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US Court Rules That Misrepresenting Software As Open Source Is False Advertising

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The US Court of Appeals for the Ninth Circuit in February affirmed a lower court decision concluding that it’s false advertising to claim that software is “open source” when it’s not licensed under an open source license. The court’s decision last month held that the defendants, The Graph Foundation, PureThink and iGov misrepresented ONgDB as a free version of Neo4j EE licensed under the APGLv3, and that the price differential was likely to influence customers’ purchasing decisions. By adding the non-free Commons Clause the software could not be characterized as “open source”, therefore advertising it to be so was unlawful false advertising.

Neo4j, Inc., the graph database company, had been through several releases of its software and several different license choices, with the latest license choice being referred to by the judge as “the Sweden Software License,” because the licensor was a Swedish subsidiary of the plaintiff. The license was a combination of the Affero General Public License (AGPL) with an additional restriction, the Commons Clause.

In May 2018, the defendants forked the software, renaming it “Open Native Graph Database” (ONgDB), and dropped the GNU Affero General Public License (AGPL), started distributing their version as AGPLv3-only licensed. This new license forbade non-paying users of the software from reselling the code or offering some support services, therefore did not meet the criteria of open source as defined by the Open Source initiative.

Neo4j and its Swedish subsidiary had initially pursued legal claims against the respective firms and their principals for trademark and copyright infringement in 2018 and 2019. The Graph Foundation agreed it would no longer claim specific versions of ONgDB, its Neo4j Enterprise Edition fork, to be a “100 percent free and open source version” of Neo4J EE. The Graph Foundation settled in February 2021, discontinuing support for ONgDB versions 3.4, 3.5 and 3.6. It released ONgDB 1.0 in their place as a fork of AGPLv3 licensed Neo4j EE version 3.4.0.rc02.

In May 2021, the judge granted Neo4j’s motion for partial summary judgment and forbade the defendants PureThink and iGov from infringing on the company’s Neo4j trademark and from advertising ONgDB “as a free and open source drop-in replacement of Neo4j Enterprise Edition.”

On Thursday, the Open Source Initiative, which oversees the Open Source Definition and the licenses based on the OSD, spoke out about its support for the appeals court’s decision in a blog post.

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