Recent developments in the law have made it clear that developers will be living with software patents for the foreseeable future. Some companies are responding by amassing patents at almost unprecedented prices. How can open source companies respond to these developments? How should we be thinking about these issues? Join Robert Blasi, a patent attorney and the head of Goodwin Procter's open source licensing practice, for a discussion of patents and patent strategy for open source companies and developers. Learn how and why software companies obtain patents, how patents can help the open source community, and how to prepare yourself to do business in a world of software patents.

1. The Future of Open Source in a World
of Software Patents
Robert S. Blasi, Esq.
Partner, Intellectual Property Transactions & Strategies
September 22, 2011
©2011 Goodwin Procter LLP

2. About Goodwin Procter
Global law firm
› Most of our attorneys in Boston, California, and New York City.
Large technology companies practice
› 160+ attorneys focused on technology clients.
› Many attorneys from Testa Hurwitz, Gunderson, Wilson.
› Open source clients include Acquia, Black Duck Software, Citrix (Xen),
Engine Yard, Hadapt, HortonWorks, Lucid Imagination, Pentaho,
RStudio, Sencha, Twilio & Vyatta.
Goodwin Procter LLP 2

3. Agenda
F/OSS Patent Strategy v1.0
Evaluating Strategy v1.0
F/OSS Patent Strategy v2.0?
The “Make-or-Buy” Decision
Questions
Goodwin Procter LLP 3

4. F/OSS Patent Strategy v1.0
Patents let you stop another from making, using, selling, etc.
F/OSS licenses let another make, use, sell, etc.
Patents + F/OSS = ???
› Explicit patent license covering software you distribute – e.g., Apache2
› Implicit patent license covering software you distribute – e.g., GPLv2
Standard analysis was that patents at best have no value, at worst a
threat to the freedom to use, study, innovate, etc.
Moreover, all we had to do was wait and the courts would throw out
all the software patents.
“Mission accomplished.”
Goodwin Procter LLP 4

5. Evaluating Strategy v1.0
Patent litigation is infrequent, but not non-existent
› June 2006 – Firestar v. Red Hat re: Hibernate.
› Oct 2007 – IP Innovation re: Linux.
› Jan 2008 – Trend Micro v. Barracuda re: ClamAV.
› March 2009 – Software Tree v. Red Hat re: JBoss.
› March 2010 – Apple v. HTC re: HTC Android phones.
› August 2010 – Oracle v. Google re: Dalvik
Downside to litigation is injunctive relief, damages (potentially
tripled).
Goodwin Procter LLP 5

6. Evaluating Strategy v1.0 (cont’d)
Companies are responding by stockpiling patents. In 2011 alone:
› Consortium of Apple Microsoft et al. spends US$4.5bn for 6,000 Nortel
patents, outbidding Google.
› Google spends $12.5bn to buy Motorola Mobility and its 17,000
patents/applications.
› Kodak said to have $3bn in patents ($700m market cap).
› Interest expressed in RIM as well.
› This suggests an average patent value in US$400k-500k.
Conclusion: Strategy v1.0 leaves you vulnerable to litigation from
companies outside F/OSS ecosystem and deprives you of valuable
assets.
Goodwin Procter LLP 6

7. F/OSS Patent Strategy v2.0?
Observations
› Threats are out there.
› Patents are valuable assets.
› Legal regime supporting patents isn’t going away any time soon.
Proposal – Treat patents like insurance
› “You can’t get it when you need it.”
› Budget a modest amount each quarter/month/year for IP protection.
› Focus on protecting competitive advantages
▪ Innovation that someone must copy to compete effectively.
› If you’re not innovating, consider buying patents from others.
Goodwin Procter LLP 7

8. F/OSS Patent Strategy v2.0? (cont’d)
A “reasonable” amount?
› Do your competitors have a lot of patents?
› Are your competitors getting sued for patent infringement?
› Are you using products that are said to infringe patents?
› Do you generate a lot of revenue?
Goodwin Procter LLP 8

9. The “Make-or-Buy” Decision
“Buy” Patents
› Reasons
▪ Your business doesn’t generate patentable innovations.
▪ You don’t have time.
› Sources
▪ Intellectual Ventures
▪ RPX/Rational Patent
▪ Ocean Tomo
▪ “Special situations” – e.g., Google/Nortel
Goodwin Procter LLP 9

10. The “Make-or-Buy” Decision (cont’d)
“Make” Patents
› Reasons
▪ Your business is premised on innovation.
▪ You have time and money to build strategically-valuable assets.
› Process
▪ Find patent counsel with right technology background.
▪ Teach your inventors how to identify patentable inventions.
▪ Put process in place to collect and evaluate disclosures from
inventors.
▪ Work with patent counsel on appropriate filings with Patent Office.
Goodwin Procter LLP 10

11. Questions?
rblasi@goodwinprocter.com