The U.S. Court of Appeals for the Federal Circuit ruled that licenses used for OpenSource projects can be enforceable under copyright law.

Here are some excerpts from the summary document published by the Court:

… Open Source software projects invite computer programmers from around the world
to view software code and make changes and improvements to it. Through such
collaboration, software programs can often be written and debugged faster and at lower
cost than if the copyright holder were required to do all of the work independently. In
exchange and in consideration for this collaborative work, the copyright holder permits
users to copy, modify and distribute the software code subject to conditions that serve to
protect downstream users and to keep the code accessible …

… Traditionally, copyright owners sold their copyrighted material in exchange for
money. The lack of money changing hands in open source licensing should not be
presumed to mean that there is no economic consideration, however. There are
substantial benefits, including economic benefits, to the creation and distribution of
copyrighted works under public licenses that range far beyond traditional license royalties.
For example, program creators may generate market share for their programs by providing
certain components free of charge. Similarly, a programmer or company may increase its
national or international reputation by incubating open source projects. Improvement to a
product can come rapidly and free of charge from an expert not even known to the
copyright holder …

… Generally, a copyright owner who grants a nonexclusive license to use his copyrighted material waives his right to sue the licensee for copyright infringement and can sue only for breach of contract. If, however, a license is limited in scope and the licensee acts outside the scope, the licensor can bring an action for copyright infringement …

Source: Jacobsen v. Katzer Appeals Summary

Copyright holders who engage in open source licensing have the right to control the
modification and distribution of copyrighted material. A copyright holder can grant the right to make certain modifications, yet retain his right to prevent other modifications.

This decision is important because it reduces the legal uncertainty regarding OpenSource rights and will make it a more attractive option for software development and OpenSource distribution models.

Elevation continues to support the OpenSource ideology. Litigation about OpenSource is rare
so it’s good to have this legal precedent on the books. August 2008 will likely be looked back on as the start of the next wave of OpenSource collaboration.