Minutes of the Research and Development and Intellectual Property Committee,
June 23, 2005
Co-chair Fernand Lavallee called the meeting to order at 12:11 P.M. Present also were
Herman Levy, Co-chair John McCarthy, Paul McQuade, Michael Nash, Arthur Samora,
Gregory Smith, Sheila Stark, Jerry Walz, Jay Westermeier, David Wheeler, and Diane
Whitmoyer. Participating by telephone were Co-chair Daniel Allemeier, Co-chair Daniel
Doogan, Joan Gildsdorf, Richard Gray, Richard Lambert, Laurie Landgraf, John
Propescu, and Leonard Rawicz.
Handouts were as follows:
1. Minutes of May 26, 2005, meeting;
2. Section 820, H.R. 1815, National Defense Authorization Act for Fiscal Year
2006;
3. H.R. 2795, 109th Cong., 1st Sess., Patent Reform Act of 2005;
4. Luncheon Presentation, New Strategies and Risk Management Practices for Open
Source Software, June 23, 2005, by J.T. Westermeier (slides);
5. Luncheon Presentation, New Strategies and Risk Management Practices for Open
Source Software, June 23, 2005, by J.T. Westermeier (text); and
6. Luncheon Presentation, New Strategies and Risk Management Practices for Open
Source Software, June 23, 2005, by J.T. Westermeier (notepad).
John McCarthy noted section 820 (trademark licensing) (Handout # 2) of the National
Defense Authorization Act for Fiscal Year 2006, saying that so far as he knew it
remained in the Act. John then turned to the Patent Reform Act of 2005 (Handout # 3);
he said that he saw nothing therein of direct concern to government contracting but
suggested a review of it.
Fern introduced the Committee’s guest speaker, Jay Westermeier, a partner in DLA Piper
and past president of the Patent Bar Association, who spoke on open source software
(OSS). OSS is a new area of IP. More and more states are insisting on delivery of OSS,
which has become a major part of the marketplace. The source code is open, which
allows for repurposing, an important matter to keep in mind.
Some open source licenses were drafted not by lawyers, but by engineers. By licensing
its OSS, a company gives up its right to trade secret protection. Mixing proprietary
software with OSS could bring about risk of “litigation or loss of the right to use the
software.” Handout # 4. OSS neither is secret, confidential, nor proprietary; neither is it
in the public domain. Handout # 4. Generally, however, it is regarded as copyrighted.
OSS must be nondiscriminatory, that is, the code may be repurposed (even in politically
sensitive areas). Sometimes a person may marry up a license with another agreement for
which it was not intended. An OSS license, among other things, must not be productspecific and must be technologically neutral (e.g., it may not be tied to a specific
hardware or preclude use of competing software). To date, the Open Source Initiative
(OSI) has approved fifty-seven OSS licenses, generally either protected or non-protected.
The latter may be distributed as binary code. A BSD new license, which is very strippeddown, allows for distribution of OSS as binary.
Jay then discussed copyright licenses. Such a license is written authority of the copyright
owner to the licensee to distribute, etc, the contributions of the owner. Jay noted the
Lucent Public License, version 1.02, in Handout # 4, Handout # 5, pp. 9-10. An OSS
license deals only with the right to create derivative works; nevertheless, if one obtains
software one must distribute it in accordance with the license. Noncompliance could
mean automatic termination of the license and potentially claims for copyright
infringement. Fern noted that this is at variance with both FAR and DFARS. Jerry Walz
observed that one must look at the license as a whole. David Wheeler noted that there
has been little litigation on the subject of breach of license, which is surprising
considering that many agreements are ambiguous. David then observed that many of the
copyrights are owned by The Free Software Foundation, which discourages such
lawsuits. The Foundation presumes that violations are accidental; nevertheless, there is
more and more realization that many violations are intentional.
Jay then turned to trade secrets. When open source implementations are distributed, trade
secrets are forfeited. Handout 5, p. 11. He discussed Computer Associates Int’l Inc. v.
Quest Software, Inc. During discovery the parties noted disclosure of General Public
License code. Because of a GPL exception to the terms of the license in question, the
court found that disclosure did not result in forfeiture of rights. The ruling is significant
in that “[b]y many accounts, open source software has been broadly incorporated in many
software products without the knowledge of company management.” Handout # 5, p. 12.
Jay characterized patents as a major area in OSS. The problem is multi-level distribution;
the license in question may not cover all levels and may change for warranties and other
matters. “IBM has pledged the free use of 500 IBM U.S. patents, as well as all
counterparts of these patents issued in other countries, in the development, distribution,
and use of open source software . . . This patent pledge may lead some companies to
distribute products an open source model to take advantage of the pledge especially
where one or more of the 500 pledged-patents presents potential infringement problems if
distributed under a proprietary software model.” Handout # 5, pp. 15-16.
“Open source licenses do not authorize the use of the licensor’s trademarks to resell or
redistribute the open source software.” Open source licenses generally “do not even
mention trademarks”; if they do, they generally expressly prohibit use of them. Handout
# 5, p. 17.
Jay then discussed software developed under a government contract or with government
funding. In that event, the Government generally obtains “Unlimited Rights” in the
delivered software. Jay noted the Mitre Collaborative Virtual Workspace License
(“Mitre License”), under which the licensee agrees not to charge the Government for any
license or royalties relating to the software. The software “is subject to the Rights in
Noncommercial Computer Software and Noncommercial Computer Software
Documentation Clause (DFARS) 252.227-7014 (JUN 1995).” The ”unlimited data
rights” concept in regard to software developed under a government contract or with
government funding “is very compatible with open source licensing.” Handout # 5, pp.
19-20. Jay’s approach is that under the Mitre License, one may use someone else’s
license and adapt it for one’s own use.
Under the NASA Open Source Agreement Version 1.3 (“NASA License”) the
Government becomes “an intended third-party beneficiary of all subsequent distributions
or redistributions of the subject software.” Therefore, “the open source strategy permits
the Government to leverage, evolve and improve software developed by the Government
without expending additional software development resources.” Handout # 5, pp. 20-21.
When NASA takes a software license, it takes the opportunity to distribute software.
Then there is the matter of export control. Often open source licenses do not address the
issue; those that do so state it “as a ‘warning’ informing the licensee that [it] is
responsible for compliance.” On the other hand, “[o]pen source licenses do not allow any
discrimination against any person or group of persons and preclude the imposition of any
further restrictions not set forth in the license.” Nevertheless, in that the Government has
drafted and promulgated the export control language, the Government might find it
difficult to challenge as inadequate comparable language of an open source license-so
long as “the open source distributor does not knowingly violate existing export control
laws.” Handout # 5, pp 21-22. Sheila Stark suggested that the export controls might
prevail by operation of law.
There also are warranty disclaimers (e.g., Common Public License Version 1.0 and GPL
License, Section 11 (Handout # 5, pp. 22-23), which provide for providing a program on
an “as is” basis unless otherwise “expressly set forth in [the] agreement.” These “are an
essential part of most open source licenses.” Many open source licenses contain a
limitation of liability provision, although many do not. Generally, it is good practice to
avoid entering into an agreement without such a provision. One of the few open source
licenses to expressly cap damages is that of Apple; it limits total liability to $50, unless
otherwise required under applicable law. Handout # 5, pp.23-24.
Other issues have arisen, including license management costs, software compliance
management, risk of abandonment, commercial distribution, software development and
support, and contract protection. Handout # 4; Handout # 5, pp. 24-29. Best practices
are on everyone’s watch list for M&A contracts and mergers. Handout # 5, pp. 30-33.
Jay believes that a scanning technique for OSS will become commonplace; a scanning
technique would enable one to review codes to determine if they are open source.
Jay and Paul McQuade observed that many lawyers see OSS as a Sarbanes-Oxley issue,
in that OSS may evade internal controls. Mergers and acquisitions also raise questions in
OSS. David Wheeler discussed the problems involved with incompatible licenses that
arise with a merger or acquisition. Then there is the SCO litigation. Caldera Systems,
Inc., d/b/a The SCO Group, sued IBM and other companies “claiming that the Linux
kernel contained millions of lines of SCO’s copyrighted code.” Handout # 5, p. 35. So
far, however, SCO has not produced evidence that its code “has been copied into the
Linux kernel . . . [M]ost industry analysts and legal experts believe SCO’s copyright
infringement claims respecting Linux lack merit.” Ibid. Nevertheless, fear of litigation
has induced IBM, Intel, and other companies to establish “a $10 million legal defense
fund to help pay for litigation costs of corporate users of Linux in the event they are
sued.” Id., p. 36.
Jerry Walz noted that many foreign companies have adopted OSS; they feel more
comfortable with it than with U.S. proprietary software. John McCarthy reported that the
FAR Part 27 rewrite is in the pipeline, out of Richard Gray’s hands.
The meeting adjourned at 1:19 P.M. with no July meeting scheduled; the Committee did
not meet in July.
Respectfully submitted,
Herman D. Levy