open source software – licences and business models andrew katz moorcrofts llp...
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Open Source Software – Licences and Business Models
Andrew KatzMoorcrofts LLP
+44 1628 470003Twitter: andrewjskatz
Background
Andrew Katz – Partner, Moorcrofts LLP
Thames Valley, UK
IP Law – Software licensing, compliance
Corporate Law – due diligence on corporate transactions (M&A, VC investments)
Employment law – IP transfer for employees
Commercial Property – as software companies develop...
Open Source - Introduction
What is open source?
Freedom to tinker, freedom to distribute, freedom to share.
Also called “free software”
Free as in freedom – but also free as in no licence fees.
How does it work?
Source code used to create object code
Recipe used to create a cake
Cake = the software you run on the computer
With proprietary software, you only get the cake. You can't tinker with the recipe.
Free/open source software lets you have the recipe, and make your own cake.
In practice very few people actually tinker with the recipe – but they can, and others can take advantage of that tinkering.
Licensing
Author chooses to license under a licence granting open source freedoms
Some very easy to comply with “You can do anything you like with this software, as long
as you buy me a beer sometime if we meet”
Some more difficult to comply withGNU GPL says that you can only use GPL code if
modified/distributed code is also released under the GPL “copyleft”
Licensing
There are hundreds of different licences.
But the 6 most common licences cover about 90% of open source projects
About 55% use a copyleft licence
Open source in the Real World
Google – runs on open source and sponsors open source projects
Amazon – runs on open source infrastructure – developed an open source cloud strategy (EC2)
Apache – by far the most popular web server
Firefox – world's most popular browser
Android, Symbian – open source phone operating systems
Linux – >78% of the world's top 500 supercomputers
How does it make money?
80% of a typical IT project spend:Project consultancy/management ImplementationCustom coding IntegrationData migrationTraining and implementationMaintenance and support
Only 20% typically licence fees
Collaborative R&D
Avoids reinventing the wheel
Who makes money out of it?
Oracle/Sun - $7bn acquisition of Sun
IDC – projected $8bn open source revenues worldwide in 2013 – 22.4% compound annual growth rate
Red Hat – over $500mn revenue in 2008/9
Google – mkt cap $169bn
etc...
“Linux is a cancer that attaches itself in an
intellectual property sense to everything it touches”
Steve Ballmer, Microsoft, May 2001
“Linux potentially violates 238 patents”
Steve Ballmer, Microsoft, November 2004
?
We counted over a million lines of code that we
allege are infringed in the Linux kernel today.
Darl McBride September 11, 2003
Oracle vs. Google
Claimed patent infringement and copyright infringement in Android mobile phone operating system
What are the real risks?
Copyright infringement
Patent infringement
Copyright infringement
Two types of copyright user:End-usersSoftware companies/developers
Two types of infringement Inclusion of proprietary code in OSBreach of strict terms of OS licence
End users
Unlikely to suffer a claim anyway – will copyright owners sue potential customers, or the infringing distributors?
SCO only example case. Coders want to replace infringing code!
If breach is of open source code, end users will NOT get suedEven if the distributor is in breach, end user is protected
under GPLOpen source programmers want their software to be usedHow can damages be quantified?
Software Companies
Can ALWAYS remedy a breach of the GPL with payment of zero pounds
But compliance will require them to release source code of derived code, and make it available for no licence fee.
Patent Risk
More difficult to quantify, but no reason should be any different for an open source company than a proprietary company.
Big proprietary suppliers see patents as a lever to scare people away from open source.
In the UK and Europe, relatively fewer software patents than the US, therefore less risk – eg Microsoft has 945 patents potentially affecting the UK, 14,195 registered in the US.
Patent Risk
Even so, patents are a potential risk
Many open source companies have, or have access to, patent portfolios: IBMOpen Invention NetworkPatent Commons Project
the GPL, under which Linux is distributed,
violates the United States ConstitutionDarl McBride, CEO SCO, Open Letter, December
2003
Linus Torvalds (originator of the Linux
kernel):
"If Darl McBride was in charge, he'd probably make marriage
unconstitutional too, since clearly it de-emphasizes the commercial nature of normal
human interaction, and probably is a major impediment to the
commercial growth of prostitution."
Open Source SoftwareAndrew Katz
Moorcrofts LLPwww.moorcrofts.com
[email protected]+44 1628 470003
Twitter: andrewjskatz