What is the typical situation when some company is found to violate the some copyleft free software license and refuses to fix it?
Can the company then be forced to disclose any proprietary code that is linked with copylefted code?
First, this is not legal advice and there is no definitive answer. But yes, such a company may indeed be forced to publish its proprietary code in order to comply with the license (or it may not, read on).
As noted in by ArtOfCode in an answer to a slightly different question section 8 of the GPLv3 provides you with some grace time that allows you fix the problem yourself and escape litigation.
However, if the copyleft license is not GPLv3, or such a company fails to comply with the license within the grace period, or just refuse to comply — what will happen then?
And the answer is: It depends.
For instance, if the propietary program was distributed only to a few people and the infringed code was insignificant de minimis may apply, and any claim made against can not be enforced through the courts.
As pointed out by cpast in a comment, the outcome may also depend on local law.
There may also be some quirk that prevents the license from being enforced. E.g.: the copyleft license in question is some home-made license, the linked software may have be linked in a manner that is not deemed to infringe copyright in the jurisdiction the litigation takes place, or the circumstances that brought the free software into the proprietary program may have been special.
Such quirks may prevent litigation, or they may influence the outcome of the litigation.
If the court finds that the company has breached copyright, it will be ordered to provide "injunctive relief" (injunctive relief will in this case mean that it must fulfill its obligations and must make its source code publicly available).
If the court finds that it has just breached a contract, then injunctive relief is not available as a remedy, and instead, the court will probably order the company to pay monetary damages and stop distributing the infringed software (if it has not done so already).
However, please note that FSF feel strongly about enforcing their license. They write:
Many copyright holders seek monetary damages when their license is violated. We do not — we only want violators to come back into compliance, and help repair any harm done to the free software community by their past actions.
All versions of GPL have been carefully designed to get any violation designated as "breach of copyright" (rather than breach of contract) in order to enable the copyright holder to seek injunctive relief. Some other copyleft licenses may not have this property.
If the FSF finds that a GPL violation is serious enough to be tried in the courts, it will go to some lengths to 1) persuade the copyright owner to demand injunctive relief; and 2) find somebody willing to provide pro bono (free) legal counsel or to find someone to pay for legal counsel.
There is not much case law available. Gatto (2007) Doubts Wane Over GPLs Enforcability writes:
The vast majority of the GPL enforcements have been private enforcements. That is to say, when the FSF (or copyright owner) becomes aware of a GPL violation, it sends a private letter to the violator and demands that the licensee either come into compliance with all of the GPL terms or cease copying, modifying or distributing the GPL software. These private enforcements have been largely successful. Many GPL violations have been inadvertent. Once notified, these innocent violators typically come into compliance.
I know of no case where the company has responded in a timely manner to a letter about infringement by simply removing the free software (i.e. stopped copying, modifying or distributing the software) that has resulted in litigation, no matter what type of copyleft license is used - so if a company does this, the precedence is that it will not have to publish its source code.
However, there is some case law on gpl-violations.org and on fsfe.org. The "classic" case in this area of controversy is a Welte v. Sitecom Deutschland GmbH (No 21 0 6123/04 (LG München 1) May 19 2004). Sitecom Deutschland GmbH used code under GPL derived from
netfilter/iptables (authored by Harald Welte) in its routers, and simply refused to comply with GPL. A German court determined that the GPL provisions requiring source code distribution are valid and ordered injunctive relief.
Finally, it depends on the copyright holder. It is the copyright holder, not the FSF (or other advocacy group), who is entitled to decide what to do about a license violation. And some holders of copyright to free software may choose to receive money through some settlement, instead of going to court over the principle of copyleft.
No, a court will not enjoin a violator of terms of the GPL or other copyleft license to disclose proprietary source code.
First of all, as Free Radical pointed out, injunctive relief is not a remedy for breach of contract. So a court will not enjoin a disclosure of proprietary source code for violating the terms of an agreement (assuming the license is interpreted as creating contractual obligations). The remedy under contract law will be limited to damages only.
Second, regarding copyright law, and as Free Radical points out, an injunction is a remedy available for copyright infringement. However, where Free Radical gets it wrong is that the injunctions available are limited to preventing further infringement. That's the case at least according to U.S. law:
"Any court having jurisdiction . . . may . . . grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright." 17 U.S.C. § 502(a).
So the injunction available under copyright law will be limited to preventing or restraining infringement. The company in violation will be prevented from shipping any product that incorporates the copyrighted open source code, it may have to pay damages and attorneys' fees, and it will incur the costs of reforming its product, but it won't be forced to disclose its proprietary code.
In the German case that Free Radical cited, Welte v. Sitecom Deutschland GmbH, it appears that the court granted an injunction barring the defendant from continuing to infringe the plaintiff's copyright, but did not order it to disclose its proprietary code. (Unless I'm mistaken about the facts. I'm just going by summaries found online.)