Subject: RE: Patent-based dual-licensing open source business model
From: "Lawrence Rosen" <lrosen@rosenlaw.com>
Date: Wed, 13 Sep 2006 15:53:01 -0700

> > But there is a more subtle legal issue implied in your question. If a
> > company tells its customers to buy its hardware, then tells them to
> > separately download specific patented open source software in order to
> avoid
> > paying royalties, I think the hardware vendor would leave itself open to
> > charges of contributory or inducing infringement. Our Covenant doesn't
> > protect hardware vendors from this.
> 
> Even if the company is not distributing the software itself?

This is a patent law question. Yes, a company that distributes hardware
(such as a Tivo box) that tells customers to download software specifically
tailored for its box from a specific "unaffiliated" website, is a potential
contributory infringer. On the other hand, if both the hardware and the
separately-downloaded software are general purpose products with other
potential uses (e.g., both the hardware and software are general purpose
commodities), then there is no contributory infringement. So if Linux
(general purpose software) had IC's patents in it, Dell (general purpose
hardware) could suggest that its customers load Linux themselves to avoid
the added cost of Dell shipping a combined product. Think they'd want to
play that way? Don't you think we'd have to negotiate our license fees to
make that combination cost effective for Dell and its customers? License
fees are market-driven.

> Nut this is probably ok for you, patents are usually a way to
> create barriers against small companies anyway.

Then you have either misunderstood our philosophical goals and our Covenant
or believe that this simple Covenant will be harder for small companies to
understand than GPLv3???? :-)

> So you are not even considering a Covenant that covers only embodiment
> in non free software?

Nope, at least not yet. Given the game-playing that companies can do with
free software, that doesn't capture enough commercial uses to make it
profitable to us. We've heard that the conversion rate of dual-licensed
software from free to commercial versions, even driven by strong copyleft
licenses like GPL, is under 4% in many cases. You can't tell me that lots of
deep-pocket commercial companies aren't getting a free ride on free
software!

/Larry


> -----Original Message-----
> From: simo [mailto:s@ssimo.org]
> Sent: Wednesday, September 13, 2006 3:11 PM
> To: lrosen@rosenlaw.com
> Cc: 'Free Software for Business'
> Subject: RE: Patent-based dual-licensing open source business model
> 
> On Wed, 2006-09-13 at 14:36 -0700, Lawrence Rosen wrote:
> > But there is a more subtle legal issue implied in your question. If a
> > company tells its customers to buy its hardware, then tells them to
> > separately download specific patented open source software in order to
> avoid
> > paying royalties, I think the hardware vendor would leave itself open to
> > charges of contributory or inducing infringement. Our Covenant doesn't
> > protect hardware vendors from this.
> 
> Even if the company is not distributing the software itself?
> 
> > I'm trying in these discussions to make it clearer. The input you and
> others
> > are providing is helpful. I do suggest that (1) open source projects
> ought
> > not to worry their pretty little butts about such things, and (2) the
> > companies that make commercial products have plenty of lawyers to
> analyze
> > such questions. I can assure you that these are much easier questions
> than
> > those associated with derivative works and the GPL. EVERY reputable
> company
> > that sells such products in commerce now knows how to deal with patents;
> > they do it every day.
> 
> You are assuming all companies are big sized companies with enough money
> to have lawyers on a regular payroll. But SMEs are completely cut off at
> this point, the risk are too high, and the cost of legal consultation
> too. Nut this is probably ok for you, patents are usually a way to
> create barriers against small companies anyway.
> 
> > I don't call our Covenant free, since I see no reason to adopt a free
> > software definition designed for copyright law that fails to account for
> the
> > value of patented software in commercial products. We adopt the existing
> > definitions only to the extent that you can implement our patents for
> free
> > in free [i.e., open source] software.
> 
> The problem is that you claim or imply the Covenant is compatible with
> Free Software Licenses. It is probably compatible with non-copyleft
> licenses, but it is probably not compatible with strong copyleft
> licenses like the GNU GPL.
> 
> > Here's how we define "open source software":
> >
> >    The term "open source software" in this covenant shall mean
> >    software actually distributed to the public under software
> >    licenses that have been expressly approved by Open Source
> >    Initiative or the Free Software Foundation as of the date
> >    of this covenant, and that provide that every licensee is
> >    free to make copies of the software or derivative works
> >    thereof, to distribute them without payment of royalties
> >    or other consideration, and to access and use the complete
> >    source code of the software.
> 
> In this definition you say: "distribute them without payment of
> royalties", but then you require royalties if you distribute the program
> embedded in hardware. There is a contradiction.
> 
> > That may not agree completely with others' definitions (although, except
> for
> > the phrase "actually distributed to the public" it probably does agree),
> or
> > their interpretations of their own definitions, nor are their licenses
> > necessarily consistent with our Covenant, but we have to build a
> profitable
> > business here consistent with our philosophical goals of promoting the
> > development of technical innovation. Please note from the paper I posted
> > that our objectives are much broader than just free software. Giving
> patents
> > away for free for commercial uses is no way to start that off.
> 
> So you are not even considering a Covenant that covers only embodiment
> in non free software?
> 
> Simo.