Back in June, I posted two articles discussing some of the terms in Movable Type's license:
The inspiration for these articles was the notice Six Apart sent to Kathy Kinsley (BlogHouse), informing her that she was in violation of MT's license by offering to install MT for her users. A number of weblogs have commented on this situation, but to date, none that I am aware of have provided any conclusive evidence that any part of MT's license is indeed illegal.
I did some legal research on my own and I can show that certain clauses in MT's licenses are indeed illegal. I have withheld posting this information until now because Mena Trott (CEO of Six Apart) asked that I wait until Six Apart can come up with new license terms for MT. I believe that Six Apart has had more than ample time to do this, and I see no reason why MT's users should wait any longer to know what their rights are and what the law is. For the record, Six Apart has known most of the information I am posting here for 80 days.
Disclaimer: I am not a lawyer. This is not legal advice and should not be construed as such. If you have legal difficulties in this area, seek out and consult with a competent attorney.
- receiving compensation for any service that uses the Software, including support services; (both licenses)
- providing, or offering to provide, any service using the Software; (Personal License)
- using the Software to provide web design or other services to commercial and non-commercial websites; (Personal License)
- hosting, or offering to host, the Software, on any basis; (both licenses)
1. Federal copyright law - Copyright misuse
Under federal copyright law, I believe the four license terms above constitute copyright misuse - attempting to leverage a copyright monopoly into a larger monopoly or exclusive right not granted by copyright law. (See my post What is a software license supposed to protect? - Part 2 for more information about the doctrine of copyright misuse.)
None of the four clauses fall within the scope of rights granted by federal copyright law. (See my post What is a software license supposed to protect? to see what rights are granted under federal copyright law.):
The prohibition against receiving compensation for services grants Six Apart a monopoly in installation and support services for pay.
The prohibition against providing web design or any other service asserts a right to restrict Personal licensees from providing services (installation, support, and web design) to anyone, despite the fact that such services are not covered under Six Apart's copyright.
The prohibition against hosting grants Six Apart a monopoly in hosting services for MT, in support of Six Apart's TypePad service.
The prohibitions against providing services or receiving compensation for providing services are most certainly not a part of Six Apart's copyright. From 17 USC 102 (federal copyright law):
(b) In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.
The way I read section 102(b), various software services such as installation, support, design, etc. would likely be categorized as "procedures", "processes", or "methods of operation" and thus not protected by copyright. If such services are not protected by copyright, then Six Apart has no basis (legal authority) to grant rights to, or withhold rights from, a licensee regarding performance of those services, as those rights already fully belong to the licensee.
Courts that follow the doctrine of copyright misuse will withhold remedies for infringement of the copyright (i.e. not enforce the copyright at all) until the anti-competitive effects of the misuse have completely dissipated.
U.S. Circuit Court Case precedents on copyright misuse:
- Lasercomb America v. Reynolds, 911 F.2d 970, 977-79 (4th Cir. 1990)
- DSC Communications Corp. v. DGI Technologies, 81 F.3d 597, 601 (5th Cir. 1996)
- Practice Management Information Corp. v. American Medical Association, 121 F.3d 516 (9th Cir. 1997), modified, 133 F.3d 1140 (9th Cir. 1998), cert. denied, 119 S. Ct. 40 (1998)
2. California state law - Restraint of trade
Movable Type's licenses are also subject to California state law. This is the Governing law clause from the MT licenses:
"This Agreement will be governed by the laws of the United States and the State of California, excluding the application of its conflicts of law rules. You consent to the personal and exclusive jurisdiction and venue of the state and federal courts located in San Francisco, California."
I believe the four prohibition clauses in MT's licenses can be viewed as prohibitions in the interest of "protecting MT's business from competition". Here's a few Six Apart quotes supporting this assertion:
From Movable Type's FAQ:
"Movable Type's development is supported from user donations, commercial License Fee payments, and our own pay installation service, and further development depends on our ability to provide related services to Movable Type users. Therefore, offering pay installation is prohibited."
Anil Dash, a Vice President at Six Apart, said this on June 20 (On The Third Hand):
"FWIW, we've let hundreds of thousands of people download the software for free, with a significant portion of the development effort being funded by our paid service installing the program for people who found the process too difficult. I don't think that's a terrible thing that we did, and I don't think we're wrong to protect the part of our business that pays for so many people to use MT at no cost at all."
Mena Trott, CEO of Six Apart, in the same discussion thread:
"We do not *currently* allow the hosting for many reasons. For one, yes, it will initially compete with TypePad, our own hosting service. The logic that we should be in competition with our own free product and not be compensated in any way is seriously flawed."
Unfortunately, California state law does not grant a business any right to protect itself from competition. This is from Section 16600 (Contracts in Restraint of Trade) of the California Business and Professions Code:
16600. 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.
This law is what makes non-compete agreements in California generally not enforceable. There a few exceptions, none of which apply here. The four activities prohibited are all lawful activities (they do not violate state or federal law), they are all activities that can be entered into as a business, and their prohibition does not protect trade secrets or confidential business information. The four clauses in MT's licenses prohibiting the activities listed above are null and void under this law.
3. California state law - Unfair business practices
In addition to violation of section 16600, I believe the four license clauses also violate laws in section 17000 (Unfair Trade Practices) of the California Business and Professions Code.
17043. It is unlawful for any person engaged in business within this State to sell any article or product at less than the cost thereof to such vendor, or to give away any article or product, for the purpose of injuring competitors or destroying competition.
17046. It is unlawful for any person to use any threat, intimidation, or boycott, to effectuate any violation of this chapter.
17048. It is unlawful for any manufacturer, wholesaler, distributor, jobber, contractor, broker, retailer, or other vendor, or any agent of any such person, jointly to participate or collude with any other such person in the violation of this chapter.
Section 17043 is violated by every developer and installer who performs installation, design, and support services for free in order to protect MT's business. I believe Six Apart may have liability under this section of law due to the fact that Six Apart's license requires it.
Section 17046 is violated by the MT "Termination" section of the license: "This Agreement shall terminate automatically if you fail to comply with the terms of this Agreement." This would be considered a threat or intimidation - if the licensee does not agree to the (illegal) license terms, the user will not be granted a license, or an existing licensee will have their license terminated.
Section 17048 is violated by Six Apart when a user agrees to abide by the illegal license terms and perform support services for free in order to protect MT's business.
Under Section 17051, the four clauses in MT's licenses prohibiting the activities listed above are null and void for being in violation of any one of the sections listed above (17043, 17046, 17048):
17051. Any contract, express or implied, made by any person, firm, or corporation in violation of this chapter is an illegal contract and no recovery thereon shall be had.
And for those of you who would insist that there is no crime committed:
17100. Any person, whether as principal, agent, officer or director, for himself, or for another person, or for any firm or corporation, or any corporation, who or which violates this chapter is guilty of a misdemeanor for each single violation and upon conviction thereof, shall be punished by a fine of not less than one hundred dollars ($100) nor more than one thousand dollars ($1,000) or by imprisonment not exceeding six months or by both such fine and imprisonment, in the discretion of the court.
MT's software licenses have no statutory (legal) authority to exert influence over any service provided by any licensee at any price (per California state law and federal copyright law). Any license term that attempts to do so can be declared null and void in court. The license clauses listed above need to be removed from MT's licenses. Plus, the restrictions on commercial licensees that prohibit licensees from installing the software on web sites that charge a fee for access or use need to be removed as well.
Bottom line: Six Apart needs to stop using MT's licenses to corner every market for themselves (especially service markets). Regardless of whether Six Apart's officers think this is fair or not, it is illegal.