Promet's Ap

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 Business
April 23, 2013 Webinar Presented by
Barry 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, but
my answers are not “legal advice.”*
 *Fine Print: If you have specific issues, questions or problems in mind, we
can 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 of
the 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 any
confusingly similar mark with similar or related
goods 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 Patent
Office
 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, in
some cases, performance

9. Trade Secret Law
 Legal Basis: Uniform Trade Secrets Act (enacted
state 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 information
accumulates, so long as secrecy maintained
 Registration provides additional benefits
 Prevents others from wrongful using or
disclosing
 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 directly
or indirectly in a computer in order to bring about a
certain result.
 Software copyright owners have exclusive right
to:
 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 giving
away software. “License shall not require royalty or other
fee for such sale.”
□ 2. Source Code - program must include source code, or
include publicized means of obtaining source code for
reasonable reproduction cost. Must allow distribution in
source code
□ Derivative Works - must allow modifications and derivative
works, and must allow them to be distributed under the
same terms
□ No Discrimination – must not discriminate against any person
or group or persons, or against any field of endeavor
□ Automatic Distribution of License – rights attached to license
apply to all redistributions

14. Open Source Definition (Cont.)
 Open Source Definition – Criteria of License
□ 3. Derivative Works - must allow modifications and
derivative works, and must allow them to be
distributed under the same terms
□ 4. No Discrimination – must not discriminate against any
person or group or persons, or against any field of
endeavor
□ 5. Automatic Distribution of License – rights attached to
license apply to all redistributions
□ Other requirements…

15. Open Source License – The GPL
 Basic rights include access to the source code
and right to make derivative works
 Key element: Reciprocity.
 Changes to the software must be released
under the same license
 Purpose:
 Increase the amount of publicly available
software
 Ensure compatibility
 Drawback: Linking – cannot be combined with
proprietary software

16. Open Source Software - Advantages
 No Vendor Lock-in
 Proprietary software can require additional
monthly 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 making
new versions.
 E.g. Internet Explorer for Mac.
 Lower Risk of Incompatibilities
 Proprietary software licenses can preclude a
fix; open source licenses allow anyone to
create compatibility
 Lower Cost Than Building From Scratch

17. Open Source Software – Advantages (Cont.)
 Allows for Larger User Base
 Proprietary licenses can assert limitations on
number of users.
 E.g., downloading music
 Control of Software Remains With User, Not
Vendor
 Ability to Integrate with Open Standards
 Greater adaptability
 Increased Innovation
 Avoid competing with proprietary modified
version of your own work
 Peer Review
 Greater reliability
 Greater security

18. Open Source Software – Risks
 Must adhere to copyright attribution and notice
requirements
 Must adhere to requirement to include source
code
 Linking can render proprietary source code
subject to open source license
 GPL and similar licenses have not been
construed by American courts
 Open source software can still be covered by
software patents

19. Open Source Software For Startups
 The advantages discussed above particularly
apply to startups seeking to offer Software as a
Service.
 Facebook and Google collectively required
millions 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 particularly
apply to startups seeking to offer Software as a
Service.
 Startups cannot afford to invest millions of
hours 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 Open
Source Software?
 If software is a mobile application, that
application can be sold in an app store.
 YOU CAN SELL (license) OPEN SOURCE
SOFTWARE, 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 to
licensees
□ Need not give away code not distributed (internal use)
□ Viewing a website is not distribution, so need not give
away code to website visitors

22. Can You Generate Revenue With Open
Source Software? (Cont.)
 Can I sell modules written by others?
□ No. That person retains copyright of their modules!
 What does it mean to retain copyright even
though subject to GPL?
□ Right to control distribution; sell copies of YOUR work
□ What you give up: must make source code available and
others can modify your work
 However, you can provide other services based
on modules written by others, like:
□ Support
□ Training
□ Customization
□ Integration

23. Sample Solutions of Open Source vs.
Proprietary Software
Grinnell 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 licensing
patents necessary to exercise GPL rights
 If GPL3 licensee sues for patent infringement
their 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 BSD
and then turn it proprietary
 Fail to mention patents

26. FAQs (Cont.)
 If I write a new module that does something
never done before, have I created intellectual
property?
 You’ve created a module. The module can give
rise to intellectual property rights.
 Patent
 Copyright
 Trade Secret

27. FAQs – Developers
 What should I put in my contract to allow
myself to re-use my code for similar projects?
 IP Ownership Clause – retain copyright for all
source code written.
 If I develop GPL code for one client, can I sell it to
another client if I do not make any changes?
 Yes! You own the copyright, and your “sale” to
the first client is merely a license for him to use
it.

28. FAQs – Developers
 What should I put in my contract to allow
myself to re-use my code for similar projects?
 IP Ownership Clause – retain copyright for all
source code written.
 If I develop GPL code for one client, can I sell it to
another client if I do not make any changes?
 Yes! You own the copyright, and your “sale” to
the first client is merely a license for him to use
it.

29. FAQs – Hiring Developers
 If I want to hire a developer, what can I put in
my contract to prevent them from selling the
code to my competitors?
 Insist that developer grant an exclusive license .
 (But that will not prevent developer from
modifying code further and having the ability to
sell further modified code to competitors)

30. Summary & Wrap-Up
 Numerous advantages to using open source
software to offer new functionality within a
business, or start a new business
 Need not start from scratch
 Lower cost
 “Future Proof”
 Main drawbacks include adhering to all rules
and requirements of license – requirements of
copyright notice, attribution and making source
code 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