What do I need to know regarding how I can customize my Open Source System? Copyright ownership is one of the most prominent legal issues facing the software industry today, and ownership questions can get especially complicated when customization of open source software is involved. Copyright law protects original works of authorship, including books, recordings and software, once they are fixed in a tangible medium, such as a manuscript, compact disc or floppy. In general, the creator of the work will hold the copyright unless the “work for hire” rule applies or an agreement to the contrary (such as an assignment of these rights by the vendor) exists. Works for hire and derivative works: If a work is “made for hire,” the employer, and not the employee, is considered the author. The employer may be a firm, an organization, or an individual. Copyright law seeks to protect independent contractors through the work-for-hire doctrine by treating independent contractors differently from employees. Absent a written assignment of copyright interest or unless there is a written acknowledgement that the software is considered to be a work for hire and the work fits within one of several, narrowly defined categories, the independent contractor will own the copyright. The guidance goes on to state: Whether or not a particular work is made for hire is determined by the relationship between the parties. This determination may be difficult, because the statutory definition of a work made for hire is complex and not always easily applied. That definition was the focus of a 1989 Supreme Court decision (Community for Creative Non-Violence v. Reid, 490 U.S. 730 ). The court held that to determine whether a work is made for hire, one must first ascertain whether the work was prepared by (1) an employee or (2) an independent contractor. If a work is created by an employee, part 1 of the statutory definition applies, and generally the work would be considered a work made for hire. Important: The term “employee” here is not really the same as the common understanding of the term; for copyright purposes, it means an employee under the general common law of agency… If a work is created by an independent contractor (i.e., someone who is not an employee under the general common law of agency), then the work is a specially ordered or commissioned work, and part 2 of the statutory definition applies. Such a work can be a work made for hire only if both of the following conditions are met: (1) it comes within one of the nine categories of works listed in part 2 of the definition and (2) there is a written agreement between the parties specifying that the work is a work made for hire.” Any work created, in whole or in part, by an independent contractor without a written copyright assignment may be problematic. If the vendor is creating customization of public domain software, in the absence of appropriate legal provisions in the contract, the vendor, not the user, may be deemed the owner of the modification, notwithstanding that the user paid for the customization as part of the project. This may be a significant consideration if federal grant funds are used to pay for this cost. What Do I Need To Know Regarding How I Can Customize My Open Source System? Page 2 Complication can arise if the vendor is not the true owner of the copyright of any modifications incorporated into the open source software. In this situation, the user may be subject to a copyright infringement suit for its use, copying, modification or distribution of this modification. The federal copyright law provides that the copyright in a derivative work extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material. The copyright in the derivative work exists independent of, and does not enlarge or otherwise affect the scope, duration, ownership, or subsistence of, any copyright protection in the preexisting material. The bottom line, then, is that a licensee granted ownership rights in a derivative work owns a copyright only in the new matter contributed, not in the preexisting materials upon which the derivative work is based. This distinction has significant ramifications for the licensee. While the licensor may be willing to grant ownership rights to the licensee in derivative works, it typically retains all copyrights in preexisting works. So, upon termination of the license agreement, where does that leave the licensee? Because a derivative work is based upon, and typically incorporates some or all of, the licensed software, it is imperative that the licensee has the right to continue to use the underlying software in its derivative works during, and after termination of, any license agreement. If the license agreement is silent on the issue, upon termination of the license agreement, the licensee would be left with ownership in and the right to use only the derivative work (i.e., the new material it contributed). In reality, however, the new material alone might not have any utility apart from the underlying software. It is crucial, therefore, that the licensee make sure that it will have the right to use the preexisting software even after termination of the license agreement. Obviously the licensee would prefer to have ownership of the copyright in the preexisting software, but that is unlikely to happen. The licensee's next best option would be to have a perpetual and irrevocable license to use the preexisting software beyond the term of the license agreement. While an exclusive license would be preferable, the licensee most likely will have to settle for a non-exclusive license.
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