Which means that the original developers cannot properly sue the customers for infringement or breach of contract concerning use of the Linux kernel. Check. You've now admitted that there's no basis for liability absent a customer's own violation of the GPL.
I admitted no such thing. And telling me what I admitted, when I haven't, is a rhetorical trick, not argument.
Grsecurity is an unlicensed derivative work and it's owned in part by the kernel developers because it necessarily includes portions of the original work. The GPL does not apply to it at all. The fact that the user has the GPL for some other copy of a Linux kernel does not license the infringing derivative work to the user. Nor does it grant Open Source Security Inc. the ability to convey the GPL for that work.
But the original developers do not own Grsecurity's modifications.
Actually, they do! Not the whole thing, but the derivative work necessarily incorporates a significant portion of the original work, and this is definitely true for the patch format used. The GPL doesn't apply to that copy as its terms were not honored, and OSS never had a right to convey the GPL originally on that copy. A GPL conveyed by someone else for another copy of Linux does not apply to the infringing derivative work. Grsecurity has no right to distribute it at all. The Linux kernel developers own the only remedy that will make its legal use possible.
Termination of the kernel license to Grsecurity does not affect the rights of their customers, or any other users, per GPLv2 secs. 4 and 6.
It does indeed if Grsecurity never had the right to convey the GPL on that work to the users in the first place. You can't convey it on a derivative work without a license from the owners of the work it was derived from. Grsecurity did not have that license because they did not comply with it.
Denied. You have not explained how Grsecurity cannot license its own modifications under the GPL, nor how anyone other than Grsecurity could sue users for using those modifications. You have admitted that customers and users are licensed to use the Linux kernel even if Grsecurity is not. You will have to admit that users can modify the Linux kernel if they so choose, even using non-GPLv2 modifications, so long as they do not publish or distribute the result (GPLv2 secs. 2 and 3).
OK, this one is too much. Look, I know that lawyers will try to fool the other side to win an argument. I've had it happen before. It's not going to make me accept your argument. I explained clearly where Grsecurity could not license its infringing derivative work. You're being silly to contend that anyone can license an infringing derivative work to someone else without a lot more permission than the GPL contains.
To reiterate, the customer has been licensed by the original developers for the original kernel and by Grsecurity for the modifications.
The infringing derivative work was never licensed to the customers, because Grsecurity never had a right to license it to anyone. The copies of the kernel that are under the GPL came to the customer another way, if they have any, and the fact that the user has the GPL from someone else on another copy does not automatically license the infringing derivative work to the customer.
A contributory infringer is "[o]ne who knowingly induces, causes or materially contributes to copyright infringement, by another but who has not committed or participated in the infringing acts him or herself, may be held liable as a contributory infringer if he or she had knowledge, or reason to know, of the infringement."
They have now been informed that there's a good chance of risk of contributory infringement and to check with their counsel. It's public knowledge now. They're paying for copies. That's how they become a contributory infringer.
How does the customer induce, cause, or contribute to copyright infringement by another by merely using Grsecurity's product? For that matter, how does a customer breach the GPL merely by using Grsecurity's product?
By knowingly entering in a contract to acquire an infringing derivative work.