The Rise of Open Source Licensing Distribute Their Work More Effi Ciently and Increase Innovation
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Mikko Välimäki TheRiseofOpenSourceLicensing Mikko Välimäki Op — from Linux to Firefox and MySQL database — has changed so ware business as we knew it. New start-ups have Mikko Välimäki challenged industry heavyweights from Microso to Oracle with inno- vative copyright licensing strategies and courageous anti-patent policies. Almost every major so ware company has been forced to react to the commodifi cation trend. Drawing from detailed case studies, historical narrative and the ap- plication of economic theory, this book shows how open source licensing is used for strategic advantage. So ware developers enter open source to The Rise of Open Source Licensing distribute their work more effi ciently and increase innovation. So ware is no longer property, they say. Interestingly, everything has worked despite — rather than because of — ever-expanding intellectual property rights. A Challenge to the Use of Intellectual Property Is there a limit? In the United States, the headline cases by SCO against Linux supporters and users opened the surface of intellectual property in the So ware Industry infringement risks. In Europe, there is ongoing public debate about the impact of so ware patents on open source. This book goes beyond fear and doubt arguing that such legal risks are in the end just necessary but man- ageable uncertainties, which always come with a new business model. M V teaches technology law at the Helsinki University of Technology. He has consulted extensively on open source licensing. ISBN 952-91-8769-6 T P h p://pub.turre.com/ 9 789529 187690 Cover photo: Ville Oksanen 2225581_Valimaki_kansi2.indd25581_Valimaki_kansi2.indd 1 118.5.20058.5.2005 116:56:396:56:39 PUBLISHED BY TURRE PUBLISHING, A DIVISION OF TURRE LEGAL LTD. Aleksanterinkatu 17, 6th floor, Helsinki, FI-00100, Finland, http://pub.turre.com/ Copyright © 2005 Mikko Välimäki First Edition. Some Rights Reserved. This book is licensed under the terms of Creative Commons Attribution-NonCommercial- NoDerivs 2.0 license available from http://www.creativecommons.org/. Accordingly, you are free to copy, distribute, display, and perform the work under the following conditions: (1) you must give the original author credit, (2) you may not use this work for commercial purposes, and (3) you may not alter, transform, or build upon this work. ISBN: 952-91-8769-6 (printed) 952-91-8779-3 (PDF) Printed in the Helsinki University Printing House. Mikko Välimäki THE RISE OF OPEN SOURCE LICENSING ACHALLENGE TO THE USE OF INTELLECTUAL PROPERTY IN THE SOFTWARE INDUSTRY III FOREWORD This book is the result of my PhD studies at the Helsinki University of Technology. I started working towards a doctoral degree right after graduation from the University of Helsinki in 1999. I was supposed to write a thesis in law. Now I need to apologize my then-supervisors profes- sor Niklas Bruun and docent Pekka Timonen not to complete the thesis at the law faculty in four years as was once planned. What happened was that I met my future academic mentor, professor Jukka Kemppinen, who had just started his professorship at the Helsinki University of Technology. He convinced me to change my plans and my university in the late 1999. The actual theme of this thesis started to emerge during my year at UC Berkeley from 2000 to 2001. At that time I was working with Olli Pitkänen and we were supposed to study digital rights management. But I went on and spotted open source. I was lucky to participate at some of the first business and technology conferences ever that were arranged on the topic in California. I concluded that this is the area I have the best knowledge of and, besides, it doesn’t seem to be a fad that disappears in the next two years. So why not write about it? The main creative writing periods of this book were in October 2003 in Berkeley libraries and cafes, and August 2004 in the Starbuckses of Santiago de Chile. In addition, there were also those numerable nights when I com- pleted separate articles, which form considerable subparts of this thesis. I fin- ished the work by completing all the open and missing parts under the su- pervision of professor Juha Laine. Dissertation examiners professor Jukka Heikkilä and Dr. Ilkka Rahnasto made a number of substantial comments to a draft version of this book. I have taken most of them into account. Professor Thomas Riis from Copenha- gen Business School kindly accepted the invitation to act as the academic op- ponent. My understanding of open source has greatly benefited from discussions with those who practice software business. As the public interest in open source has grown, I have found myself lecturing and consulting open source licensing to different organization from Finnish software companies to Inter- IV American Development Bank. Special mention goes to Antti Halonen who introduced me to MySQL before there was a company for that particular pro- ject. Mårten Mickos, MySQL’s CEO since 2001, has also been of help by giv- ing constructive feedback and kindly sharing his connections. Another bunch of special thanks go to my research colleagues Ville Ok- sanen and Herkko Hietanen. In addition to several co-authored research pa- pers, the founding of Electronic Frontier Finland in 2001 has definitely sharp- ened my argumentation and overall writing skills. Through the association, I have had the opportunity to participate into the public policy discussion on copyright and patents from the inside. I want to also thank Olga ja Kaarle Oskari Laitisen Säätiö, Jenny and Antti Wihuri Foundation, Helsingin Sanomain 100-vuotissäätiö, Soneran tutki- mussäätiö, Ella and Georg Ehrnrooth foundation and the Research Founda- tion of Helsinki University of Technology for their grants supporting my re- search work when that support was most needed. Finally, thanks to my family, friends and colleagues not especially men- tioned. There are just too many people I’ve met at universities, conferences, business meetings and bars all around the world who have given their sup- port and contribution in one way or other to this project. It makes me no sense to list you all. “Meet the new boss – same as the old boss.”* Lauttasaari, Helsinki, 30th March 2005 Mikko Välimäki * Final verse from The Who song Won’t Get Fooled Again (1971). Lyrics by Pete Townshend. V TABLE OF CONTENTS FOREWORD........................................................................................................................III TABLE OF CONTENTS...................................................................................................... V ABBREVIATIONS ............................................................................................................. IX 1 INTRODUCTION ............................................................................................................. 1 1.1 PROBLEM.....................................................................................................................1 1.2 TERMINOLOGY,PERSPECTIVE AND LIMITATIONS ........................................................3 1.3 METHOD .....................................................................................................................5 1.3.1 Rationale for Different Methods Used...................................................................5 1.3.2 Continuing Patterns in Business History .............................................................6 1.3.3 An Economic Perspective......................................................................................7 1.3.4 Comparative Law and Social Norms.....................................................................8 1.4 ACADEMIC CONTEXT AND SOURCES.........................................................................10 1.5 OVERVIEW OF THE STUDY .........................................................................................11 2 FROM PROPRIETARY TO OPEN: EVOLVING LICENSING MODELS IN SOFTWARE INDUSTRY................................................................................................... 13 2.1 SOFTWARE INDUSTRY................................................................................................13 2.1.1 A Short Historical Overview ..............................................................................13 2.1.2 Market Size and Regions ....................................................................................15 2.1.3 Emergence of Open Source .................................................................................16 2.1.4 Open Source and Software Business Models.......................................................19 2.2 PROPRIETARY LICENSING ..........................................................................................21 2.2.1 IBM’s Unbundling Decision and Corporate Licensing .......................................21 2.2.2 Mass Markets Licensing and Shareware .............................................................24 2.2.3 Proprietary Licensing Today...............................................................................26 2.3 FREE SOFTWARE AND OPEN SOURCE LICENSING ......................................................30 2.3.1 BSD License and Unix Copyrights .....................................................................30 2.3.2 GNU General Public License, Linux and SCO ...................................................33 2.3.3 Open Source Enters Vocabulary .........................................................................36 2.4 SOCIAL AND POLICY DIMENSIONS OF OPEN SOURCE................................................40