juridiko by Sean Hogle


Good news for open source: 9th Circuit contradicts itself on scope-limiting license conditions

A little less than a year ago, in MDY Industries, LLC v. Blizzard Entertainment, Inc., the Court of Appeals for the Ninth Circuit elucidated a new rule that a contract obligation in a license agreement will be considered a scope-limiting license condition, breach of which is remediable by copyright remedies, only if the obligation contains a “nexus” to the exclusive rights accorded to the copyright owner via the U.S. Copyright Act, or is a payment obligation. For more on this case, go to my previous blog post or read the article I wrote for Landslide magazine.

However, in a decision rendered less than one month ago, Apple Inc. v. PsyStar Corp., (9th Circuit, Sept. 28, 2011), the Ninth Circuit ruled (emphasis added):

Enforceability of business-to-business employee anti-poaching clauses

One frequently encountered provision in software license, support or development agreements is an employee non-solicitation clause, in which the customer agrees not to solicit, recruit or hire the vendor's employees during the term of the agreement and for a period of time thereafter, typically six to twelve months. While such clauses can lead to acrimony during negotiations, for the most part customers typically understand the reasoning of and the need for such clauses, and most often agree to them in some form.

What may not be widely understood, however, is that such clauses may run afoul of California's statutory prohibition against non-competition covenants, embodied in section 16600 of California's Business & Professions Code. This statute renders void and unenforceable "every contract by which anyone is restrained from engaging in a lawful profession, trade or business of any kind …." Any company domiciled in California, or any company doing business with a California company, should be aware of the issues and risks employee non-solicitation and similar no-hire clauses resulting from application of section 16600.

Source code license "cooling-off" clauses as possible (and unenforceable) non-compete covenants

Companies licensing out source code, particularly operating system or middleware platform code, are fond lately of inserting into the relevant licensing agreements a "cooling off" period during which employees of the licensee who accessed such code would be prohibited from being involved in projects concerning source code of competitive software. An example of such a clause follows:

Licensee shall ensure that any Licensee employee who has accessed the Licensed Software Source Code shall not be permitted to work on any project involving the development, evaluation, modification or use of software that is substantially similar in function and purpose to, or which is competitive with, the Licensed Software, during such employee's access to the Licensed Software Source Code and for a period from the date of such employee's last day of access, to one (1) year later.

Article Published in Landslide Magazine

An article I've written has been published as the lead submission for the July/August 2011 edition of Landslide Magazine, the official publication of the American Bar Association's Intellectual Property Section. The article is entitled, "Open Source Licensing and the Viability of the Free Software Movement." The article discusses the impact of the Ninth Circuit decision of MDY Industries v. Blizzard Entertainment. In that case, the Ninth Circuit elucidated a new rule that a contract obligation will be considered a license condition only if the obligation contains a "nexus" to the exclusive rights accorded to the copyright owner. The Ninth Circuit's reasoning as applied to open source licenses would render notice, attribution and copyleft obligations in those licenses as mere contract covenants and not scope-limiting conditions, foreclosing the possibility of recovery of copyright remedies. The ruling therefore casts considerable doubt on the ability of open source licensors to effectively enforce these obligations.

Think your license agreement effectively specifies the law of your choice? Think again.

Choice of law is often a contentious point in license negotiations.  Each party fights for that party's home country's laws to be applied exclusively in the event of any disputes between the parties later.  In order to resolve the impasse that arises in this context, it is quite common for parties to agree on a neutral forum's laws as a compromise.  Whether this neutral choice would actually be enforceable, however, may depend on whether there is a reasonable or logical basis for this choice.

Think you are immune from non-compete covenants because you are a California employee? Think again.

Unlike many states, California outlaws non-compete covenants except in certain limited contexts (such as in connection with the sale of a business). Section 16600 of the California Business & Professions Code, in existence since 1872, provides, "Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade or business of any kind is to that extent void."  California courts have consistently construed section 16600 as a strong expression of public policy ensuring every citizen's right to pursue a trade of his or her choice. As a consequence, clauses in employment agreements that purport to restrict post-termination the ability of an employee to work for competitors of the employer, or that prohibit solicitation of the employer's customers, are void and unenforceable. Even presenting such clauses to employees or potential employees may constitute an unlawful employment practice

Are You Ready for an IPR Audit?

Consider the following hypothetical (the names contained in which are entirely fictional):

Oh Noes -- teh Angry Birds GPL'd! Google's Alleged GPL Violations in Android

Two commentators, Florian Mueller and Edward Naughton, have recently claimed that Google is violating the copyleft obligation of the General Public License in distributing the Android mobile operating system used in millions of smartphones all over the world. Android consists of a combination of the underlying Linux kernel, licensed under GPLv2, wrapped with a C library known as Bionic, and topped off with an application framework. Google has released Bionic under the permissive BSD license. Naughton's and Mueller's thesis is that Google's Bionic library is a derivative work of the Linux kernel due to the amount and type of code Bionic lifts from the kernel, and therefore is required to be licensed under GPLv2. If Bionic is required to be licensed under GPLv2, that means Android applications would also have to be licensed under GPLv2 in source code form, they claim. Google would lose control of the entire platform, the argument goes, and Android as a viable and profitable ecosystem would collapse.

Ninth Circuit Ruling Guts Enforceability of Open Source Licenses

A recent Ninth Circuit Court of Appeals decision elucidated a new rule that a contract obligation will be considered a license condition only if the obligation contains a “nexus” to the exclusive rights accorded to the copyright owner via the US Copyright Act. The Ninth Circuit’s ruling casts considerable doubt on the ability of open source licensors to effectively enforce open source copyleft obligations.

Preserving DMCA Infringement Immunity for Website Owners: You're Doing it Wrong

The Digital Millenium Copyright Act of 1998 amends Title 17 of the US Code, ie, the US Copyright Act, to create a safe harbor for "online service providers" (defined, essentially, as providers of online services and websites offering unmodified third party content) against copyright liability in certain circumstances. Namely, such service providers will not be liable for infringing content posted on their sites if the service providers adhere to prescribed safe harbor guidelines and promptly block access to or remove infringing materials upon receiving notification of infringement form the applicable copyright holder.  This DMCA safe harbor immunizes the site operator from liability if the operator complies with the takedown procedures specified in section 512 of the Act. Surprisingly, many prominent sites are apparently failing to follow these requirements and are consequently exposed to the risk of losing this DMCA immunity.

notices    log in

© 2006, 2017 Sean Hogle PC. All rights reserved. These pages constitute ATTORNEY ADVERTISEMENT.