User beware: Modified AGPLv3 removes freedoms, adds legal headaches

In a prior post, we reported on a decision from a U.S. district court holding that it was false advertising for a company to claim that software licensed under the Affero General Public License version 3 with the addition of the Commons Clause (referred to in the case as the “Neo4j Sweden Software License”) was “free and open source” software. Unfortunately that case contains one more decision that is already raising concerns among the open source community.

Defendants in this case had forked the Neo4j software and removed the Commons Clause from their now-AGPLv3 licensed fork. They did this relying on AGPLv3 Section 7 that permits a licensee to remove any "further restriction" – such as non-commercial use – imposed beyond those listed in AGPLv3. However, the court held that the defendants were not allowed to redistribute the software without the Commons Clause license.

That conclusion goes against the intent of the drafters of the AGPLv3. The GPLv3 Second Discussion Draft Rationale says in footnote 73 that the restriction was aimed at the copyright owners themselves: “Here we are particularly concerned about the practice of program authors who purport to license their works under the GPL with an additional requirement that contradicts the terms of the GPL, such as a prohibition on commercial use.”

Nevertheless, the Neo4j district court reached a different conclusion, with the judge relying on his own opinion in another, earlier case against related defendants, Neo4j, Inc. v. Graph Foundation, Inc. The Commons Clause is not a stand-alone license but designed as a modifier to an open source license. The Commons Clause adds a restriction on “Selling” software, with “Selling” a defined term of unclear scope. There is no question that adding the Commons Clause makes a free and open source license non-free, which the FAQs for the Clause itself say.

The part of the AGPLv3 license defendants relied on to remove the Commons Clause says that “If the Program as you received it, or any part of it, contains a notice stating that it is governed by this License along with a term that is a further restriction, you may remove that term.” Why didn’t the court permit the removal of the Commons Clause, and thus hold that the distribution of the fork under the AGPLv3 alone was correctly advertised as open source software?

The trial court held that this provision in the AGPLv3 applies only to downstream licensees, not when the original licensor adds them:

Neither of the two provisions in the form AGPLv3 that Defendants point to give licensees the right to remove the information at issue. Section 10 of the AGPLv3, which is incorporated into the Neo4J Sweden Software License, states: “You may not impose any further restrictions on the exercise of rights granted or affirmed under this License.” Section 7 states: “[i]f the Program as you received it, or any part of it, contains a notice stating that it is governed by this License along with a term that is a further restriction, you may remove that term.” Defendants argue that these provisions mean that “there can be no liability for removing the further licensing restrictions which Neo4j incorporated into the license,” namely the Commons Clause. As Plaintiffs point out, however, the AGPLv3 defines “you” as the licensee, not the licensor. AGPL § 0 (“Each licensee is addressed as ‘you’”). Thus, read correctly, Sections 7 and 10 prohibit a licensee from imposing further restrictions, but do not prohibit a licensor from doing so. Indeed, it would be contrary to principles of contract and copyright law to interpret these provisions as limiting Neo4J Sweden’s exclusive right to license its copyrighted software under terms of its choosing.

PureThink has now withdrawn consideration of this question from the lawsuit, so it will be up to another party to challenge the correctness of the court’s opinion.

Why this matters

There are several lessons to be learned from this. This is an unexpected outcome. The Software Freedom Conservancy called it “erroneous.” It was the intention of the FSF (footnote 73) that if the licensor added more restrictions, the downstream users could remove them.

But at the end of the day, courts interpret the meaning of legal agreements and, no matter how skilled the drafter, the outcome may be unexpected. This is one reason why the license review process is so rigorous. An OSI-approved license may be used for decades to come and we do our best to make sure that they will be interpreted as intended.

It is also a demonstration that combining an open source license with other terms will create a new license that is neither OSI-approved nor likely one that can gain approval. Any effort to change the terms of an open source license should be met with suspicion because they are likely designed to take away freedoms, or else an already OSI-approved license would have been suitable. The subterfuge is designed to “open wash” the software, claiming to use an open source license and hoping no one looks too carefully.

As a consequence, using any software under a non-OSI-approved licensing combination requires professional advice on the scope of rights being granted. But this largely defeats the purpose of using an open source license, which is to rely on the community consensus that the license delivers all the rights necessary to enjoy the software without negotiating with its makers and most likely also to take advantage of the network effect that becomes available when using a license that all know and understand. Sticking to OSI-approved licenses is the way to ensure that everyone’s expectations are met.