Last year, 2011, was one of the most active years in legal developments in FOSS. This activity reflects the increase in FOSS use: Laura Wurster of Gartner, noted in the Harvard Business Review blog that open source has hit a “strategic tipping point” this year with companies increasingly focused on using “open source” software for competitive rather than cost reasons http://lawandlifesiliconvalley.com/blog/?p=619.
Continuing the tradition of looking back over top ten legal developments in FOSS, http://lawandlifesiliconvalley.com/blog/?s=top+10+2008&x=40&y=6, my selection of the top ten issues for 2011 are as follows:
1. Android Patent Litigation. One of the most widely reported legal developments in FOSS has been the patent wars surrounding the Android operating system. Over 40 patent cases are pending between a wide variety of parties, including Motorola Mobility, Inc., HTC, Samsung Electronics, Inc. and Apple Computer, Inc. This year saw several decisions in these suits. In Australia, Apple won a trial court decision which enjoined the distribution of Samsung’s Android tablets based on a claim that the Samsung tablet violated Apple’s design patents. However, after a series of appeals, Australia’s High Court overturned the injunction and Samsung can now distribute its tablets. Apple was more successful in Germany where it was successful in obtaining an injunction based on Apple’s design patents which prevents the distribution of Samsung’s Galaxy Tab 10.1 (however, Samsung has released a revised version named the Galaxy Tab 10.1N). Apple was not successful in obtaining an injunction against distribution of Samsung’s Galaxy Tab in the United States, although the judge stated that Apple’s design patents might be infringed. More recently, on December 19, the ITC ruled that HTC’s Android phones violated two claims of an Apple utility patent and issued an “exclusion order” for HTC Android phones which would take effect on April 19, 2012. HTC has announced that it will provide a workaround. Google has been handicapped by its lack of patents to assert in defense of Android (it started with only 600 patents, but is aggressively buying new patents and has agreed to purchase Motorola Mobility, Inc., primarily for its patent portfolio).
2. Oracle v. Google. A separate but related case is Oracle’s suit against Google for the alleged infringement of Oracle’s copyrights in the Java software (which it acquired from Sun Microsystems, Inc.) and certain Oracle patents by Android. Oracle is asserting that the Android operating system infringes the copyrights in “twelve code files and 37 specifications for application programming interface packages”. The decision on this claim could have a significant impact well beyond this case: most software lawyers have viewed APIs (and their specifications) as either having no copyright protection or very limited copyright protection. These views govern the interpretation of both FOSS and proprietary licenses. The court described APIs as follows:
Conceptually, an API is what allows software programs to communicate with one another. It is a set of definitions governing how the services of a particular program can be called upon, including what types of input the program must be given and what kind of output will be returned. APIs make it possible for programs (and programmers) to use the services of a given program without knowing how the service is performed. APIs also insulate programs from one another, making it possible to change the way a given program performs a service without disrupting other programs that use the service.
If Oracle prevails and the court finds that APIs are copyrightable, lawyers will need to rethink how they interpret both FOSS and proprietary licenses. The issue could be particularly important in determining whether interactions between software programs licensed under GPLv2 or GPLv3 create, respectively, “derivative works” or a “modified version” and, thus, impose the license terms of GPLv2 or GPLv3 on the software modules with which they interact. The first significant decision in the case rejected Google’s attempt to eliminate the claims through summary judgment (Google won only on a single minor point). http://www.scribd.com/doc/65143317/Oracle-v-Google-Denial-of-Google-s-Summary-Judgment-Motion. However, this decision is not surprising because summary judgment is generally used for settled issues of law; the copyright issues in this case are on the cutting edge of the law.
3. Perfect 10 v. Google. Although this case was not strictly about open source software, it established a critical principle for remedies for copyright infringement. These remedies also apply to enforcement of copyright licenses in certain situations. For decades prior to this decision, the presumption was that the remedy for copyright infringement was always “injunctive relief”. Injunctive relief means that a court orders an “infringer” to comply with the terms of the license. The Perfect 10 decision in the Ninth Circuit Court of Appeals made clear that “injunctive relief” is no longer a remedy which is always available for copyright infringement. Instead, the court stated that : We therefore conclude that the propriety of injunctive relief in cases arising under the Copyright Act must be evaluated on a case-by-case basis in accord with traditional equitable principles and without the aid of presumptions or a “thumb on the scale” in favor of issuing such relief.
Injunctive relief is an unusual remedy for breach of license agreements, because under Anglo Saxon law, the standard remedy for breach of contract is monetary payment. However, a remedy of monetary damages has little value for breach of open source licenses because the open source software is generally distributed at no cost. The Perfect 10 decision undercuts the value of the Jacobsen decision to the open source community. In Jacobsen, the Court of Appeals of the Federal Circuit decision found that injunctive relief was available for open source licenses if the relevant obligations were drafted to make them a “restriction” on the scope of the license rather than just a contractual obligation (a “covenant”) http://lawandlifesiliconvalley.com/blog/?p=65. However, the other standard copyright law remedies such as attorneys fees, actual damages and, potentially, statutory damages remain available. However, injunctive relief, the most valuable of remedies, may be more difficult to obtain to enforce open source licenses.
4. Publication of Software Package Data Exchange (“SPDX”) Specification. The management of open source software in the supply chain has been a continuing problem. However, the open source community has been working to find a solution to this problem. The work has been guided by the SPDX Group (the SPDX Group is a working group of the Linux Foundation and is associated with FOSSBazaar) which has developed the SPDX specification as a standard format for describing the components, licenses and copyrights associated with a software package. For example, SPDX Group has identified seven versions of the General Public License version 2, the most commonly used open source license. If widely adopted, SPDX will be critical to effectively manage open source software as it becomes more widely used in the supply chain. As noted in the Harvard Business Review blog by Gartner Group, the ubiquity of the use of open source software has not been matched by effective management of its use http://blogs.hbr.org/cs/2011/03/open_source_software_hits_a_st.html.
5. Revision of Mozilla Public License. The Mozilla Public License is one of the most popular open source licenses. After eighteen months of work, Mozilla has announced a new version. The Mozilla Public License version 2 (“MPLv2”) is a much simpler, shorter and more usable license. The new license has adopted approaches (and sometimes the terms themselves) from other open source licenses: the patent license provision was adopted from the Apache license and the termination provision from the General Public License version 3. In addition, Mozilla has made the MPLv2 compatible with the Apache license. And MPLv2 has also included a provision to make the license “compatible” with other licenses. For example, MPLv2 permits distribution of code under the MPLv2 with other modules licensed under GPL variants (GPLv2, GPLv3, APGL and LPGL) if such modules are part of a “Larger Work” (unless the notice in the software states that the software is “Incompatible with Secondary Licenses”). However, these differences mean that the transition to the MPLv2 for existing projects will require careful thought.
6. Cybits Decision in Germany. This decision makes clear that companies cannot alter the terms of software licensed under GPLv2. AVM is a manufacturer of FRITZ!Box router, a digital subscriber line DSL terminal, which uses the Linux Kernel as a part of their production firmware (which is licensed under GPLv2). Cybits, a software producer, distributes the Internet filtering software “Surf-Sitter DSL”, which is intended to protect children. The Surf-Sitter application downloads FRITZ!Box software to the user’s computer, modifies it and then reinstalls it back on the FRITZ!Box.
AVM claimed that Cybits did not have the right to modify the part of the FRITZ!Box firmware which was licensed under GPLv2. The court rejected AVM´s claims that Cybits should not be permitted to alter the firmware of AVM and denied that Cybits had infringed AVM´s copyright by distributing Surf-Sitter. The court found that the firmware is a collective work, which contains modules licensed under GPLv2. Cybits or any third party may modify the GPLv2 licensed software. Thus, AVM is not able to control any modifications to the GPL licensed components of the FRITZ!Box firmware.
7. Project Harmony Publishes Standardized Contributor Agreements. Many commentators have complained about the problems raised by the number of licenses approved as “open source”, a problem frequently referred to as “license proliferation”. Yet a similar problem is lurking in the development of open source software: the contribution agreements which govern the rights provided by contributors to a project. Project Harmony was a community effort to resolve this problem in advance by developing a set of standard agreements which can be adopted by open source projects http://www.harmonyagreements.org/about.html.
Many open source projects use the “license” for the project as a contribution agreement, but a variety of separate open source contribution agreements have developed over time, from the Apache Contributor Agreement to the Joomla Contributor Agreement http://community.joomla.org/images/JCA_General_Draft.pdf. Although many open source projects can use their standard open source license (i.e. GPLv2 for Linux or Mozilla Public License for the Mozilla browser) as the “contribution agreement”, this approach “locks in” the open source project to that license. If the open source project wishes to change the license (such as the change of OpenOffice project from GPLv2 to Apache), this approach would require that each contributor agree to the change. A good example of the potential for problems with this approach is the Open Street Map Project (“OSM Project”). The OSM Project has been struggling with shifting from a Creative Commons license to a more appropriate Open Database License http://wiki.openstreetmap.org/wiki/Open_Data_License_FAQ. After three years, the transition is still not complete. Finally, the OSM Foundation has given up on obtaining agreement from the remaining contributors and will probably delete contributions from contributors that have not agreed to shift to the new license http://en.wikipedia.org/wiki/Open_street_map#Licensing. In addition, open source licenses do not deal with a number of other issues which should be addressed by contribution agreements, such as contributions by minors and changes of license. Project Harmony also makes it easier for corporations to contribute to open source projects by avoiding the complexities of managing the differing terms of these new contribution agreements. The Project Harmony standard contribution agreements permit projects to make a choice between a license or assignment approach and, then, select among several options to change licenses in the future (without obtaining permission from each contributor.
8. Dispute over Koha Trademark. The importance of the protection of trademarks to open source projects was illustrated by the recent dispute over the Koha trademark between Horowhenua Library Trust (“HLT”) and a commercial company, PTFS, http://koha-community.org/update-2/. HLT manages the Koha open source project. PTFS filed for trademark protection for Koha in New Zealand after it had acquired a company which used the trademark and the trademark was, then, registered by the New Zealand government. Upon registration of the Koha trademark, HLT complained and appealed for help. Subsequently, PTFS agreed not to enforce the trademark and even to transfer the trademark to HLT http://patentbuff.com/2011/11/koha-alls-well-that-ends-well_28.html?spref=tw.
9. The Meaning of Open Source. The power of the community to police the misuse of “open” was demonstrated by Nokia’s attempt to claim that the Symbian mobile operating system was “open” for business http://www.groklaw.net/article.php?story=20110402143136766. However, the Symbian license is not consistent with the Open Source Definition. The copyright license in the Symbian license is as follows:
Subject to the terms and conditions of this Agreement, Nokia hereby grants to You a personal, non-exclusive, non-transferable, irrevocable (except as set forth in Clause 7.1 and 7.2 below), royalty-free and worldwide license under Copyrights licensable by Nokia to: i) reproduce and modify Source Code Components; ii) reproduce Binary Components and Documentation; iii) use and reproduce Utility Software, and iv) publicly display, distribute and make available (a) the Source Code Components to third parties that have acquired a valid source code license from Nokia; and (b) Utility Software, Binary Components and Source Code Components in binary form to third parties, (c) Documentation in unmodified form in all cases i)-iv) solely as part of the Symbian Platform or for use with the Symbian Platform, under the terms and conditions of this Agreement.
The agreement requires a separate license for source code from Nokia and limits the use to the “Symbian Platform.” Nokia was forced to “correct” their original statement to “open for business” rather open source http://symbian.nokia.com/blog/2011/04/04/not-open-source-just-open-for-business.
10. Open Hardware License. The open hardware movement received a boost when CERN published an Open Hardware License (“CERN OHL”). The CERN OHL is drafted as a documentation license which is careful to distinguish between documentation and software (which is not licensed under the CERN OHL) http://www.ohwr.org/documents/88. The license is “copyleft” and, thus, similar to GPLv2 because it requires that all modifications be made available under the terms of the CERN OHL. However, the license to patents, particularly important for hardware products, is ambiguous. This license is likely to the first of a number of open hardware licenses, but, hopefully, the open hardware movement will keep the number low and avoid “license proliferation” which has been such a problem for open source software.
As the use of free and open source software (“FOSS”) has become more ubiquitous, legal issues relating to FOSS have become more common and important. This year has seen a mix of new and old issues. Even more so than 2008, this year has seen an increase in the importance of the top ten legal issues http://lawandlifesiliconvalley.com/blog/?s=top+10+2008&x=40&y=6. My list of the top ten FOSS legal developments for 2009 follow:
1. MySQL Delays Sun/Oracle Merger. The European Commission (“EC”) delayed the closing of the Sun/Oracle merger because of concerns about the future of the MySQL database software. MySQL software is the most widely used open source database. The use of FOSS in the European Union is much higher than in the United States and the EC is very concerned about a potential reduction in competition in the database market. The EC concerns seem to fundamentally misunderstand the nature of FOSS and the ability of the community to continue the development of the software even without ownership of the copyright in the particular software. This approach has been widely criticized http://www.economist.com/businessfinance/displaystory.cfm?story_id=14861553. In mid December, Oracle offered ten commitments with respect to MySQL software. http://www.marketwire.com/press-release/Oracle-Corporation-NASDAQ-ORCL-1090000.html. The EC will make its decision next year.
2. First Lawsuit by a Commercial FOSS Vendor. Artifex uses a “dual licensing” model (providing the software under both the General Public License (”GPL”) and a commercial license) for its MuPDF rendering engine: the company filed suit against Palm for alleged copyright infringement because Palm allegedly violated the GPL (in the interests of transparency, I have worked for Palm in the past, but I am not involved in this matter) http://lawandlifesiliconvalley.com/blog/?p=376. This complaint may signal the beginning of a trend by commercial open source companies with “dual licensing” models because the success of that model depends on the difference in the scope of rights available under an open source license and a commercial license (as well as the value of the additional protections, performance warranties, support and indemnification available under the commercial license).
3. Microsoft Discovers Violation of GPL and Contributes to Linux. Microsoft Corporation continues its engagement with the FOSS community by its prompt acknowledgement and correction of its failure to comply with the GPL in its distribution of the Windows 7 USB/DVD Download Tool http://lawandlifesiliconvalley.com/blog/?p=306. In addition, Microsoft provided three drivers to Linux under GPLv2 http://lawandlifesiliconvalley.com/blog/?p=276.
4. Standard for Injunctive Relief for License Breach Is Set High. Last year, the Court of Appeals for the Federal Circuit (”CAFC”) overturned the District Court decision in Jacobsen v. Katzner and strongly supported the right of FOSS licensors to obtain copyright remedies for breach of FOSS licenses. This result was critical for FOSS licensors because copyright 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. The CAFC decision was so clearly in favor of Jacobsen that most lawyers thought the District Court would grant an injunction to Jacobsen upon remand. Instead, the District Court refused to grant an injunction on the basis that Jacobsen had made no showing that he had actually suffered any potential harms and that Jacobsen had “failed to proffer any evidence of any specific and actual harm suffered as a result of the alleged copyright infringement” http://lawandlifesiliconvalley.com/blog/?p=141. This decision is disappointing for FOSS licensors and hopefully other courts will not impose such a high standard for injunctive relief.
5. SCO Attack on Linux Rises From the Dead. In August, the Ninth Circuit Court of Appeals reversed the summary judgment granted Novell in its litigation over the ownership of the copyright in Unix software. The ownership of the copyrights in the Unix software is essential for SCO to prosecute cases for copyright infringement against Linux. Thus, if SCO does not own the copyright in Unix, it cannot sue third parties claiming that the distribution of Linux infringes its copyright of Unix. The original contract between SCO and Novell relating to Unix does not transfer the ownership of copyrights in Unix to SCO, but a Second Amendment provides for a “conditional” assignment. The District Court had found that the conditions of the assignment had not been met and the assignment had not become effective. The Ninth Circuit decided that the facts were not sufficiently clear to grant summary judgment and asked the District Court to try the case. This decision is likely to have little practical effect. First, the decision does not grant ownership of the copyrights to SCO, but simply provides SCO the ability to litigate the issue rather than losing on summary judgment. Given that the judge has expressed his opinion that the copyright was not transferred by Novell under the “high” standard imposed by a summary judgment (a “summary” procedure setting a high standard of proof on the moving party, Novell), it seems unlikely that he will change his decision under the lower standard of proof which applies in a lawsuit. Second, the continued prosecution of the case will be very expensive and SCO is in bankruptcy. SCO would need to find additional financing to continue the case.
6. Enforcement of GPL for Busybox Continues. The Software Freedom Law Center has continued to enforce the GPLv2 on behalf of some of the owners of the copyright in Busybox software. Most recently, the SFLC filed suit against fourteen major companies, including Samsung, Best Buy and Westinghouse http://www.softwarefreedom.org/news/2009/dec/14/busybox-gpl-lawsuit/. The suits are based on violations of the GPLv2 in a variety of consumer electronic products, such as DVD players and televisions. However, Bruce Perens, one of the authors of the Busybox software, announced that he did not approve of the litigation http://perens.com/blog/2009/12/15/23. He raised the question of the rights of one of the authors of FOSS in such litigation. This issue would depend on whether the software would be considered a “joint work” or “compilation” under copyright law http://www.copyright.gov/title17/92chap1.html#101. As is the case frequently in software and copyright, these standard copyright categories are difficult to apply to software. A traditional example of a “joint work” would be a film because the work is the result of contributions by numerous authors to create a single work. A traditional example of a “compilation” would be a magazine which is the combination of independent copyrighted works from many authors. This issue remains unresolved.
7. GPL Found to be Indirectly Enforceable in France. In case of first impression in France, the Court of Appeals in Paris has issued a holding, as part of a larger dispute over the delivery of software, that states that the terms of the General Public License were breached (and thus the GPL is enforceable under French law). The basis for the decision was that the defendant, Edu4, had deleted two copyright notices in the VNC software and replaced them with its own copyright notice and had deleted the GNU GPL license language. The case is also unusual because it involved a suit by a licensee, AFPA, against a distributor, Edu4, claiming breach based on violation of the terms of the GPL by the distributor http://lawandlifesiliconvalley.com/blog/?p=285.
8. ALI Adoption of Software Contract Principles. The American Law Institute (“ALI”) approved the Principles of the Law of Software Contracts (the “Principles”) on May 19, 2009. ALI is a very prestigious legal organization and the Principles have the potential to be very influential on courts. As I have discussed in this blog, the Principles continue 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. Despite the stated goal of summarizing the case law and recommending best practices, the Reporters have included many new concepts which impose consumer type protections on both consumer and business software licenses. Although the Reporters have tried to exclude the applications of some of the Principles to FOSS, these modifications are not clearly successful in implementing this exclusion http://lawandlifesiliconvalley.com/blog/?m=200906.
9. Microsoft Sues TomTom for Patent Infringement. Microsoft Corporation sued TomTom for patent infringement for its GPS device which includes Linux. Although a number of commentators assumed that the suit was the first salvo in the long awaited patent assault on Linux by Microsoft, I was (and am) skeptical and thought that these concerns are premature. The claims relating to Linux, such as those covering FAT, are based on features common to many operating systems and would be likely to be subject to challenge under the new higher standards for patents set by the Supreme Court. Moreover, the case settled quickly, suggesting that it was not the beginning of a Microsoft assault against Linux http://lawandlifesiliconvalley.com/blog/?p=214.
10. New GCC Runtime Exception. The FSF announced new runtime exceptions (“GCC Exceptions”) for their popular GCC programs as part of its shift of the GCC programs from GPLv2 to GPLv3. http://www.fsf.org/licensing/licenses/gcc-exception.html. The exception is similar in purpose to the existing GCC exception for GPLv2 but is based on section 7 of the GPLv3 which permits a limited (and carefully defined) number of “additional permissions.” The GCC Exceptions are necessary because the GCC program when it compiles another program may combine portions of certain GCC program header files and runtime libraries with the compiled program. Without the GCC Exception, the compiled program would be required to be licensed under GPLv3 (just as without the prior exception, the use of GCC programs licensed under GPLv2 for compilation would have required the compiled program to be distributed under GPLv2) . The GCC Exception permits the use of the GCC program to compile programs which are then licensed “under terms of your choice”, including proprietary licenses. However, the new GCC Exception has added a limitation to its scope which was not present in GPLv2 version of the exception by limiting the use of non-GPL Compatible programs in the compilation process: “A Compilation Process is “Eligible” if it is done using GCC, alone or with other GPL-compatible software, or if it is done without using any work based on GCC. For example, using non-GPL-compatible Software to optimize any GCC intermediate representations would not qualify as an Eligible Compilation Process”. This limitation was included because the GCC programs are moving to a “plug in” architecture and the FSF wanted to avoid permitting plug ins that “called out to proprietary software to transform the compiled code—effectively creating proprietary extensions to GCC and defeating the purpose of the GPL”.
I am sure that this trend will continue in 2010, so stay tuned!
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.
The DLA Piper 2008 Technology Leaders Forecast Survey found that the use of open source software, while widespread, remains misunderstood. The Survey found that software companies used open source software in 65% of their products, as compared with use of open source software in 55% of the products of all technology companies. This number drops to 29% of the products when all respondents are included. However, only 48% of these companies have an open source use policy (software companies were more likely to have an open source use policy).
Smaller companies, those with fewer than 1000 employees, used open source software in almost half of their products (44%), yet 35% of these companies do not have open source use policies. Larger companies, those with more than 5,000 employees, reported use of open source software in only 9% of their products and 65% do not have open source use policies. I find that this number for use of open source software among large companies is strikingly low.
I think that the survey reflects a continued misunderstanding among large companies about how widespread is the use of open source software.The failure to have an open source use policy is very dangerous in the world of complicated “hybrid” products: open source licenses do not mix well with commercial licenses without careful analysis. http://lawandlifesiliconvalley.com/blog/?p=18. The risk is particularly high now because the financial downturn means that licensors will be carefully reviewing compliance with license terms to try to find new sources of revenue. For additional thoughts on this issue, you can see my interview. http://www.youtube.com/watch?v=MsZKWFmT0qs&eurl=http://www.dlatechlaw.com/search?updated-max=2008-10-21T13%3A46%3A00-04%3A00&max-results=7
In the midst of a financial and economic crises, and in the midst of uncertainty associated with a historic presidential election, the DLA Piper 2008 Technology Leaders Forecast Survey found that industry leaders have a host of concerns, but are fundamentally optimistic about future opportunities. http://www.dlapiper.com/tech_survey_release/. The survey is part of our first Global Technology Leaders Summit.
These top executives revealed that 75% of them have been adversely affected by the economic slowdown. Only 15% of respondents think the U.S. economy is likely to rebound in the first half of 2009 and more than half of respondents (55%) believe the IPO market will not begin to rebound until at least 2010. With responses received between September 23 and October 6, the survey was conducted as Congress debated the $700 billion bailout bill and during a tumultuous two weeks on Wall Street.
Approximately 90% of respondents do not believe the IPO market will return until at least the end of 2009 which is not surprising given the extent of the current economic crisis and the shutdown in the IPO market that occurred following the Tech Bubble Burst in 2000.
These views of liquidity issues have clearly affected the views of venture capitalists which have a very different view of the financial crisis than executives of technology companies. Nearly half (47%) of finance and venture capital respondents say the current financial crisis will have a more adverse impact on the technology industry than the Technology Bubble Burst of 2000. However, 67% of technology company entrepreneurs and leaders disagree. We think the difference between the two groups was largely due to the emphasis of venture capitalists on exit issues such as M&A and IPOs – which are likely to be more adversely impacted in the near term – than longer-term operating results.
These concerns are also reflected in the recent pronouncements by venture capital firms such as Sequoia Capital and Benchmark which I have summarized in my earlier post. http://www.lawandlifesiliconvalley.com/blog/?p=77