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Open Source Software: An Edge For Your Growing Business

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  • 1. GREENBERG TRAURIG, LLP  ATTORNEYS AT LAW  WWW.GTLAW.COM©2011. All rights reserved.Open Source Software: Defining It,And Using It To Grow Your BusinessApril 23, 2013 Webinar Presented byBarry Horwitz and Promet Source
  • 2. Necessary Disclaimer I am a lawyer, but . . . This presentation is not legal advice Legal advice requires:□ Specific factual circumstances□ An attorney-client relationship. There will be time for questions at the end, butmy answers are not “legal advice.”* *Fine Print: If you have specific issues, questions or problems in mind, wecan set up a time to discuss them separately
  • 3. Open Source Software - Overview What is open source software?□ Subject to open source license. What is an open source license?□ Licensor must grant certain rights□ Right to use, modify and distribute□ Right to access source code “Open source” vs. “Free software”□ You can sell open source software.□ Free” does not mean “no cost”; it means unencumbered. Think “Free speech, not free beer.”
  • 4. Open Source Software – Uses & Restrictions What can businesses do with it? Some examples:□ Use existing software as a head start□ Modify code for additional functionality□ Greater adaptability□ Lower cost Restrictions:□ Must allow access to source code□ Must allow further modifications□ Must allow further redistribution
  • 5. Intellectual Property Primer Intangible property rights over “creations ofthe mind”; four types: Trademark Patent Copyright Trade Secret
  • 6. Trademark Law Legal Basis: Lanham Act, 15 U.S.C. §§ 1051 et Seq. Use: “Mark” or designation to indicate source□ Indicates quality□ Need not identify source Rights accrue upon use in commerce Registration provides additional benefits Prevents others from using the same or anyconfusingly similar mark with similar or relatedgoods or services.
  • 7. Patent Law Legal Basis: U.S. Constitution, Art. 1, § 8, Cl. 8 U.S. Patent Act, 35 U.S.C. §§ 1 et seq. Use: Inventions, improvements.□ Machines, Devices□ Chemical compositions□ Methods Processes Rights accrue when granted a patent by PatentOffice Must disclose to earn monopoly Prevents others from using, making, selling,importing, or offering for sale
  • 8. Copyright Law Legal Basis: U.S. Constitution, Art. 1, § 8, Cl. 8 U.S. Copyright Act, 17 U.S.C. §§ 1 et seq. Use: Works of Authorship.□ Does not protect ideas□ Fixed in tangible medium of expression Rights accrue when expression is fixed Registration provides additional benefits Prevents others from making copies,distributing, making derivative works and, insome cases, performance
  • 9. Trade Secret Law Legal Basis: Uniform Trade Secrets Act (enactedstate by state). E.g. 765 ILCS 1065/1 et seq. Use: Protect confidential information□ Information must derive economic benefit from secrecy□ Owner must take steps to protect confidentiality Rights accrue as confidential informationaccumulates, so long as secrecy maintained Registration provides additional benefits Prevents others from wrongful using ordisclosing Independent derivation okay
  • 10. Software: Types of IP Software is most clearly subject to Copyright Literary work More recently, patent protection Could also be trade secret
  • 11. Software Copyright Primer 17 U.S.C. § 101 defines a computer program as: A set of statements or instructions to be used directlyor indirectly in a computer in order to bring about acertain result. Software copyright owners have exclusive rightto: Reproduce the work Distribute the work Create derivative copies of the work
  • 12. Software: Licenses You do not buy software; you license it. License: grants the right to use. Permission. Proprietary licenses withhold rights. Limit number of computers. Cannot distribute Cannot make derivative works What is open source?
  • 13. Open Source Definition Open Source Definition – Criteria of License□ 1. Free Redistribution – no restrictions on selling or givingaway software. “License shall not require royalty or otherfee for such sale.”□ 2. Source Code - program must include source code, orinclude publicized means of obtaining source code forreasonable reproduction cost. Must allow distribution insource code□ Derivative Works - must allow modifications and derivativeworks, and must allow them to be distributed under thesame terms□ No Discrimination – must not discriminate against any personor group or persons, or against any field of endeavor□ Automatic Distribution of License – rights attached to licenseapply to all redistributions
  • 14. Open Source Definition (Cont.) Open Source Definition – Criteria of License□ 3. Derivative Works - must allow modifications andderivative works, and must allow them to bedistributed under the same terms□ 4. No Discrimination – must not discriminate against anyperson or group or persons, or against any field ofendeavor□ 5. Automatic Distribution of License – rights attached tolicense apply to all redistributions□ Other requirements…
  • 15. Open Source License – The GPL Basic rights include access to the source codeand right to make derivative works Key element: Reciprocity. Changes to the software must be releasedunder the same license Purpose: Increase the amount of publicly availablesoftware Ensure compatibility Drawback: Linking – cannot be combined withproprietary software
  • 16. Open Source Software - Advantages No Vendor Lock-in Proprietary software can require additionalmonthly fee. E.g. Security/Anti-spyware programs Leads to longer useful life of software Can’t Be Orphaned by Vendor End-of-Lifing Proprietary software - vendor stops makingnew versions. E.g. Internet Explorer for Mac. Lower Risk of Incompatibilities Proprietary software licenses can preclude afix; open source licenses allow anyone tocreate compatibility Lower Cost Than Building From Scratch
  • 17. Open Source Software – Advantages (Cont.) Allows for Larger User Base Proprietary licenses can assert limitations onnumber of users. E.g., downloading music Control of Software Remains With User, NotVendor Ability to Integrate with Open Standards Greater adaptability Increased Innovation Avoid competing with proprietary modifiedversion of your own work Peer Review Greater reliability Greater security
  • 18. Open Source Software – Risks Must adhere to copyright attribution and noticerequirements Must adhere to requirement to include sourcecode Linking can render proprietary source codesubject to open source license GPL and similar licenses have not beenconstrued by American courts Open source software can still be covered bysoftware patents
  • 19. Open Source Software For Startups The advantages discussed above particularlyapply to startups seeking to offer Software as aService. Facebook and Google collectively requiredmillions of hours worth of coding. Startups cannot afford to invest that much time Goal: create and sell a mobile application that,for example, allows users to find a reasonably-priced parking space in downtown Chicago. Map functionality Payment processing functionality Account profile User Interface
  • 20. Open Source Software For Startups The advantages discussed above particularlyapply to startups seeking to offer Software as aService. Startups cannot afford to invest millions ofhours of coding in a new service Goal: create and sell a mobile application that,for example, allows users to find a reasonably-priced parking space in downtown Chicago. Map functionality Payment processing functionality Account profile User Interface
  • 21. Can You Generate Revenue With OpenSource Software? If software is a mobile application, thatapplication can be sold in an app store. YOU CAN SELL (license) OPEN SOURCESOFTWARE, e.g. GPL, or from Drupal repository “Sales” are really licenses. Can charge as much as you want! Purchasers (licensees) subject to the same license Source code must be made available tolicensees□ Need not give away code not distributed (internal use)□ Viewing a website is not distribution, so need not giveaway code to website visitors
  • 22. Can You Generate Revenue With OpenSource Software? (Cont.) Can I sell modules written by others?□ No. That person retains copyright of their modules! What does it mean to retain copyright eventhough subject to GPL?□ Right to control distribution; sell copies of YOUR work□ What you give up: must make source code available andothers can modify your work However, you can provide other services basedon modules written by others, like:□ Support□ Training□ Customization□ Integration
  • 23. Sample Solutions of Open Source vs.Proprietary SoftwareGrinnell College Campus Tour
  • 24. FAQs Difference between GPL2 and GPL3? Protects right to tinker: prevents “tivoization” “Distribute” changed to “convey” Stronger protection against patent threats Conveying software requires licensingpatents necessary to exercise GPL rights If GPL3 licensee sues for patent infringementtheir license is terminated Offers new ways to provide source code Clarifies compatibility
  • 25. FAQs (Cont.) Difference GPL and other licenses (MIT, BSD) No reciprocity People can modify software licensed under BSDand then turn it proprietary Fail to mention patents
  • 26. FAQs (Cont.) If I write a new module that does somethingnever done before, have I created intellectualproperty? You’ve created a module. The module can giverise to intellectual property rights. Patent Copyright Trade Secret
  • 27. FAQs – Developers What should I put in my contract to allowmyself to re-use my code for similar projects? IP Ownership Clause – retain copyright for allsource code written. If I develop GPL code for one client, can I sell it toanother client if I do not make any changes? Yes! You own the copyright, and your “sale” tothe first client is merely a license for him to useit.
  • 28. FAQs – Developers What should I put in my contract to allowmyself to re-use my code for similar projects? IP Ownership Clause – retain copyright for allsource code written. If I develop GPL code for one client, can I sell it toanother client if I do not make any changes? Yes! You own the copyright, and your “sale” tothe first client is merely a license for him to useit.
  • 29. FAQs – Hiring Developers If I want to hire a developer, what can I put inmy contract to prevent them from selling thecode to my competitors? Insist that developer grant an exclusive license . (But that will not prevent developer frommodifying code further and having the ability tosell further modified code to competitors)
  • 30. Summary & Wrap-Up Numerous advantages to using open sourcesoftware to offer new functionality within abusiness, or start a new business Need not start from scratch Lower cost “Future Proof” Main drawbacks include adhering to all rulesand requirements of license – requirements ofcopyright notice, attribution and making sourcecode publicly available
  • 31. Questions? Contact information Barry Horwitz, Greenberg Traurig, LLP horwitzb@gtlaw.com 312-456-1037 Andy Kucharski, Promet Source andy@promethost.com 773-525-8255