Relationships Matter

After a couple of postings focused on the state of the open source business, I would like to pick up the theme of earlier postings concerning fundamental legal considerations for open source businesses.

Good businesses are built on good relationships ... relationships with customers, partners, and employees. Open source companies have another important relationship to consider ... the community. In the spirit of the old adage "good fences make good neighbors," contracts, instead of wood or brick, help keep good relationships from going bad. While contracts are well accepted in customer, partner and employee relationships, they are not as effective in a community relationship. Whether through contracts or other means, open source companies must address the unique demands they face in balancing their profit motives with open source ideals.

The most fundamental of all business relationships is between vendor and customer, and standardized contracts are a well-accepted means of describing the expectations of these parties. While the commercial contracts of open source companies are generally the same as for proprietary companies, certain virtues of the open source development model allow open source companies to sidestep or minimize the many traditional commercial software contract clauses. For example, the availability of free software before purchase often makes customers less worried about issues like evaluation licenses, performance and ownership warranties, broad indemnification rights, and licensor liability obligations.

Partner relationships of all sorts (marketing, distribution, inbound licensing, joint development, etc.) also are commonplace in the open source business and typically addressed through standardized contracts. Because partners, like customers, can get the value of open source software without paying for it, open source companies must present additional value (such as marketing or referral benefits) compelling enough to entice partners to enter into agreements that provide adequate protection. Specific clauses might include prohibitions on forking the code or creating an unauthorized solution, or an obligation that a partner's solution must always be available under an open source license.

Employees are the most important assets of any technology business. As a result, employment agreements, related agreements governing ownership of inventions created by employees, and confidentiality agreements are regularly used. The traditional templates for these types of agreements are, however, at odds with the open source ideals of community participation because employees of open source companies are also members of the community. As a result, open source companies must challenge themselves to rethink the traditional scope of employer ownership rights and level of oversight in employee participation in outside projects and implement appropriate legal agreements and company policies. This type of flexible approach also has the benefit of being a great tool for recruiting potential employees from the community.

A community relationship is different than the other relationships above in that an open source company can't rely on a contract to set expectations ... the community has no single point of contact that can enter into contracts, and the relationship is based on a constantly evolving application of open source principles as well as trust established over time. However, a company's contributor agreement, the one important community-oriented legal agreement, should reflect community ideals such as by granting contributors joint ownership or broad usage right in contributed code. The community also looks to a company's position on patents as an indication of open source friendliness so a carefully considered patent policy is important see my previous post on patents for more on that). In general, open source companies need to establish a clear business strategy that incorporates open source principles, and be able to clearly and tactfully articulate why the community should accept a particular business decision even when it might conflict with open source ideals. Decisions as to when and how to enforce violations of open source licenses, or when to introduce closed source code into an open source solution are among of the most difficult for the community to accept, but a strong community relationship will help.

Each of these 4 relationships are vital to the success of an open source business. While contracts can play a primary role in open source companies and their customers, partners and employees being "good neighbors," the community relationship, by its very nature, is less predictable and requires trust along with the proper balance between sincerity in honoring open source principles and conviction on business strategies that might be seen as contradicting open source values.