Copyrights: Alive and Kicking in Open Source

As mentioned in my previous post, this is the first in a series of posts about the role of intellectual property rights in open source businesses. Copyrights and copyright ownership are a significant part of all open source businesses and are as relevant today as ever before.

In a world where the most popular open source license (the GNU Public License) embodies the philosophy of "copyleft," it would be easy for an open source company to ignore the value of copyrights and copyright ownership. It is even easier to ignore copyright ownership with the great success of a company like Red Hat whose business is built on a foundation of software with so many copyright owners that the concept of ownership becomes virtually irrelevant. In spite of this, open source companies must make copyrights and copyright ownership a top priority, and must implement business policies that protect and exploit copyrights as necessary to make their chosen open source business models effective.

Copyright ownership seems "old school". For decades, proprietary software companies have tightly controlled their copyrights in, and generated revenue by, granting limited scope usage rights to customers. The rise in popularity in open source business models in recent years has changed the way software companies use copyrights and the rights they grant to customers. Companies that license their software as open source, by definition, can't prevent others from exploiting their copyrights to make a better product, or by setting up a consulting or service business based on the same software. Differentiation is the only way an open source company can survive in this environment, and copyright ownership is a critical element of differentiation for any open source business models.

Most open source business models roughly fall into two categories: dual-license or service-oriented. Open source companies that retain ownership of copyrights (either by creating code themselves or through an assignment of rights from contributors) can implement a dual licensing model. While the purists in the open source world might see the use of closed source value-add components as a contradiction to the open source values, realists recognize that the value and quality of open source software cannot be sustained unless a revenue stream accompanies it. The dual license model gives open source companies that own copyrights incredible flexibility. Not only can they license their software to companies that would not typically entertain use of open source software by providing a closed source license, but they can also develop add-on components that retain the open source nature of the core software while generating value that was not previously there.

Open source companies that implement a service-oriented business model can also benefit from copyright ownership and differentiation. These companies can extend the value they provide beyond their services by creating their own add-on components for which they own the copyrights. These components can be licensed as closed source, or under a dual-license model, which gives an open source company a new level of flexibility.

Open source companies with all levels of revenue can enjoy the good news that copyrights are generally easy to protect and exploit. They are created spontaneously upon creation of copyrighted work and can be exploited through basic license agreements or through transfer of ownership. Registration of copyrighted material, which enhances a company's ability to enforce copyright infringement claims, takes very little time or money. Even in cases where copyright ownership is not deemed important as a primary business strategy, open source companies should pursue ownership and protection of copyrights to the greatest degree that makes sense for the chosen business model to preserve flexibility and enable differentiation.

In my next post, we will look into possibly the most important intellectual property right of all for open source companies: trademarks.