Jacobsen appealed the ruling and the Court of Appeals for the Federal Circuit (CAFC) reversed the lower court. Disaster averted, was the general sense in the FOSS community. But it's worth taking a look at the details.
The CAFC found that the conditions of the Artistic License were in fact conditions on the scope of the license. The court pointed in particular to the phrase "provided that" in the license, a phrase that is generally regarded in law as imposing a condition. And the court concluded that Katzer was liable for both copyright infringement and violation of contract, implying that Jacobsen was entitled to both injunctive and monetary damages under copyright law.
The fact that no money changes hands in a copyleft license didn't mean that there were no economic implications of the violation of the license, the court said. And, interestingly, the court cited Lawrence Lessig's Creative Commons license (creativecommons.org) in its opinion, clearly implying that its decision was not limited to this one license.
The CAFC sent the case back to the lower court for resolution under this guidance.
The implications of the CAFC's reversal are pretty significant. This makes it clear that free and open-source software creators can seek statutory damages without having to prove monetary harm, can get an injunction against an infringer, may be able to recover attorney's fees, and may have other rights as well. All of this would have gone away if the lower court's decision had been upheld. It's a big deal.
This is not the end of the story. Various people have raised questions regarding the scope of the decision and the jurisdiction of the court. The CAFC typically deals with patent law, not copyright; this is a decision in a U.S. court and not binding on other countries; the decision hinges on the language of the license and might not apply to all copyleft licenses; etc. Any speculation here falls under the heading of opinions about opinions not yet rendered, but basically, in the view of Lawrence Lessig and others who have been following the case closely, this decision is likely to set the precedent for other courts and cases and jurisdictions.
As for the fact that the decision hinges on the specific language of the license, that's a positive thing for those crafting copyleft licenses. A Federal court has now articulated just what language needs to be in your contract to make it enforcable under copyright law.
This is an important decision not just for those who create free and open-source software, of course. It also has implications for anyone on the other end. If you've been deliberately remaining ignorant of whether software you use infringes copyleft licenses, this ruling is your wake-up call.