use right and the
GPL would not prevent the software product from being marketed, as a
third party would be able at any time to re-acquire the rights from the
software developer. However, sects. 2 and 4 of the GPL do not refer to
the German concept of conditions. Sect. 4 refers to particular rights
“provided that”. Sect. 2 uses the term “conditions”, but in a very
broad and general sense, such as a contractual term which has to be
met. It might well be that a violation of the GPL leads to contractual
remedies for non-performance, but not to an automatic loss of use rights.

c. To operate with a condition subsequent is “beating the devil with
the devil”. If I were a producer of proprietary software products, I
would be very happy with the judgement of the district court because
nobody can prevent the producers of proprietary software from likewise
using a condition subsequent. They can now restrict the transfer of
sold software to third persons or the use of a programme on different
computers by combing these (invalid) contractual restrictions with a
condition subsequent related to the “license”. If you pass software to
anybody else or use it in another computer, you (and the third person)
automatically lose your right to use the software. Everything courts
had said on the (in-) validity of contractual use restrictions in the
software business is now going to be undermined by the model of the
condition subsequent.

d. Why does the GPL call itself a “license”? The term “license” is
not used in the German Copyright Act and is not known in Continental
European copyright law. That is good: the term “license” is nebulous
and has been used in business as a smokescreen to mask the invalidity
of “license” restrictions. In recent years the license model has been
efficiently refuted by European courts and traced back to traditional
concepts such as the purchase of rights or a legal lease. The district
court should have dealt with this opinio communis. But what happened
in Munich?

e. The ignorance of the Munich court as to the opinio communis can
also be demonstrated in connection with the problem of exhaustion. If
the GPL is regarded to be binding even in cases of the transfer of
software to a third person, the concept of exhaustion might be
violated. The European Software Directive has provided that the
exhaustion of the copy of a program is applied Community-wide by a
first sale of that copy in the Community with the consent of the right-
holder; once an author has sold a copy of a work, he or she loses the
exclusive distribution right with respect to that work. A contractual
limitation of this principle is held to be invalid, at least in
Germany and Austria. The Munich court obviously did not know of these
developments; instead it simply stated that the German copyright
legislator had once expressed its support for Open Source. However,
this support has been given only in other legislative debates
regarding mandatory rights of creators to adequate remuneration. But
even if the legislator generally likes Open Source, it does not at all
mean that the legislator supports and considers every rule of the GPL
as legally effective.

f. En passant, the Court raised some more radical questions without
giving good arguments. For instance, the Court claimed that a non-
exclusive license gives a right in rem; this contradicts the
interpretation of the Federal Supreme Court, which held that non-
exclusive use rights are not property rights but contractual rights
(BGH, GRUR 1959, 201, 202 – Heiligenhof). The court has not really
discussed rules relating to the conflict of laws. Of course, copyright
law is governed by the principle of territoriality. But what about the
relevant rules for contractual aspects, as with the interpretation of
the GPL (see above) or the applicability of regulations concerning
unfair contract terms?

g. Finally, there is the important question of the consequences of the
assumed invalidity of the GPL. The Munich court argued that the
question of the enforceability of the GPL was in no way relevant.
According to the Bavarian judges, if the GPL is legally ineffective,
the user does not have a license and is thus violating copyright law.
On the face of it, that sounds plausible, but it is not. If somebody
offers software on the Internet for downloading and links the download
with invalid general terms, he can hardly sue for copyright
infringement. Instead, the validity of the standard terms is a matter
for the software distributor: if he wants to use invalid contractual
terms, he bears the risk of their use. It would violate equity and
good faith if he were allowed to sue others merely on the grounds that
his license terms were invalid.




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