Open Source Software and Copyright Infringement Law
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1 What Every GC and CTO Should Know about Open Source Software David Mirchin July 14, 2015
2 David Mirchin Chair, Meitar Technology Transactions and IP Group Tel Aviv, Israel
3
4
5 Open Source sometimes also a blank at least no clear rules
6 So that you can advise your companies on use open source software with less risk Our Goal
7 Safe Software
8 What We ll Cover Overview of Open Source Software Types of Open Source Licenses GPL, MIT/BSD, Apache, LGPL, Mozilla Significant changes in GPL v.3 Recent Open Source Developments What We are Seeing Open Source Policies Recommendations for M&A Transaction
9 I. Overview of Open Source End of 2012: 900,000 open source projects Up from 600,000 in % are in cloud computing and mobile computing
10 Open Source Licenses 100+ Open Source Licenses Thousands of Open Source Projects Most Restrictive : GPL and Affero GPL Least Restrictive : MIT/BSD/Apache Middle Ground: LGPL and Mozilla
11 No One Definition of Open Source Open Source Initiative opensource.org No Discrimination Against Persons or Groups Not Useful
12 March in Selma 1965
13 4 Open Source Principles 1. Licensees are free to use the software for any purpose E.g., not okay to say, for R&D purposes only No reporting obligations by licensee to licensor as to how the software was used 2. Licensees can copy and distribute the software without paying licensor Licensee may, however, sell the software But practical result: the price of unmodified software is the marginal cost of production and distribution
14 3. Licensees may create derivative works and distribute Again, without payment of royalties to licensor 4. No restrictions on software with which it is merely combined or distributed
15 II. GNU: Most open source is licensed under the
16
17 GPL is a religion, not a software license Stallman interview: what is free software? 2:17/8
18 Like
19 GPL v2.0 & v3.0 Apache MIT License Artistic BSD 3-cl LGPL v2.1 MPL BSD License LGPL v3.0 EPL 1.0 Public Domain Most Widely Used Licenses [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] [CELLREF] Number of Components (% Change)
20 Approximately 35% Of all open source software is under GNU GPL 2.0 or 3.0 Version 1.0 released 1989 Version 2.0 released 1991 Version 3.0 released 2007 If a licensee modifies and distributes the software, MUST release the source code If merge together with your proprietary software into a larger work, THE ENTIRE WORK IS DISTRIBUTED UNDER GPL.
21 THE Scenario 1. You develop software. 2. You integrate GPL software into your software. 3. You license your software to customers 4. All your software becomes open source Risk: Requires that the source code of all derivative works you distribute be made public
22 Why do you care if you must release the source code? Source code reveals the structure Human-readable Permits anyone to modify Puts maintenance/support revenues at risk Multiple versions of YOUR product in the market Same principle under GPL v.2 and GPL v. 3
23 Dual Licensing (MySQL): to Open Source License Consider Proprietary License May include warranty and support, or indemnity or additional liability obligations If licensee integrates software and does not want to distribute under GPL
24 III. MIT License Simplest Copyright Notice Owner and date Licensee can do anything copy, distribute, derivative works, etc. 2 requirements: 1. Copyright Notice 2. NO WARRANTY. AS IS
25 IV. BSD (Berkeley Software Development) MIT plus no endorsement Neither the name of the <ORGANIZATION> nor the names of its contributors may be used to endorse or promote products derived from this software without specific prior written permission.
26 V. Apache Similar to MIT/BSD No trademark license Explicit patent license 1. Can use in commercial projects 2. States: Can charge money for support, warranty, indemnity or other liability obligations 3. No need to provide source code Recommendation #1: Must meet the Notice Requirements
27 VI. Intermediate Category Mozilla License Developed by Netscape Attribution for Individual Developers In general, like the GPL: if distribute, must distribute source code, but
28 Mozilla Hybrid between BSD and GPL Permits merging the Mozilla open source code with proprietary code May distribute the proprietary code under its own terms Therefore: no contamination THE question under GPL does not arise: is it one combined program?
29 VII. Lesser GPL Version 2 was complete goobledygook LGPL, Version 3 (released June, 2007) is clearer Must include the entire LGPL license (yes, really see Skype case from July, 2007)
30 What We are Seeing Hesitant About Using LGPL Difficult to Decipher
31 Recent Project For a Client Desirable Category: Work That Uses the Library Only in isolation ; then becomes a work based on the Library Inconsistent terminology of linking, combined with, compiled Must permit modification of the work for the customer s own sue and reverse engineering for debugging such modifications
32 New Trend: No Licenses
33 Unlicensed FOSS Beware: new trend---posting of FOSS modules without licenses.
34 Recent blog post younger devs today are about POSS Post open source software. F*** the license and governance, just commit to github. Bad idea undercuts a major motivating factor for OS developers broad use of their code It s true that it may be difficult to enforce, but My advice to clients if no license: rip it out. Also bad for developers if no disclaimer of warranties under UCC liable for merchantability (the product is of average quality) and fit for a particular purpose (if developer knows of use by the licensee)
35 VIII. Main Provisions GPL 3 Software As a Service (ASP model) Outsourcing Development Not a conveyance Clarified: Can Charge
36 1. SaaS No need to release source code Crucial: If use internally, no need to release source code If distribute ( convey ) In the terminology of V.3, need to provide Source code What about code made available over a network?
37 Not clear under V.2 Now NO NEED TO RELEASE SOURCE CODE Affero GPL v. 3 licensor can require source to be released for SaaS model
38 2. May outsource Since 1991, much use of software contractors or total outsourcing
39 Under V2, transfer of a copy was a distribution and could permit the subcontractor/outsourcer to distribute the source code onward V3 permits using contractors; does NOT require disclosing source code; not considered a conveyance
40 3. May charge for open source Huge clarification software Not seen as a change, but V2 was unclear Now MAY charge for GPL open source software, and for warranties and support Crucial for business models of many open source companies
41 How Do You Even Know what Providers! OS You Have?
42 Many enforcement actions But few decisions German decision 2005 enforcing the GPL
43 Litigation 2007: Skype found Guilty of Violating GPL German case Skype distributed handset manufactured by third party (SMC Networks) Handset included Linux software, distributed under GPL v.2 Provided link to where GPL and LGPL are found
44 Court held: Not enough if product is not an internet product. Striking: 1. applied to the distributor, Skype 2. Very literal reading of GPL
45 Aug 2008 Jacobsen v. Katzer Issue: Is violation of the Artistic License a copyright infringement or breach of contract? Plaintiff developed open source software for model trains Defendant copied the software Plaintiff sues for copyright infringement Circuit Court: Plaintiff s claim is for copyright infringement Importance: Can obtain injunction Statutory damages, without proving actual damages
46 Perfect 10 v. Google (2011) Undercuts Jacobsen. Injunctions not necessarily the appropriate remedy for copyright infringement
47 Selected Additional Litigation 2007: First Copyright Infringement Lawsuit Filed in connection with GNU GPL Plaintiff Busy Box developed an application that implements a lightweight set of standard Unix utilities
48 Typically used in embedded systems Licensed under GNU GPL version 2 Defendant Monsoon Multimedia incorporated the BusyBox SW in its Firmware, but did not provide source code Sued for actual damages and injunction to prevent continued distribution of the SW Injunction means: No Monsoon product since it is Firmware
49 Other BusyBox Suits Xterasys (firmware; USB adapters) High-Gain Antennas Verizon Bell Microproducts Super Micro Computer Xtreme Networks
50 Settled 2009 SFLC v. Cisco Appoint Open Source Director for LinkSys software, reports to FSF Pay FSF Make LinkSys open source available
51 Software Freedom Conservancy Sues VMWare in Germany March 2015
52 Versata, Ameriprise, Ximpleware (N.D. Cal.) 4 decisions thru Nov 2014; still ongoing Versata licenses software to financial advisor company, Ameriprise Includes XML parser by Ximpleware under GPL Ameriprise makes it available to thousands of affiliated financial advisors Ximpleware sues for copyright and patent infringement
53 Lessons Not Just Do-gooders like Software Freedom Conservancy Commercial Disputes Customers Being Sued Importance of an Indemnification Provision
54 Summary of Recent Litigation Must follow GPL and LGPL exactly (include full license) Skype What exposure if violate open source? Injunction and Statutory damages (Jacobsen) XimpleWare Case is a Watershed Can Sue Customers All SFLC claims settled on plaintiff s terms Must appoint an open source compliance officer Pay money but don t know amount. Publish source code
55 Transactional Issues Investment Round: Must make reps Rep: Complied with all OS license M&A Rep: List all OS. Client: Gave software for beta for less than two weeks Oops! That s a distribution, requiring delivery of open source
56 Business Question: Important to keep target s software proprietary? Hardware company which wants the software to be widespread
57 To avoid a buyer or investor walking away from the M&A/investment or reducing the price
58 An issue in EVERY single M&A of a software company, or company with important software assets Long discussions Seller required to redesign their product
59
60 Proactive: Policy Discussion Inside Company Pros/Cons of Open Source Use Negative: Explain the Risks Free, but Can be Expensive Positive: Use of OS Software Quicker Time to Market Cuts Development Costs Better Product Many Minds contributing to Solutions
61 Recommendation #3 Establish Internal Open Source Policy Elements to Policy: 1. All Licensed Software which will be Conveyed (Distributed) to be Reviewed 2. No beta distributions without Review 3. Will you Use open source at all? 4. If so, will you use GPL? 5.Key Question: Is it Independent and Separate or Single Larger Work?
62 Open Source Policy (Cont d) 6. Can it be Developed in a Separate Way? 7. Appropriate Recordkeeping in prep for M&A/Investment/Lending Reps
63 8. EULA no warranty or indemnity for Open Source modules Certain modules are licensed under open source licenses 9. Must include proper notices:
64 <one line to give the program's name and a brief idea of what it does.> Copyright (C) <year> <name of author> Notices should be reviewed by attorney
65 This program is free software: you can redistribute it and/or modify it under the terms of the GNU General Public License as published by the Free Software Foundation, either version 3 of the License, or (at your option) any later version. This program is distributed in the hope that it will be useful, but WITHOUT ANY WARRANTY; without even the implied warranty of MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE. See the GNU General Public License for more details. You should have received a copy of the GNU General Public License along with this program. If not, see <
66 Summary of Recommendations All open source licenses: Must meet Notice Requirements Copyright Notices Attachment of License Must offer source code when licensing modifications you made to GPL, LGPL, Mozilla LGPL: Must permit Modification and Reverse Engineering for Version 2 LGPL
67 Consider Dual Licensing Model Software Policy for Proprietary and Open source Software No Reps for your Open Source Software
68 Thank you!!
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