The District Court for the Northern District of California has denied a motion to dismiss a complaint of breach of contract and copyright infringement claims in a case regarding the GPL. The plaintiff, Artifex Software Inc., is the creator of Ghostscript, an AGPL-licensed PDF interpreter. In 2016, the company filed a lawsuit against Hancom, a South Korean software company that incorporated Ghostscript into its Hangul word processing software without complying with the GPL.

Ghostscript is available for free for those who use it in compliance with its AGPL license. Artifex also offers a commercial license of Ghostscript that is required if the user is including it and distributing it within an application that is not licensed under the AGPL. Richard Stallman outlined this common practice of “selling exceptions” to the GPL in 2010, saying that he has considered it acceptable since the 1990’s, because “this approach has made it possible for important programs to become free software.”

According to the complaint, Hancom failed to purchase a commercial license and also did not distribute the source code as required by the AGPL:

Because Defendant did not have a commercial license for Ghostscript, its use and distribution of Ghostscript constituted consent to the terms of the GNU GPL…In addition, Defendant’s website stated that it had licensed Ghostscript under the GNU GPL. Nonetheless, Defendant failed to comply with key provisions of the GNU GPL. In particular, because Defendant integrated Ghostscript into its software without revealing to the end-user that Ghostscript was part of the Hancom software, the GNU GPL required Defendant to distribute its software with the accompanying source code. Defendant did not do so and thus violated the GNU GPL, terminating Defendant’s license to use Ghostscript. Defendant’s failure to obtain a commercial license deprived Plaintiff of a licensing fee, or, alternatively, its failure to comply with the GNU GPL deprived Plaintiff of the opportunity “to further promote the advancement of interpreter technologies.”

Although Hancom is said to have removed Ghostscript from its software in August 2016, Artifex is asking for a court order for Hancom to stop the infringement and seeks compensation for damages. Artifex also requests that the court require Hancom to distribute to each licensee of Hangul and Hancom Office the complete source code for the products in accordance with the GPL.

Hancom responded by filing a motion to dismiss the complaint on the grounds that Artifex had not demonstrated the existence of a contract, how it was breached, or the damages caused by a breach.

An order issued by Magistrate Judge Jacqueline Scott Corley ruled that Artifex has sufficiently established the existence of a contract:

The GNU GPL, which is attached to the complaint, provides that the Ghostscript user agrees to its terms if the user does not obtain a commercial license. Plaintiff alleges that Defendant used Ghostscript, did not obtain a commercial license, and represented publicly that its use of Ghostscript was licensed under the GNL GPU. These allegations sufficiently plead the existence of a contract.

Furthermore, the ruling also recognized the damage that results from a company failing to comply with an open source license, citing the 2008 ruling on Jacobsen v. Katzer, another open source licensing dispute:

Indeed, as the Federal Circuit has recognized, there is harm which flows from a party’s failure to comply with open source licensing: “[t]he lack of money changing hands in open source licensing should not be presumed to mean that there is no economic consideration” because “[t]here are substantial benefits, including economic benefits, to the creation and distribution of copyrighted works under public licenses that range far beyond traditional license royalties.” Jacobsen v. Katzer, 535 F.3d 1373, 1379 (Fed. Cir. 2008).

Although QZ.com and other media outlets are reporting that this is a groundbreaking ruling that makes open source licenses an enforceable contract, the case has not yet gone to trial. The court has simply denied Hancom’s arguments that because the company didn’t sign anything, the GPL does not constitute a contract. The ruling states that Artifex’s allegations regarding the dual licensing structure for its product are enough for the company to begin the process of pleading damages for its claim that Hancom breached its contract. It is not a ruling about whether or not copyleft licenses are enforceable.

Artifex is now free to pursue its case of breach of contract and copyright infringement claims against Hancom, but it’s still very early and may end in a settlement. Hancom is ordered to file its answer by May 18 and both parties are scheduled to appear for an Initial Case Management Conference on June 15.