Can a developer of a GPL-3 code ask a client not to publicly share the code?

Question

I will elaborate my question with a hypothetical example.

A commercial software named "Kota" from a company called "GRILL" is based on a publically open-source GPL-3 software "Choc".

"Kota", as stated in their website, is claimed to be an "open-source ... simulation engine.".

Nevertheless, "Kota" is not publically "open-source". The source of the software is only shared with clients who pay for.

As discussed in (https://opensource.stackexchange.com/a/6366/16900), selling a GPL-3 based code, and sharing its source only with the client seems to be allowed, and is legal.

The issue however is this: "GRILL" asks her clients to sign an agreement that they will not share any information regarding the source code with third parties or public.

My question: Is there anything in GPL-3 or in its peripherals commenting on such scenarios?

Answer 1

The GPLv3 is very clear about this situation. It is explicitly disallowed by sections 7 and 10.

7. Additional Terms.

“Additional permissions” are terms that supplement the terms of this License by making exceptions from one or more of its conditions. Additional permissions that are applicable to the entire Program shall be treated as though they were included in this License, to the extent that they are valid under applicable law. If additional permissions apply only to part of the Program, that part may be used separately under those permissions, but the entire Program remains governed by this License without regard to the additional permissions.

[...]

All other non-permissive additional terms are considered “further restrictions” within the meaning of section 10. If the Program as you received it, or any part of it, contains a notice stating that it is governed by this License along with a term that is a further restriction, you may remove that term. [...]

Additional terms, permissive or non-permissive, may be stated in the form of a separately written license, or stated as exceptions; the above requirements apply either way.

10. Automatic Licensing of Downstream Recipients.

[...]

You may not impose any further restrictions on the exercise of the rights granted or affirmed under this License. For example, you may not impose a license fee, royalty, or other charge for exercise of rights granted under this License, [...]

Section 10 clearly states that the restrictions imposed by the separate contract with "GRILL" are a violation of the GPLv3 license they are holding on "Choc". However, only the copyright holders of GPL code used by "GRILL" can start a lawsuit to get "GRILL" to stop this practice.

If somebody decides to ignore the separate contract and distribute "Kota" regardless, then section 7 allows them to do the distribution under the plain GPLv3 without the additional terms.

A note of caution is required here: I can easily imagine that the person/company redistributing "Kota" will get sued by "GRILL" for breaking that separate contract and that a judge would award quite significant damages to be paid to "GRILL".