Just a reminder, these posts are not legal advice. This site is the personal blog of Mark Radcliffe and the opinions expressed are those of Mark Radcliffe and not those of his clients, DLA Piper or the clients of DLA Piper.

About Me:

Mark Radcliffe

I have been practicing law in Silicon Valley for over thirty years assisting startups and global companies develop and market innovative products and services. I have participated in multiple business cyles in Silicon Valley from hardware to software to internet to cloud. My projects have included developing the dual licensing business model for open source startup, developing the original domain dispute resolution policy for NSI and assisting Sun in open sourcing the Solaris operating system. Recently, I served on the US Japan Innovation and Entrepreneurship Council (one of ten members) to develop a plan to encourage the innovation in Japan and the United States. I have been working with the same attorneys since 1986 although we have merged with other law firms several times. I am now a partner at DLA Piper, a (relatively) new global law firm formed in 2005 from the merger of three law firms. The firm now has 4200 lawyers in 31 countries and 77 cities. My experience in corporate securities (particularly venture capital) and intellectual property enables me to assist companies structure the financing and intellectual property strategy for developing ane exploiting a new product or service. I and my team work with fifty startups at one time as well as Global Fortune 100. I have been fortunate enough to work with companies in software, cloud computing, semiconductor, health care IT and Web 2.0.

Gartner just reported that 85% companies currently use open source software and the remaining 15% expect to start using it within one year. They noted that OSS is frequently replacing proprietary software for applications. For new projects OSS is being equally adopted for mission critical and non mission critical projects. TCO and reducing development costs continue to be the lead drivers of OSS adoption, but concern about vendor lock in with proprietary software remains important.

They noted that governance remains the number one problem. They noted that 69% of companies surveyed do not have a formal policy for evaluating and cataloguing OSS use. This number is even more dramatic than the findings of the survey for the DLA Piper Global Technology Summit.

Gartner notes:

“Just because something is free doesn’t mean that it has no cost,” said Laurie Wurster, research director at Gartner. “Companies must have a policy for procuring OSS, deciding which applications will be supported by OSS, and identifying the intellectual property risk or supportability risk associated with using OSS. Once a policy is in place, then there must be a governance process to enforce it.”

I strongly agree with this recommendation. As I have noted in the past, an open source use policy is essential for any company using software (in fact, a third party use policy is a more accurate description of the need because many “commercial” software components are readily available on the web). The failure to have a OSS (or Third Party Software) Use Policy runs the risk that a company will be liable for monetary damages due to intellectual property infringement and may even be prevented from distributing its products due to an injunction. The recent Jacobsen case, in particular, raises the risk of injunctions being granted for failure to comply with OSS licenses.

An OSS Use Polcy provides the best protection from these risks. And such a policy can be lure for the best programmers if it permits contributions by employees to open source projects. Many programmers now contribute to open source projects and want the assurance that they can continue to do so even when working for a corporation.

Recently, Trip Chowdry, a Silicon Valley pundit, predicted (as reported in Barrons): ’”‘almost every’ VC funded open-source company is struggling and will run out of funds within the next 6 months”  I share Matt Asay’s scepticism.

Based on my experience with the open source startups who are my clients, Trip is simply wrong. In fact, I have been involved in two different open source venture fundings in the last thirty days. At worst, no more than 10% of the open source startups that I represent are in difficult straits. I have been working with startups for over twenty five years (and remember about half of all startups fail over time), this percentage is hardly unusual.

Bill Snyder makes some interesting points about the differentiation between open source companies and other technology companies (particularly Web 2.0 companies) I think that the open source companies will thrive in the current market because of their lower cost (critical as IT budgets shrink). However, open source is not business magic and open source companies need to manage their resources and costs carefully.