Open Source Legal Update: 2012 at Open Source Think Tank Napa

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					Open Source Think Tank 2012: Legal Update

Mark Radcliffe, Partner
DLA Piper, Silicon Valley Office
Global Platform

                   Largest law firm in the world
                    with 4,200 lawyers in 30
                    countries and 76 offices
                    throughout Asia, Europe,
                    the Middle East and the US
                   1st in M&A deal volume
                   Ranked #1 among the
                    world’s leading global law
                   1st in Venture Capital and
                    Private Equity deal volume
                   Ranked in the top 5 for US
                    IPOs by US Issuer Adviser
                   More than 550 DLA Piper
                    lawyers ranked as leaders
                    in their fields
Global IP and Technology Practice

 More than 400 IP and Technology lawyers – 56 offices in 24 countries
 Highly-ranked, full service, global IP practice
    Litigation, prosecution and transactions
    Patent, trademark, copyright, trade secrets, domain name, Internet, anti-
     counterfeiting, anti-piracy, privacy
    Acquisition, development, licensing, enforcement, technology transfer
 Global patent litigation and patent enforcement
    United States     Netherlands      Australia
    Germany           Italy
    UK                Asia

 Full service law firm advantage – benefit from cross-practice
  knowledge base
    Regulatory and government affairs, litigation, antitrust, etc.

2012: OSS Has Arrived

 Red Hat announces $1.13 Billion year from “free” software
 Jim Whitehurst:
   “The strength of our fourth quarter was a fitting conclusion to a
    remarkably strong year for our business. Our investments to
    expand our geographic sales footprint and add sales people with
    targeted industry and product knowledge has accelerated our
    growth,” stated Jim Whitehurst, President and Chief Executive
    Officer of Red Hat. “Red Hat is the first pure-play, open source
    company, and one of only a select few software companies, to
    have achieved the billion dollar revenue milestone. The open
    source technologies which we provide are being selected by more
    customers every day as they re-architect the infrastructure of their
    data centers for greater efficiency, agility and cloud enablement.”

2012: The Future is OSS

 Corporate use of OSS as a strategy
 Collaboration: Learning New Rules
 Major potential legal shift
    Copyright Protection of API (Oracle v. Google)
 Cloud standard wars
 Patent wars
 OSS Management
    Demands becoming ubiquitous
    New tools
       SPDX
       Project Harmony

2012: Year of Corporate Engagement

 OSS as Critical Part of Innovation Strategy
   Hewlett Packard: WebOS
   Genivi
   Yahoo: Hadoop (Hortonworks)
   Rackspace/NASA: OpenStack Foundation
   NYSE: OpenMAMA
 Microsoft Reorganization (effect uncertain):
   The (Open Technologies) subsidiary provides a new way of
    engaging in a more clearly defined manner. This new structure will
    help facilitate the interaction between Microsoft's proprietary
    development processes and the company's open innovation efforts
    and relationships with open source and open standards

Business Imperatives to Survive and
Thrive: Collaboration

 HBR: Innovation through Global Collaboration: A New
  Source of Competitive Advantage (2007)
   Complexity of products, so one firm cannot master all
    of the skills
   Growth of skilled labor in developing countries
   Emergence of unique skills and capabilities in other
   Cost of coordination of distributed work has gone down
    due to open architectures and technology
   In sum, collaboration is no longer a “nice to have.” It is
    a competitive necessity.

Goverance: Critical Decision Points

 What do you make open
    Goals
    Differentiation
    Community
    Strategy
       Entire project: Yahoo (Hadoop), NYSE (OpenMAMA)
       Gradual: NetFlix
 Project Characteristics
    Community
    Ensuring “fairness” for various constituencies
 Corporate governance
    Linux Foundation/Apache
    Separate foundation
    Manage internally

Strategic Challenge: IP &

 IP is valuable
    $1.1 Billion sale of patents by AOL to Microsoft
    $4.5 Billion sale of Nortel patents
    $40 Million sale of Friendster patents
 Corporate attitude
    IP is valuable, we need to own it
    If we pay for it, we own it
 Collaboration requires “sharing” and ownership shifts
    Ownership of platform IP (what is platform, what is app?)
    Use of technical solutions: API/technical design
    Linux example: Linux: 10,000 contributors and 70% of contributions from
     large companies such as IBM, Intel, SGI, MIPS, Freescale, HP and more
     than 500 other companies
 Critical Lesson: Need to learn a new IP strategy for collaboration

IP & Collaboration: Companies need
to Rethink their IP Strategy

OSS Goverance: OpenStack
Foundation Model

Project management: Project
 Technical Lead
Project Planning Board
Advisory Board

OpenStack Foundation Goals

 Make OpenStack the ubiquitous cloud operating system
 Deliver high quality software releases that companies can rely
  on to run their business
 Ensure interoperability among OpenStack clouds
 Nurture a healthy community, with broad participation and a
  sharp focus on the OpenStack Mission
 Grow the ecosystem around OpenStack to strengthen the
  platform and provide opportunity
 Build and protect the OpenStack brand to the benefit of the
  community's participants

OpenStack Foundation

 One of the Foundation's main purposes is to empower and
  coordinate the resources of the community effectively, providing
  leadership in key areas that are required to fulfill OpenStack's
 Development process and release management
 Developer, user and ecosystem community management
 Meet the needs of real world users by producing great software, and
  fostering their involvement in the community to provide feedback and
 Brand management (PR & marketing, trademark policy)
 Event management (Twice-annual Summit & Conference, meetups
 Legal affairs (CLA process and docs, trademark defense)

OpenStack Foundation: Public Policy

 Definition and ownership of the OpenStack mission and vision.
 Coordination and alignment across OpenStack projects and
  community driven requirements.
 Managing the process for adding additional projects both to the
  incubation program and to the core set of projects, assuring
  compatibility with OpenStack's mission.
 Ensuring inter-project architectural consistency and coherent API
 Establishing policies to maximize efficiency across projects and
  assuring compatibility across projects.
 Board
    All PTL
    Five elected members
    Four appointed members (Rackspace)

OpenStack Foundation: Project

 "Each project community should be self-managing by the
  contributors, and all disputes should be resolved through
  active debate and discussion by the community itself."
 Led by Project Technical Lead (PTL)
 Elected every six months.
 Nominations/elections
   Nomination: 5 weeks prior to design summit
   Election: 4 weeks prior to each design summit
   Elections held open for no less than three days

Advisory Board Goals

 Provide guidance on the OpenStack mission
 Provide guidance on the OpenStack governance structure
 Provide guidance on the OpenStack brand usage guidelines
 Provide guidance on increasing OpenStack adoption
 Evangelize on behalf of OpenStack

2011 Legal Developments

 New Version of MPL
    Patent provisions (Apache)
    Termination (GPLv3)
    New approach to license incompatability
 Android litigation continues
    Google buys Motorola Mobility
    Oracle v. Google
 Remedy changes: loss of automatic injunction for copyright
  infringement (Perfect 10 v. Google)
    : We therefore conclude that the propriety of injunctive relief in cases
     arising under the Copyright Act must be evaluated on a case-by-case
     basis in accord with traditional equitable principles and without the aid of
     presumptions or a “thumb on the scale” in favor of issuing such relief.

Navigating the New World of OSS: The
Future is Foggy

Oracle v. Google

  Copyrightability of APIs
    Conceptually, an API is what allows software programs to
     communicate with one another. It is a set of definitions governing
     how the services of a particular program can be called upon,
     including what types of input the program must be given and what
     kind of output will be returned. APIs make it possible for programs
     (and programmers) to use the services of a given program without
     knowing how the service is performed. APIs also insulate
     programs from one another, making it possible to change the way
     a given program performs a service without disrupting other
     programs that use the service.
  Potential for major change in scope of “derivative
   work” under GPL licenses
  Potential for API Wars

Cloud Standard Wars (next year, API

Open Stack
Cloud Stack
OpenNebula (Europe)
Companies to watch
   VMware
   Red Hat
   Nimbula, Nebula, Piston, Cloudscaling, Morphlabs

Patent Wars

Patent Wars: Shareholder Pressure

 Carl Icahn to Motorola Mobility (July 21, 2011)
   “patent portfolio, which is substantially larger than Nortel Networks’
    and includes numerous patents concerning 4G technologies, has
    significant value … There may be multiple ways to realize such
    value given the current heightened market demand for intellectual
    property in the mobile telecommunications industry.”
 Starboard Value LP to AOL (Feb 24, 2012):
   “(i) a significant number of large internet-related technology
    companies may be infringing on these patents, and (ii) AOL's
    patent portfolio could produce in excess of $1 billion of licensing
    income if appropriately harvested and monetized. Unfortunately,
    several of these parties have expressed severe frustration that
    AOL has been entirely unresponsive to their proposals regarding
    ways to take advantage of this underutilized asset”

Patent Wars

 Android patent wars continue
   Microsoft has licensed its patents to device manufacturers who make 70%
    of Android phones
   Possible settlement by Apple
      Steve Jobs: "I'm going to destroy Android, because it's a stolen product. I'm
       willing to go thermonuclear war on this.”
      Cost $400M (Professor Lemley, Stanford)
      March 2012 (Bloomberg): People familiar with the situation, however, note that
       top-level executives at both Apple and Samsung have communicated lately
       about potential settlement options. Apple CEO Tim Cook does not seem to
       share his predecessor's passion about laying all foes to waste. Cook appears to
       view litigation as a necessary evil, not a vehicle of cosmic revenge.
 Companies Reloading with More Ammunition
   Google: Motorola
   Microsoft: AOL

Patent War Lessons

 OS Projects and Companies Need a Patent Protection
   Moral objections will not help if you get sued
   Cold War: need to get armed
 Android History
   On launch, Google had 600 patents (few or none in mobile)
   Motorola Purchase: $12.5 Billion
 Learning from Android: Facebook
   Buying patents from IBM, Friendster & others
   Yahoo litigation: Facebook counterclaim used 75% purchased
 New Strategy: File early, but look to buy

OSS Policy

 OSS is everywhere
 Buyers are demanding to know
 Venture capitalists are demanding as part of financing due
 Acquiring companies are demanding
 Industry initiatives
    SPDX
    Project Harmony

Overview of Open Source Policy

 Cross Functional Team
     Product Planning/Management
     Legal, Security & Export Compliance (including encryption)
     Engineering
 Integrated Processes
     Component Evaluation, Selection and Management
     Community interaction and contribution Management
     License Management
     Release Management
        Release Planning
        Release Delivery
     Security Review
     Export Compliance Review

Best Practices: Strategy

 Systemic
   Baked in to the culture & workflow
   Event Driven
      Component approval request
      Planning a release
      Accepting a code drop from a vendor/outsourcer
      Performing a build
      Creating a release
 Embrace Supply Chain Techniques
   ERP systems brought together different users and processes
   Workflow automates task creation
      Notifications
      Process Monitoring
   Central repositories of data
   Business Process Integration is the key

Best Practices: Structure

 Define criteria for approved software
    Licenses
    Use (internal/product/website)
    Sources
    Support
    Other
 Define criteria for unapproved software ?
 Consider use cases: internal use, hosted applications, distributed software
 Consider scope of application: internal development, independent contractor,
  outsource vendors, M&A
 Define conditions for participating in the Open Source Software communities
 Employee Education
    No compliance without education

Best Practices: Coverage

 Define how development teams and other functions
    Search, select, approve, track, validate, track & monitor
 Inbound approval processes
    Code from internal teams, external sources
 Outbound compliance processes
    Distributed code
 Create a baseline of your code
    Prioritize
    Perform code analysis
    Plan remediation
    Document the origins of the code base
    Determine all components and licenses in use
    Verify usage is approved
    Create a catalogue of approved components and licenses
 Validation processes

Common Mistakes in OSS Policies

 Legalese: make it understandable
 General policy intended for certain products/business model/groups
 Failure to cover all sources of software
    Consultants and contractors
    M&A
    Third party licensors
 Policy too strict or impractical, so VOA: Violated on Arrival
 Does not allow for edge cases
 Does not provide for modification to meet changes
    Business model
    Product lines
    Development approaches
 Lack of continuous education and management attention


 We won, but new issues arise
 Governance is a critical new issue
 Change IP strategy for collaborations
 Watch the Google case
 Arm yourself for the patent wars (prosecute and consider
  buying patents)
 Management of OSS evolving (new tools, such as SPDX)


Description: This presentation summarizes the legal developments in open source software during the last year.l