Open Source Think Tank: 2010 Legal Issues

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					Open Source Think Tank 2010: Legal Issues

                 Mark Radcliffe
               DLA Piper USA LLP
    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

    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
             • 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
             • SVB has seen very significant growth in new companies: new
               accounts in March 2010 was more than January/February 2010
             • 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
             • IPO market is coming back

    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

    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
    • 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”

    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
    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


    • 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
    • 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


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Description: This summary of Legal Issues in Open Source was presented at the Fifth Annual Open Source Think Tank in Napa on April 15-17.