Open Source Think Tank 2010: Legal Issues
Mark Radcliffe
DLA Piper USA LLP
Mark.radcliffe@dlapiper.com
Global Locations
• A global organization
• 67 offices in 29 countries
• 3,500 lawyers
• 8,000 people worldwide
• Over 1,500 lawyers on
each side of the Atlantic
• Major presence in Asia
• Only global law firm with
strategic focus on
technology and emerging
growth
10460427.1
Venture Capital Investing
• Despite a downturn in the amount of venture capital investments:
$17.7B in 2009 down from $28.8B in 2008, but is very similar to
1997/1998
• Open Source Venture Investments (451 Group):
• 37% down from 2009 over 2008
• 37.9% up in Q1 (2010) from Q4 (2009)
• Silicon Valley continues to dominate the industry with 40% of 2009
deals
• SVB has seen very significant growth in new companies: new
accounts in March 2010 was more than January/February 2010
combined
• Q4 reflects an upturn in the number of deals from Q3 but a downturn
in the amount invested in Silicon Valley
• For Q4, software continues to be the largest sector with life science
a close second. In Q4, venture capitalists invested in 177 deals
(21% increase from Q3) and 619 deals in 2009 (down 40% from
2008).
• IPO market is coming back
10460427.1
2009: Legal Year in Review
• Jacobsen decision undercut by District Court
• Standard for injunctive relief set very high
• Remedy issue
• Copyright: injunctive relief/statutory damages
• Contract: monetary damages
• Case settles with payment to Jacobsen
• SCO challenge to Linux rises from the dead, but is finally interred: jury finds
against SCO
• Patent Litigation by Microsoft against TomTom
• Trend or exception
• First commercial open source software enforcement suit: Artifex vs. Palm
• Enforcement of GPL for Busybox continues: SFLC files against fourteen major
companies, including Samsung and Best Buy
10460427.1
2009: Legal Year in Review
• EU delays Oracle/Sun merger due to concerns about
MySQL and open source
• Open source litigation expands beyond Germany,
Isreal and US: decision in France
• SFLC publishes new exception for GCC, now under
GPLv3
• ALI publishes “Principles of Software Licensing” with
major risks to industry formally adopted
• Non disclaimable warranty of non infringement
• Non disclaimable warranty of “no hidden material defects”
10460427.1
2010: New Legal Issues
• Patents & open source: TurboHercules and IBM
• Rise of hybrid products and potential for conflicting
license obligations
• New world: open source in the cloud
• Increased scrutiny in use of open source in supply
chain: diligence form and Motorola initiative to
coordinate the approach
• Greater scrutiny in M&A: possibility for increase in
amount of escrow and period of holdback
• Contribution agreements: assignment v. license
• More tools: Binary Analysis Tool Released Today
10460427.1
Reasons for an Open Source Policy
• Role of a policy
• Manage risk
• Ensure strategic flexibility
• Unusual OSS risks
• Automatic termination of GPL
• Uncertain scope of GPL
• Broad scope of patent termination in MPL
• Forking of code
• Customers are demanding to know what is in your product
• Compliance important for financings/M&A
• IT staff turn over and difficulty of following up
• SFLC becoming more aggressive (Samsung, Best Buy)
• SFLC requiring an “Open Source Compliance Officer” as part of settlement
10460427.1
Conclusions
• Open source is ubiquitous: pure “commercial” software companies do
not exist even Microsoft calls itself a “hybrid”
• Companies are asking about open source in inbound products: more
diligence in the supply chain
• Consumer and vendors of software should have an open source
strategy;
• Mistakes can be expensive because of more litigation
• Open source issues spread throughout corporate life:
• M&A
• Litigation settlements
• Many critical issues remain uncertain
• What business models will be successful
• Role of governments
10460427.1