I have just finished attending the Fifth Annual Open Source Think Tank, hosted by Andrew Aitken and I at Meritage in Napa Valley. Andrew and his team did a great job of organizing the event. The Think Tank is a great forum for discussing the important questions facing the industry, but equally important, we have structured the Think Tank to provide plenty of time to meet and get to know other attendees (more on that later!). Colin Bodell, VP Web Platforms for Amazon, said it best: he always leaves with a thick sheaf of new cards and many new relationships. I provided my annual summary of Open Source Legal Developments, including both 2009 and 2010 (you can see the powerpoint at http://www.docstoc.com/docs/34875054/Open-Source-Think-Tank-2010-Legal-Issues)
This year, we focused the discussions on commercial problems through the use of three formal “business cases” with detailed facts and questions:
1. Public Sector: How should the State of California adopt and manage open source?
2. Mobile Sector: Selecting a Mobile Platform for Application Development
3. Cloud Computing and Open Source
Much of the discussion was focused on the cloud and how it will effect open source. The opinions ranged across the spectrum: many participants saw the cloud as a great opportunity for open source, but a smaller (but vocal) group noted that the cloud could be a major problem for the open source model. In particular, the concern is that with cloud vendors taking responsibility for the “software stack” customers will be less concerned about open source advantages, leaving such issues to the cloud vendor. As more companies move to the cloud, the customers of open source companies will shift from end users to cloud vendors: consequently, open source companies could have fewer and more sophisticated customers.
Another challenge for open source vendors is the more sophisticated response of commercial software vendors: commercial software vendors are building entire “software stacks” and providing such stacks as a comprehensive solution to end users, thus reducing the need for open source applications. The commercial software vendors are also using “cross subsidies” between the different parts of the stacks to compete with open source vendors selling a single application.
The cloud also poses new legal challenges. The interpretation of open source licenses (and commercial licenses) in this new environment is just beginning and lawyers in the industry have very different opinions on the issues. Some of the issues under discussion at Think Tank include: (1) is provisioning software in the cloud a “distribution” under open source licenses and, thus, triggering obligations under GPLv2, GPLv3, MPL, EPL and other “copyleft” licenses and (2) are software stacks in the cloud an “aggregate” as defined the GPL family of licenses and, thus, not a derivative work (a derivative work might require making source code of all of the programs available if the programs are distributed under the GPL type of licenses).
We also had plenty of opportunity to get to know the other attendees: we had a winetasting on Thursday night in the “cave” at Meritage (including tasting Port brought directly from Portugal by one of the attendees). After the winetasting sponsored by Scott Collison of Geeknet, we moved on to the bar at the Meritage where we shared our experience over stronger potations until well past midnight. On Friday, after the morning discussion and a wine tasting in the afternoon (or golf), we had a dinner at Artesa http://www.artesawinery.com/index1.html hosted by Microsoft. We tasted the Artesa champagne, chardonnay and cabernet sauvignon. The site was magnificent with great views from a hilltop across the green hills of Carnaros and the wines were very good. After dinner, we enjoyed using a telescope to scan the night sky (I saw the rings of Saturn for the first time!).
The Think Tank was a great mix of fun and work. Olliance Group will be summarizing the conclusions, so stay tuned!
The American Law Institute (“ALI”) approved the Principles of the Law of Software Contracts (the “Principles”) on May 19, 2009. I have discussed these Principles in the past in this blog http://lawandlifesiliconvalley.com/blog/?p=134. Although the Reporters (the title given those managing the project) have made some changes to the earlier draft, the current draft continues to have significant flaws. The Principles were meant to clarify the ambiguity created by conflicting legal decisions and the application of multiple laws to software licenses, such as intellectual property law (including, most importantly, copyright), Article 2 of the Uniform Commercial Code (“Article 2”) and various consumer laws (the federal Magnusson Moss Warranty Act and state laws such as the Song Beverly Warranty Act in California). Unfortunately, they have made the situation worse because many of their recommendations relating to ”best practices” are new and not consistent with existing law.
The Principles have the stated goal of summarizing the case law and recommending best practices, but the Reporters have included many new concepts which impose consumer type protections on both consumer and business software licenses. Yet consumer and business licenses are quite different because of the negotiation leverage of licensees who are businesses as well as the ability of businesses to enforce their rights. The result is a significant lack of flexibility in negotiating the terms of the license for businesses. Moreover, this dramatic change does not appear to be addressing any significant problem in the market.
The best example of this approach is the new “non disclaimable” warranty of no hidden material defects. This warranty provides that licensors are liable for “hidden” material defects if they are aware of them at the time of the transaction. Yet this warranty is not otherwise found in the case law and incorporates new and difficult concepts, such as “hidden” and “material”. In addition, the concept of a “non disclaimable” warranty is fundamentally inconsistent with the approach of existing laws including Article 2 and both federal and state consumer warranty statutes. This warranty, if adopted, is likely to lead to significant litigation without any clear benefit to licensees.
The concern about the Principles in the software industry has led to unusual bedfellows: Microsoft Corporation and the Linux Foundation, who are fierce competitors with radically different approaches to licensing, sent a joint letter to the ALI to express their concern about the provisions in the Principles and request a delay in their approval. The Principles were, nonetheless, approved.
Despite these flaws, software licensors need to deal with the likelihood that the courts will be influenced by the Principles and need to review their agreements and processes. I will be providing a more detailed discussion of the major provisions in a series of blog posts. The Principles can be purchased at the ALI website at http://www.ali.org/.
Last year was the one of the most active years for legal developments in the history of free and open source (“FOSS”). http://lawandlifesiliconvalley.com/blog/?p=27 This year, 2008, has seen a continuation of important legal developments for FOSS. My list of the top ten FOSS legal developments in 2008 follows:
1. First Major Appellate Decision for a FOSS License. Last year, the District Court in San Francisco in Jacobsen v. Katzner decided the first case under US law interpreting an open source license. That decision had the potential to significantly undercut the ability of FOSS licensors to enforce their license. However in August, the Court of Appeals for the Federal Circuit (”CAFC”) overturned the District Court decision and strongly supported the right of FOSS licensors to obtain copyright remedies for breach of FOSS licenses: such remedies include injunctive relief (an order by the court to the licensee to obey the license) and statutory damages of up to $150,000 for each infringed work. http://lawandlifesiliconvalley.com/blog/?p=64
2. Final End of the SCO Attack on Linux. Although SCO’s lawsuits against IBM and others was largely resolved by the decision last year against SCO in its litigation with Novell over ownership of the copyrights to UNIX, several important issues remained. This year the court confirmed its ruling against SCO and awarded Novell $2,547,817 from the amount paid to SCO by Sun. The decision is interesting because the court came to different conclusions about whether licenses to SVRX software in SCO’s agreements with Sun and Microsoft were “incidental”. This term was important because SCO did not owe royalties to Novell if the license of the SVRX software (the royalties from which would have to be paid to Novell) was ”incidental” to the licensing of Unixware. This case demonstrates the importance of careful drafting in intellectual property licenses.
3. First Settlement of Patent Infringement Litigation For an Open Source Community. Red Hat’s settlement of the Firestar litigation demonstrated the need to carefully consider the nature of open source communities on the settlement of patent litigation. Unlike traditional patent settlements, Red Hat ensured that the settlement covered other members of the community including upstream licensors of products incorporated in the Red Hat product and downstream licensees. The settlement of patent litigation for open source products needs to deal with the complexity of many open source products and communities. This reality makes settlement of patent litigagtion much more complicated for open source products than for traditional software. http://lawandlifesiliconvalley.com/blog/?s=firestar
4. Major Litigation on GPL. In December, the Software Freedom Law Center filed suit against Cisco Systems, Inc. alleging that Cisco had violated the GPLv2 and LGPLv2 in its distribution of certain software whose copyright is owned by the Free Software Foundation, including GNU C Library, GNU Coreutils, GNU Readline, GNU Parted, GNU Wget, GNU Compiler Collection, GNU Binutils, and GNU Debugger. The complaint asserts that Cisco distributed the programs without providing complete and corresponding source code as required by the GPLv2 and LGPLv2. FSF requested that an injunction be issued against Cisco and that damages and litigation costs be awarded to the FSF. The SFLC states that they filed the lawsuit reluctantly and had negotiated with Cisco for two years on the issues. The suit raises the question of whether the SFLC is becoming more willing to file suits to enforce the GPL. For example, the SFLC has been vigorously enforcing the rights under the GPLv2 for Busybox.
5. Enforcement of GPL for Busybox Continues. The Software Freedom Law Center has continued to enforce the GPLv2 on behalf of the owners of the copyright in Busybox software. Although most of these cases apparently are settled without litigation, SLFC filed suit three suits this year: Bell Products, Super Micro Computer, Inc. and Extreme Networks, Inc.
6. Open Source Litigation from Other Countries. Although litigation about open source licenses has generally been confined to Germany and the United States, one case that settled this year about the enforeceability of the GPL was in Isreal. The plaintiff, Maryanovsky, claimed that the IchessU software violated the terms of the GPL because IchessU software did include credit for him and was released under a proprietary end-user license agreement. He also suggested that an audio-visual module developed by IchessU was a derivative work, since it could not compile without his code. The case was filed in 2006, but was settled confidenitally this year.
7. SFLC Guide to Legal Issues and GPL Compliance. The increasing ubiquity of open source software as well as the litigation to enforce the GPL and other open source licenses has made understanding the obligations imposed by the GPL very important for a wide range of companies. The SFLC has been the leader in developing and enforcing the GPL. They shared their views of the legal issues in open source and the obligations imposed by the GPL in two publications: “A Legal Issues Primer for Open Source and Free Software Projects” and ”A Practical Guide for GPL Compliance”. The Primer and Guide are quite usefull. Although licensing attorneys may not agree with all of their conclusions (the nature of the law and the lack of court decisions make this statement true about most open source license issues), the Primer and the Guide should be read by any lawyer working with open source legal issues.
8. American Law Institute Publishes Draft of Principles of the Law of Software Contracts with Significant Problems for Open Source Software. The ALI is a very prestigious and influential non profit institution whose purpose is “to promote the clarification and simplification of the law and its better adaptation to social needs.” The Principles state that the “best practices” in software licensing would be to include two new “non disclaimable” warranties which would result in significant problems for the open source community. The warranties are the (1) warranty of non infringement of intellectual property rights (such as patents or copyrights) if the contributor knew or should have known of the infringement and the contributor holds himself out by occupation as having knowledge or skill peculiar to the software and (2) warranty of no hidden material defects. Current law (and all OSI approved licenses) permit the contributor (and any licensor) of open source software to completely disclaim all warranties i.e. promises about performance or non infringement which could result in liability to a contributor or a licensor(so called AS IS provisions). If accepted by the courts, these recommendations would have a significantly negative effect on open source licensors. http://lawandlifesiliconvalley.com/blog/?p=56.
9. Publication of Version 1.3 of GNU Free Documentation License. The new version permits the use of the FDL with the Creative Commons Attribution ShareAlike License (CCASL). The draft is an interim one and SFLC is working on FDL 2.0. However, the Wikimedia Foundation requested the FDL be made compatible with the CCASL. This change recognizes the need for the two major branches of “free” content licenses to be compatible just as the GPLv3 was modified to be compatible with the Apache license.
10. Project Governance Concerns Become More Important. The recent fork in the Twiki community (an open source wiki project) demonstrates the need for a community to think about how it will manage itself. As open source projects have greater economic value, the potential for the community to split over decisions regarding the direction of the project (in particular, commercialization) will increase. Communities need to develop processes to discuss these issues and come to a conclusion that is supported by the community. Although forks are always an option for open source projects, they generally create significant loss of momentum and can doom a project if it has competitors offering similar functionality. In the case of Twiki, the ownership of the Twiki trademark by Peter Theony, the project leader, was critical to the control of the project.
Unfortunately, computer problems (my hard drive died) and travel have delayed my summary of the second day. First, we ended the first day with a magnificent dinner cruise on the Seine River. Our hosts, Alexandre and Celine arranged for a sommelier to select special wines for the cruise which meant that we had great wines from all over France. On the second day, we focused the brainstorming sessions on Open Source Licensing and the Definition of Open Source. The licensing discussion was lively, with the European attendees focusing on the challenges imposed by the number of open source licenses. During the licensing discussion, they were particularly interested in the effect of the Jacobsen decision which clarifies the enforceability of open source licenses in the US, an issue was viewed as settled in the European Union.
The discussion of the definition of open source ranged from who should control the definition to whether a new group, focused on commercial open source should be created to provide guidance about how to determine whether products (or companies) are “open source”. The consensus was that OSI definition has served the industry well and should continue to be the core definition and that a new non profit focused solely on commercial open source is unnecessary. The discussion about whether a company can be considered “open source” was very interesting. Most attendees agreed that it is very difficult to meaningfully designate a company as “open source” because most companies follow a variety of approaches to software development and distribution. The better approach is to focus on products as following an open source model. An interesting side note to this discussion was the conclusion that all companies are now following a “hybrid” business model which includes both proprietary and open source products. Even Microsoft is now part of this trend. This conclusion is consistent with the results of our 2008 Napa Open Source Think Tank that open source software is now becoming part of the mainstream. The final presentation was by Rudy Salles, the Vice President of the French National Assembly. Linagora had assisted the French National Assembly in implementing an open source environment and Mr. Salles discussed open source from the point of view of both a user and a policy maker.
The Open Source Think Tank Europe was a great success and was particularly useful in helping the US companies understand the European perspective. We hope to see you there next year!