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Open Source – the State of Play

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Open Source – the State of Play Open Source – The State of Play 3rd Conference of the Americas: IT Business in the Americas Computer Law Association and Latin American High Tech Computer and Law Institute (ILATID) Mexico City December 1-2, 2005 2 This presentation is intended to alert the reader to some of the legal issues discussed herein. The impact of the law for each particular situation depends on a variety of factors, therefore we strongly recommend you engage legal counsel to assess and help minimize your legal liability based on the particular requirements of your institution. Like any presentation, this is not meant to be used as a substitute for legal counsel. © 2005 Gordon & Glickson LLC. 3 "Every time we've moved ahead in IBM, it was because someone was willing to take a chance, put his head on the block, and try something new. Thomas Watson, Founder of IBM © 2005 Gordon & Glickson LLC. 4 Open Source Anecdotes • SCO sues IBM • Open Source used to teach kids in Kenya • AtosEuronext – Saves $7+ million with Linux • MySQL AB – Booming business • Open Source Companies Get Millions © 2005 Gordon & Glickson LLC. 5 Open Source Software (OSS) • Introduction – OSS is not free (as in $) – OSS is not inherently hostile towards business • What is Open Source Software? – Source v. Object – Closed v. Open • History – Free Software Foundation (www.fsf.org) – Open Source Initiative (www.opensource.org) © 2005 Gordon & Glickson LLC. 6 State of the Market • Current Adoption – U.S. – 33% – Japan – 20% • Trends – Asia – Linux server licenses up 36%, client licenses up 49% – 47% of developers in Asia are increasing their adoption of open source in the next year, compared to 25% in North America • Programs – Web Servers - Apache runs 70%, Microsoft ISS at 25% – Desktops – Microsoft has overwhelming market share – Browsers – Firefox at 20%, Internet Explorer at 74% © 2005 Gordon & Glickson LLC. 7 © 2005 Gordon & Glickson LLC. 8 Open Source License Types Distinguishing Characteristic – How “viral” is the license? • Strong Viral (GPL) • Weak Viral (MPL) • Non-Viral (BSD) © 2005 Gordon & Glickson LLC. 9 Open Source Today • Alive and Vibrant – State of Evolution – Focus on Lower Costs • International Scope – Europe – Huge use in Financial Institutions – Australia – Mandates Public Entities To Use – Brazil – Backs Use of Open Source At Federal Level – China/Japan/ROK – Private Joint Ventures – Denmark – Promotion of Use By Public Entities – Mexico – Opened an OSS Technology Center with IBM – India – Promoted at All Levels © 2005 Gordon & Glickson LLC. 10 Open Source Today – U.S. Huge Momentum Play – Government and Private • Avalanche Corporate Technology Cooperative – www.avalanchecorporatetechnology.net – Best Buy, Jostens, Select Comfort, Cargill, Medtronic – Cost Sharing/Indemnification of Members • Government Open Code Collaborative – www.gocc.gov – Public Sector and Academic Institutions – Share Open Source Code • Federal Efforts – DOL – Workforce Connections (GPL) – NASA – World Wind • State/Local Efforts – Massachusetts/Oregon – Chicago/Los Angeles © 2005 Gordon & Glickson LLC. 11 Industry Efforts – U.S. • Internet Services – Amazon.com – Linux – Google – Linux – Yahoo – FreeBSD • Financial Services – Credit Suisse First Boston - Linux – Merrill Lynch - Linux • Entertainment – Industrial Light and Magic – Linux – DreamWorks – Linux – Pixar Animation – Linux • Oil Exploration – Royal Dutch Shell – Linux/IBM – WesternGeco – Linux © 2005 Gordon & Glickson LLC. 12 OSS…So What? • Licensing/M & A Risks • Control - Avoiding Vendor Lock-In • Evaluating Information Security and Liability • Proposing and Exploring Business Models © 2005 Gordon & Glickson LLC. 13 Note on Distribution • Most requirements of open source licenses are only triggered upon distribution • Traditionally IP holders have only sued distributors, not users – However, the SCO case is a warning to users © 2005 Gordon & Glickson LLC. 14 Licensing and M&A • Unfamiliar Open Source Traps – Open source components more likely than closed source to “sneak in” because… • Easily accessible to developers • Legally permissible (But there are still strings attached!) – Often no indemnification or warranty for IP violations – Viral licenses could cover some of your code • How big a concern are these traps? – Penalty – immediately cease distribution of software – 56.2% of developers have used OSS modules (Source: Evans Data) – Open source licensors have settled multiple cases against license violators © 2005 Gordon & Glickson LLC. 15 Licensing and M&A - Best Practices • Oversight Committee – Pre-Approval of OSS Use Necessary • Staffing – Legal and Technical • Careful Documentation of Decisions – Access To All Necessary Expertise – Train Staff As To Terms and Enforcement • Approval Process – Careful Documentation – Should Create Detailed Product Pedigree • Mergers and Acquisitions – Be attentive to special open source risks – With rising use of OSS, even into closed source programs, be aware of IP risks for ALL software being acquired © 2005 Gordon & Glickson LLC. 16 Control - Avoiding Vendor Lock-in If Only the Vendor Has the Source Code… • “Hidden” Expenses – Software tied to specific hardware, per CPU costs – Forced upgrades if product is discontinued – Feature Bundling – Vendor is only one who can support software – Vendor only one who can add new features – Expensive, proprietary hardware • Bankruptcy/Discontinued products – Source code could be lost forever – Can be covered with escrow, but may be difficult term to get © 2005 Gordon & Glickson LLC. 17 Information Security and Liability • Rash of ID thefts – CardSystems – BJ’s Warehouse – LexisNexis – DSW Show Warehouse • New Age of Personal Information Liability – New Laws: 20+ proposed ID theft and security bills – Existing Laws: HIPAA, GLB, SOX, SEC rules – FTC action against BJ’s Warehouse © 2005 Gordon & Glickson LLC. 18 How Does This Implicate OSS? • OSS may provide more security… – More eyeballs – Can hire someone to fix flaws yourself – Some argue that Linux is more secure from ground-up than Windows • But it may not… – Hackers get to see the source code too – Possibly fewer warranties or indemnifications • However, closed source companies usually require waiver of consequential damages and limitation of direct damages Takeaway: Technical and legal security works differently in OSS, may become important in ID theft battlefield © 2005 Gordon & Glickson LLC. 19 Four OSS Business Models Your Business’s Value May Not Lie in the Code… • Give away software, charge for support (Red Hat) • Use free software to sell hardware (IBM) • Give away OSS to promote related proprietary software (Netscape) • Standards Setting (Sun Microsystems) In each case, releasing software as open source can substantially increase user base © 2005 Gordon & Glickson LLC. 20 Conclusion “Linux is a cancer that attaches itself in an intellectual property sense to everything it touches." - Microsoft CEO Steve Balmer, June 2001 • Today Microsoft employs Bill Hilf, an open source veteran from IBM, to head up their “Linux and Open Source Software Technology Group”, making Microsoft products interoperable with open source products. One of his employees is Daniel Robbins, the founder of Gentoo Linux. © 2005 Gordon & Glickson LLC. 21 Bibliography • Open Source Software Licenses: Perspectives of the End User and the Software Developer. Paul H. Arne and John C. Yates. The Computer and Internet Lawyer, Volume 22, Number 8, August 2005. • Open Source Licensing: Virus or Virtue? Christian H. Nadan. Texas Intellectual Property Law Journal. Spring 2002. • Taking the Case: Is the GPL Enforceable? Jason B. Wacha, Vide President of Corporate Affairs and General Counsel, MontaVista Software, Inc. • Open Source Wins Victories Large and Small. Ric Shreves. Bangkok Post. July 18, 2005. http://www.technewsworld.com/story/44652.html • Europe: Financial Services Companies Lead the Charge to Linux. Carol Silwa. Computerworld. July 18, 2005. http://www.computerworld.com/softwaretopics/os/story/0,10801,103202,00.html • The Future Is Open Source: Should Microsoft Be Watching Its Back? Danny Bradbury. Silicon.com. July 21, 2005. http://www.silicon.com/research/specialreports/opensource/0,3800004943,3915062 5,00.htm © 2005 Gordon & Glickson LLC. 22 Bibliography (cont’d) • Linux Goes Global. Mitch Betts. Computerworld. July 18, 2005. http://www.computerworld.com/printthis/2005/0,4814,103198,00.html • VC Money Continues to Flow to Open Source. Larry Greenemeier. InformationWeek. July 20, 2005. http://www.informationweek.com/story/showArticle.jhtml?articleID=166401218 • Are Open Source Integration Solutions Mature? Henry Peyret and Michael Goulde. Forrester/CIO.com. July 19, 2005. http://www2.cio.com/analyst/report3741.html • Workforce Connections http://workforceconnections.dol.gov/ • Better Browser Now the Best. Arik Hesseldahl. Forbes.com. September 29th, 2004. http://www.forbes.com/2004/09/29/cx_ah_0929tentech.html?partner=tentech_news letter • Browser Statistics. http://www.w3schools.com/browsers/browsers_stats.asp © 2005 Gordon & Glickson LLC. 23 Bibliography (cont’d) • Open Source Initiative. http://www.opensource.org • Free Software Foundation. http://www.fsf.org • Open Source Development Labs. http://www.osdl.org • GPL-Violations.org (Site raising awareness about infringing users of GPL licensed software. http://www.gpl-violations.org • Groklaw (Site following the SCO v. IBM case in depth). http://www.groklaw.org • Meet the Head of Microsoft’s Linux Lab. Mary Jo Foley. Microsoft Watch. May 6, 2005. http://www.microsoft-watch.com/article2/0,2180,1813672,00.asp • Kenya Pilots Handheld Education. Richard Taylor. BBC News. July 29, 2005. http://news.bbc.co.uk/1/hi/programmes/click_online/4727617.stm © 2005 Gordon & Glickson LLC. Open Source – The State of Play Gordon & Glickson LLC 444 North Michigan Avenue, Suite 3600 Chicago, Illinois 60611-3903 (312) 321-1700 [email protected].
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