Open Source Update

Most commercial software is developed by a single business entity and then licensed to end users subject to restrictions on use, copying and redistribution. It is commonly distributed in machine-executable, object-code form instead of a form which can be more easily interpreted and modified by humans (known as “source code” form) and in such instances the licensee is also contractually prohibited from reverse engineering the code (back into source code form). The inner workings are therefore kept secret and any changes or enhancements require the assistance of the licensor.

However, there has been a movement in recent years to develop software in a collaborate manner, with many different developers each developing pieces, with everyone sharing access to the source code and with everyone being able to obtain the benefits of any future improvements. Such software is commonly referred to as open source software.

The GNU General Public License (GPL) is the most pervasive form of license for open source software. GPL obligates parties who wish to redistribute any software licensed under it, either in original or modified form, to do so under the terms of the license pursuant to which the original software was received. So if a developer modifies open source software that was subject to a license which allowed others to use, modify or redistribute the software without needing the permission of, or having to compensate, the original developers, the modified version must also be distributed on the same basis. The best known example of open source software is Linux, an operating system which competes with Microsoft Windows and was originally modeled after another operating system called Unix.

So basically, under the GPL, the licensor permits the licensee to exercise virtually all of the rights available under copyright with the only obligation being that if the licensee wishes to distribute the software, they must agree to also distribute it under the GPL and grant similar rights to others. However, a licensee is not required to grant any rights to others if it chooses to use the modifications only for itself and to not distribute the modified code to others.

Open source provides users with a number of important advantages – including the ability to acquire programs at low or no cost and the ability to made modifications and enhancements. Unless a user wishes to further distribute the software, there is no obligation to disclose or share enhancements made for their own internal use.

The SCO Group, which acquired rights to Unix through a series of corporate transactions, has sued IBM for dumping allegedly confidential Unix code into Linux. SCO is claiming $3 billion in damages from IBM for breach of confidentiality and wrongful disclosure of Unix code it claims it owns. IBM has denied these claims and filed counterclaims against SCO alleging breach of contract, patent infringement and unfair competition.

SCO has also sued DaimlerChrysler and AutoZone for deploying Linux systems without an SCO license. With Linux becoming common on network servers of major corporations, SCO sent letters to about 1500 large companies demanding they pay per server licensing fees or face legal action

Despite repeated requests, SCO has to date refused to identify the portions of Linux that were allegedly were copied from Unix. This has let some to accuse SCO of being more interested in shaking down Linux users than protecting their copyrights. At least one law professor has also commented that SCO may have difficulty succeeding with their claim because the company has distributed Linux versions under a GPL that requires contributors to renounce their rights to any parts of the system.

The law suits have caused a concern in the open-source movement and may slow commercial acceptance of Linux which has been gaining market share at Microsoft’s expense. They have also highlighted the greater liability risk that arises from using software which contains contributions of software code from thousands of individuals, some of which may be original and some of which may have been misappropriated. They should also sound a warning bell to large companies that as users they are not immune from infringement liability and consequently the importance of negotiating sound intellectual property indemnities in respect of any third party software they license.

Note: The above appeared as an article published by The Lawyers Weekly in June , 2004.