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.

Last year was the one of the most active years for legal developments in the history of free and open source (“FOSS”).   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.

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.

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.

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.

After a busy year end, I have time to reflect about the last year and developments in open source.  I was particularly interested in the cascade of articles and comments about how the “Open Source” business model is broken started by  Stuart Cohen’s article in Business Week on December 1. I believe that Stuart is just wrong.  I think that Charles Babcock got it right in his blog responding to Stuart.  

From my point of view, Charles’ most important point is that  “open source” is not a business model, it is a means of developing and distributing software. And 451 Group makes a similar point in their report on open source business models (which actually pre dated Stuart’s article). I represent over fifteen open source startups (as well as large companies developing open source software) and they have  a variety of ways of making money on open source software, ranging from “dual” distribution to support for proprietary additions.  Marten Mickos in his keynote at OSBC in 2007 noted thirteen different ”open source” business models.  Second, “open source” cannot be a single business model because it spans a wide variety of different products: the business models for application software are quite different from infrastructure software.  Third, most of the companies that I represent use a mix of business models, such as dual distribution and SAAS.  In fact, even the “dual” distribution model has two forms: the newer model in which the company distributes a commercial version which has additional functions compared to the open source version and the older model in which the open source and the commercial version are the same.  While the characteristics of “open source” development have strong similarities across different types of products, the business models are likely to quite different and will continue to evolve.

The open source community also owes Charles Babcock (and his colleagues at InformationWeek) a vote of thanks for the Analytics report “Open Source Enterprise: Its Time Has Come, And the Price is Right.”  It provides an excellent summary of the state of open source software in the enterprise, with plenty of specific examples.  However, I think that the most interesting part of the report is “What Happens After the Acquisition”.  This section describes the challenges faced in the integration of open source companies into larger companies.  The nature of open source companies and their communities requires a different approach from traditional acquisitions.  In particular, the acquiring companies need to consider carefully the effect on the open source companies employees and their community when modifying the business model. As more open source companies are acquired by traditional software companies, these issues will take on increasing importance. Both sides need to understand that such an integration will require flexibility.

I think that 2009 will be a very interesting year for open source!