IP and Commercialization
Seminar Series
Management and Issues for Software - Licensing
in, ownership, open source, EULA’s and other
issues related to the development, use,
distribution and licensing out of software.
We made it!
Preparing for the New Reality
Fall
• Sept. 23
Fundamentals of IP
• Oct. 21
Patents and Patenting
Process
• Nov. 11
Technology
Commercialization and UR
• Dec. 9
How to Find Inventions,
Good Inventions and How
to find Prior Art
Spring
• Jan. 20
Assessing Market
Opportunity of New Tech
• Feb. 10
Working with Third Parties
• Mar. 17
Risk Assessment for Tech
Investments
• April 14
Software and Open Source
Software
12:00-1:00 Wilson Commons, 2nd Floor Gowen Room
Lunch Provided
SW Utopia v. SW Reality
In a perfect world with infinite budgets and infinite
development time, you would write from scratch all
the code for each program.
In the real world of limited budgets and tight
deadlines, you will need to use others code and
software. How you manage that process is
critically important.
Basic questions when managing
software.
Where did the code come from?
Employees?
Contractors?
Licensors (which includes open source)
What do you intend to do with the software?
Internal Use
Distribution
What are the consequences?
Obligations, transfer of rights, etc.
Software Development
Existing
Code
New
Code
End Users
Internal
Commercial
Software
Employees
Open Source
Software
Preexisting
Proprietary
Software
UR
Contractors
End Users
External
Need to manage the software from
developer to end user!
Employee Developed SW
• New Code – Obtaining Title
• Employee Agreement – Obtain ownership
of all IP (CP, Patent, etc.) in work product.
• Work for Hire (Copyright Only!)
• Incorporated Code
• Commercial Code – Obtain license
• Open Source – Understand license terms
• Preexisting Proprietary – Could be from
prior employer, can you obtain rights?
Contractor Developed SW
• New Code – Obtaining Title
• SW Agreement – Obtain ownership of all
IP (CP, Patent, etc.) in work product.
• Work for Hire (Copyright Only!)
• If can’t own, license sufficient rights
• Incorporated Code
• Commercial Code – Obtain license
• Open Source – Understand license terms
• Pre-existing contractor code – Obtain
license!
Best Practices with SW
Contractor Agreements
• Require notice and approval of all 3rd party
software incorporated into deliverables.
• Obtain license to any background IP (both
theirs and any they can sublicense)
incorporated into deliverables.
• Obtain warranty against incorporation of
unapproved 3rd party code.
• Obtain warranty for removal of unapproved 3rd
party code and repair with approved code.
Issues with
rd
3
Party SW
• Can you obtain necessary rights for internal use?
• Can you obtain necessary rights for distribution if
required?
• Who is responsible for bug fixes, updates, integration,
customization, tech support?
• What are the costs, how long will they be performed,
are you entitled to regular updates, forward and
backward compatibility?
rd
3
Party SW Issues Cont.
• Who owns customizations, is there exclusivity
(even for a set time)?
• Who is responsible for IP infringement, can you
get a meaningful indemnity?
• What if the SW supplier fails, can you obtain
access to the source code to continue to
maintain the SW? (Use of SW escrow)
rd
3
The Other
Party Software
– Open Source
Open source software may be free of
cost, but open source is not free of
obligations!
Key Idea
OS is just like any other software –
It is made available under terms dictating user
obligations which must be reviewed to determine:
1. Whether they meet your business requirements,
2. Whether you are able to comply with them, and
3. Whether they require review/approval under
university policies.
The interactions of each use and each license are
unique, this analysis must be done for every case!
Key Ideas
•Open Source is subject to licensing terms.
Can UR meet the obligations today and in the future?
Can UR get the customer to agree to the obligations?
•Open Source can require the transfer of intellectual property
rights.
Transfer can be in many forms
Actual Transfer (obligations to provide new code)
Grant of IP (patent, copyright) license
Forbearance of rights (covenants not to sue)
• Open Source can create issues for continuity of supply and
services
OS comes without warranties or indemnities
OS comes without representations of ownership
What is Open
Source Software?
•Typically called open source, freeware or shareware.
•Source code distributed and available to any and all at no
cost but subject to obligations (licensing terms).
•All users are also free to run, modify, and redistribute the
code subject to the license terms.
•Aggregation of effort by different programmers to a
software program.
Theory – multiple minds create better software.
Different programmers apply their efforts to modify,
support and enhance the program.
Open Source Initiative
•Distribution without charge
•Availability of source code
•Permission to make
derivative works
•Integrity of author’s source
code
•No discrimination against
users/groups
•No discrimination against
fields of use
•Distribution of original
license with product
•License is not product
specific
•No restriction of
accompanying software
•License is technology
neutral
Open Source Software Is
Subject to Licensing Terms
• OSS is free to obtain and use, but is always
subject to conditions (licensing terms)
• User receives software under a license that
permits use and/or distribution with conditions
Without the license, copyright may prevent most
uses, modifications, and further distribution
License terms dictate “open source” conditions
What Are Typical
Open Source Licensing Terms?
•User generally given right to use, copy, modify, and distribute
software, subject to conditions
Distribution less of an issue for internal use (but what
counts as distribution is often very unclear)
•Distributor cannot charge money for license
Can charge for other services or products
•Distributor must allow users to copy, modify, and redistribute
the software subject to the open source conditions
•In some cases, distributor must make source code of software
(original and modifications) available to users and others
What Are Normal Open Source
Licensing Terms? -Continued
“Viral” licenses – Bringing other software into
contact with some open source software turns
other software into open source software
“Not all open source licenses are “viral”
And finally, courts are starting to enforce OS
licenses and various parties are looking to benefit
from finding infringement of open source.
Open Source Licenses are Often Unclear
•Often they are not written by legal professionals.
•Often they have no choice of law, so the same license could be
interpreted very differently in different jurisdictions
•Terminology is often undefined.
Distribution –
Does passing to a different employee count as distribution?
Does passing to a consultant count as distribution?
Does transferring internally between different corporate entities count
as distribution?
I
Integration- Dynamically or statically linked? Any incorporation?
•License may be promoting a particular agenda.
Anarchist licenses – No commercial use permitted
Pacifist licenses – No military use permitted
Possible Risks from Open Source
•No warranty of title
The provider may not actually own or have
the right to distribute the software.
Source of software is not known.
•No confidence that free of patent infringement
No intellectual property indemnities
•No recourse if problems arise:
Legal
Technical
What Are the Potential Problems?
Liability for infringement
Patent
Copyright
Damages
Injunction
Non-IP assertions
Turn proprietary software into open source software (“viral”
licenses)
Unintentional Licensing of IP (Patent licenses)
Ability to pull code/replace functionality
Some licenses terminate when licensee asserts patent
Assessing Risk
When Considering OS
LESS RISK
TYPE
OF
USE
All Internal
Use
(example,
testing)
CRITICALITY
OF
USE
Small feature,
easily
separable,
alternatives
readily
available
MORE RISK
Internal Use to
Provide Service to
Customer
Important Feature,
well integrated,
alternatives available
but time consuming
to implement
Distribute in
Product to
Customer
Basic Function required
for operation, highly
integrated. Alternatives
very difficult and time
consuming
Example of using and
OS and possible consequences
• A UR employee downloads open source software
• The employee attaches UR code or code from another source to the
open source software
• UR uses resulting software
Internal use only (no distribution)
Risk is likely lower, distribution often triggers most onerous
requirements
Distribution to customers
Risk is higher, likely obligations to share at least
improvements if not all other integrated software.
Exposure is higher to IP infringement claims. Risks of
disruption are higher due to lack of technical support or
immediacy of technical support.
Open Source Licenses
Several varieties of licenses
“Viral”
Non-Viral
Some open source software may be distributed
under multiple licenses
Terms of alternative licenses may be
advantageous, select the one best for your
circumstances
Types of Open Source Licenses
Viral
GNU GPL, Lesser GPL
IBM
Mozilla
Apache (1.1 is non-viral, all others viral)
Non-Viral
BSD
MIT
W3C (WorldWideWeb Consortium)
“Viral” Open Source Software
Imparts “open source” status on other
software that “comes into contact” with it.
An important issue is the interpretation of a
“derivative work” under copyright law, and
interpretation varies by jurisdiction.
Risk – “proprietary” software becomes “open
source” software
OS Licenses –
An Example - ZLib
This software is provided 'as-is', without any express or implied
warranty. In no event
will the authors be held liable for any damages arising from the use of
this software.
Permission is granted to anyone to use this software for any purpose,
including commercial
applications, and to alter it and redistribute it freely, subject to the
following
restrictions:
1. The origin of this software must not be misrepresented; you must
not claim that
you wrote the original software. If you use this software in a product,
an acknowledgment
in the product documentation would be appreciated but is not
required.
2. Altered source versions must be plainly marked as such, and must
not be misrepresented
as being the original software.
3. This notice may not be removed or altered from any source
distribution.
A Common OS License:
GNU GPL – Viral
What software is virally infected?
Incorporated into GPL software
“Derivative Work under Copyright Law” (GPL
Section 0)
“Modified” GPL files (GPL Section 2)
“Conventional Wisdom”
Dynamic linked files, are not infected.
Static linked files are infected.
A Common OS License:
GNU GPL – Viral - Continued
GNU GPL has different Versions
Version 2:
If the appropriate steps are taken and the linking is
performed correctly, it is possible to distribute
products having OS licensed under Version 2.
Version 3:
As a practical matter, it is difficult to distribute
products having OS licensed under Version 3.
(However it can be possible to use OS under version
3 for internal purposes or internally to provide
services to UR customers in some circumstances)
Risks/Benefits of Open Source
Benefits
Cost
Speed
Risks
Failure to comply with license
Virally infect other UR software
Infringe 3rd party intellectual property
Inability to sell resulting software
Costs saved in development may be costs spent
in compliance and profits lost in sales.
OS Best Practices
Documentation of all licensing terms
at time of down-load.
Softcopy – Good
Documentation of exact code downloaded (unmodified)
Archive exact version of open
source software
Hardcopy – Better
Softcopy- Yes!
No hyper-links!
Hardcopy (if reasonable)
Have an Archive where the license
can be retrieved for review and
compliance (The same software
with the OS can be in many later
generations of products)
No hyper-links!
Other Forms of Open Source
- Cloud Computing
Cloud Computing is a form of Shareware – Free
(often) to use the service but includes licensing
terms and obligations.
Companies offering Cloud Computing include
Google, Amazon, MS, etc.
Use of Cloud Computing should be treated just
like the use of any other open source software
and is subject to the same UR requirements.
Compliance
• A key part of any SW management plan is
compliance with all licensing terms.
• That includes all licensing terms, both open
source and commercial license terms.
• Compliance includes internal behavior (both
management and internal end users) but to the
extent possible, behavior of 3rd party end users.
Compliance with all licensing terms
(Open Source and Commercial SW)
Understand all terms and required actions.
Obligations to include notices/disclaimers/licenses in
code, documentation or as specified
Build compliance as much as possible into the actual
software.
Draft software to minimize compliance issues and
negative consequences. (Particularly consequences
of viral open source terms)
Flow through of
licensing terms to final product
Make all downstream software engineers aware of
presence of open source software and licensing
terms.
Make launch team aware of presence of open
source software and licensing terms.
Comply with all notices and other requirements of all
licenses, and monitor compliance.
Other Related SW Issues
The End User License Agreement
(EULA)
• How do you get the end user to read the EULA
and agree to the terms?
• Common forms are shrink wrap, click wrap,
other forms of obtaining agreement.
Other Related SW Issues
Royalty Triggering Events
• What triggers the payment of a royalty?
• Manufacture, use, sale, ???
• Can you comply with the royalty trigger?
• Have you considered the entire life cycle of a
product and how that may or may not trigger
another royalty payment?
URVentures Intellectual Property and
Commercializing Technology
Lecture Series
September 2014 – April 2015
Sponsored by Dean for Research Office
Arts, Sciences & Engineering
THANK YOU!