Monsoon Multimedia and the Software Freedom Law Center are discussing a settlement regarding Monsoon's open-source licensing violation, but a deal isn't certain.

"Simply coming into compliance now is not sufficient to settle the matter, because that would mean anyone can violate the license until caught, because the only punishment would be to come into compliance," said Dan Ravicher, SFLC's legal director, in a statement. He confirmed that the parties are in settlement discussions but said an agreement hasn't yet been reached.

In a statement, Monsoon said that it has always intended to comply with the licensing requirements and expects to do so within the next couple of weeks.

Last week, the SFLC filed a lawsuit against Monsoon on behalf of two of the creators of BusyBox, a lightweight set of Unix utilities used in embedded systems. BusyBox claims that even after repeated requests, Monsoon failed to publish its source code. Monsoon uses BusyBox under the GNU General Public License version 2, which requires distributors of software that uses the licensed software to make their source code available. Failing to do so is considered copyright infringement.

The SFLC said this is the first case they know of filed in the U.S. to enforce an open-source license. It is being closely watched as a test of the legal strength of GPL2.

If the case goes to trial, the key decision will be whether the court decides that GPL2 is a license or a contract, said James Gatto, a lawyer who leads the open-source team at Pillsbury Winthrop Shaw Pittman, which is based in New York and is not involved in the lawsuit.

If the court decides GPL2 is a contract, it would be a blow to the open-source community. That's because the remedy for breach of contract is damages for losses, he said. "Here, what's the loss to a plaintiff that doesn't charge for the software?" he said. The court can also in some cases require specific actions in a breach of contract case, he said.

In a licensing arrangement, the defendant would be charged with copyright infringement, entitling the plaintiff to damages and an injunction.

It is unusual for an open-source licensing issue to reach the courts. Typically, the parties work it out privately. "There's not enough at stake generally for people not to comply," Gatto said.

In Europe, the GPL Violations Project has brought at least one open-source licensing case to court.