For All the Law Students Interested In Open Source

I recently met several law students who are interested in intellectual property law and the open source business. I was impressed with their awareness of the impact of open source on the technology industry, and happy to see how interested they were in learning more. In response to their questions on how to develop the skills needed to focus on open source, I have advised students that no pre-defined path of classes or experience leads to expertise, but there are several activities to emphasize as they progress in their journey towards finding their niche in the legal community.

A. First and foremost, all students interested in open source must have a solid foundation in intellectual property law. Open source business models arose as novel ways to utilize traditional proprietary rights. For example, the GNU General Public License ("GPL"), the most well known and widely used open source license, relies on a liberal grant of the rights held exclusively by a copyright owner to ensure that software users have a maximum amount of freedom to use open source software. A thorough understanding of copyright law is critical to understanding the impact of "copyleft" licensing.

B. Of equal importance to students is understanding contract law and having strong contract drafting and interpretation skills. Using the GPL as an example again, the copyleft effect only works because the license is drafted in such a way that passing along the rights granted under the license to subsequent licensees is a condition of the license grant. (See Mark Radcliffe's commentary on the Jacobsen v. Katzer case, which hinged on the "conditional license" issue.) In other words, the contract is written to enforce the viral nature of copyleft licensing. The conditional nature of most open source licenses means that contract interpretation skills are critical. A legal interpretation of a particular open source license must take into account the contractual conditions and obligations along with the broader context in which the licensed components are used.

C. As in any endeavor requiring legal analysis, a lawyer must always look beyond the relatively narrow context of "the law" to recognize and understand the bigger picture and real world consequences of legal conclusions. This is particularly true with open source businesses because the goal of businesses to generate revenue contradicts the act of giving something away for free does and open source technology must be used to generate revenue in other ways. In addition, open source businesses are heavily tied into their corresponding development communities and open source solution partner networks. The choice of an open source license, or a division of features between open and closed source versions of a product, and other such decisions open source companies must make have significant impacts on the viability of an open source business.

D. A more practical point for law students is to look for internships and clerkship opportunities with companies and law firms known for open source expertise. My employer, Sun Microsystems, for example, is a leader in the open source community and typically offers internships to several law students each year. These students get to see the details behind the hard decisions that business units make in guiding their open source activities. They also get to research details of the law as applied to open source issues, which gives them a level of expertise in a particular subject matter that can follow them the rest of their career.

E. Attend conferences and talks about open source law, as well as trade shows featuring open source businesses. The open source business has become big enough that a multitude of conferences and trade shows are presented virtually every week across the country and around the world. Events like OSCON and the OSBC are fixtures in the open source world, as are conferences like the MySQL User Conference and SugarCon for SugarCRM, to name just a few. Look at the upcoming Continuing Legal Education calendars to see how many seminars are devoted to open source or spend at least an hour on open source. (Shameless plug: I will be presenting a talk on open source business models with Joyce Chow from Apple Inc. at a December 10 PLI conference in San Francisco.) These are all great opportunities to learn how open source works in the real world, and students sometimes get free or reduced fee admission.

F. As a final note of encouragement, do not get discouraged by a lack of technical background (such as engineering or computer science) because this does not need to be a barrier to understanding open source technology and businesses. My college degree was in government and economics with no formal training on how software is written or even the difference between source and object code. While it is true that many law students start with a technical background, it is common for a lawyer in the tech industry to not have a deep technical background. (See the blog of one of my colleagues at Sun who did a survey of college majors of those within the Sun legal group... the results are very interesting.)

Trade Secrets: Which Secrets are Worth Keeping?

Trying to understand the impact of intellectual property rights on an open source company can be intellectually challenging. We saw this quite clearly in the complicated discussion of patents in the last post. I think it's the right time to take a break and tackle a subject that is far less controversial and mentally demanding -- trade secrets.

The concept of trade secrets is straightforward... an intellectual property right designed to protect economically valuable information that a company attempts to keep confidential. It can be applied to all types of information from marketing strategies to manufacturing techniques. Trade secrets, like copyrights, trademarks and patents, can provide a valuable means of differentiation, but in different ways. While copyrights, trademarks and patents provide differentiation through unique product features and branding, trade secrets do so by preventing competitors from using a company's business operations to their own advantage.

Open source companies might be tempted to ignore trade secrets on the grounds that the term "secret" is the antithesis of "open," but this would be a mistake. Instead, open source companies should use trade secrets to their advantage as a core element of their business strategy in much the same way as their proprietary counterparts. Proprietary software companies protect virtually all information by treating it as secret unless the company specifically authorized for disclosure. This is consistent with the proprietary license strategies they employ, which withhold intellectual property rights until a customer purchases a license.

This blanket approach will not work for open source companies. Because the company's source code is publicly available and development ideas and techniques are freely discussed within the community, much (if not all) of the company's technical information is not even eligible for trade secret protection. As a result, open source companies must clearly distinguish between technical and business information. Business information worthy of trade secret protection might include the next vertical market to be targeted with a marketing campaign, the unannounced release date of a closed-source add-on to the open source software, or the fact the company expects to close a significant deal by the end of the quarter. As business information, these examples do not directly impact the community, and release could potentially put the company at a disadvantage with respect to its competitors.

This is not to say that all technical information should be open, or that all business information should be closed. Open source companies should use this as a guideline in determining which secrets are worth keeping. Once an open source company makes this determination, it should use non-disclosure agreements aggressively to protect that information.

This is the final of 4 posts in a series aimed at providing practical consideration for open source companies with respect to intellectual property rights. As alluded to in the post introducing this series on intellectual property rights, I will soon tackle other aspect of the open source business that touch on legal issues including relationships with customers, partners and employees, as well as deciding when to shift legal work from outside to inhouse counsel.

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.

Practical Legal Considerations for Open Source Success - Intellectual Property Rights

This is an introduction to a series of upcoming postings on this blog dedicated to practical legal considerations for open source software companies from the perspective of inhouse legal counsel. My goal is to cut through the cloud of thought that often arises when people try to meld “open source” with “the law” and shine the spotlight on some of the critical, unique legal issues around intellectual property rights that open source companies face when defining their business strategies.

Open source software companies relish their role as disruptors and believe their business models lead to better quality software than their proprietary counterparts. While this often seems to be true, for all their differences, open source software companies rely on the same intellectual property rights for the foundation of their business as do proprietary software companies. The fundamental difference lies is how they protect and exploit those assets.

No matter how "pure" its open source beliefs, each open source company must carefully consider the role of intellectual property rights in its business. For some companies, this focus on intellectual property rights will be motivated by financial considerations. Without a solid foundation in intellectual property ownership and well considered intellectual property policies, investors (including venture capital firms and investors who purchase stock after an IPO) will be less confident about return on their investment. On the other end of the spectrum, even the purest of open source companies can benefit from clear intellectual rights policies by creating a more sustainable open source project.

The upcoming series of posts will touch on the four basic areas of intellectual property rights: copyright, trademark, patents and trade secrets, and later posts will expand this theme further to other aspects of open source businesses. As you will see in the first post, copyrights and copyright ownership are as relevant today in the open source world as ever before.