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Most companies that distribute software are aware of the issues raised by the use of open source software. Now, however, recent activities by Lindon, Utah-based The SCO Group (formerly Caldera Systems Inc.), in connection with its well-publicized suit against International Business Machines Corp., have raised questions regarding the use of open source software by companies that do not develop or distribute software. SCO has taken the position that use of the Linux open source computer operating system by anyone who does not have a license from SCO is a violation of SCO’s intellectual property rights. Some of the recent difficulties caused by the use of open source software include the SCO/IBM dispute as well as the recent related suit brought by Red Hat Inc. (a commercial distributor of Linux) against SCO. Careful planning can help companies avoid these pitfalls. Open source software is typically available for downloading from the Web or other sources without payment of fees or execution of any agreement. Despite the absence of an executed agreement, open source proponents take the position that the software is nonetheless subject to one or more particular open source licenses that provide for specific terms of use for the software and that any other use is an unlicensed violation of the copyright in the software. Currently, this area of the law has not been widely interpreted or tested by the courts. Probably the most widely used open source licenses are the general public license (GPL) and the lesser general public license (LGPL). Linux is provided under the GPL, which requires, among other things, that source code (program instructions in their original form) be made available for any software that is combined with GPL software and distributed. Although some software companies have been successful selling software licensed under the GPL (e.g., Red Hat), in most cases companies that wish to maintain their software as proprietary should not mix GPL software with their proprietary software. The LGPL addresses some of the harsh results of the GPL by not requiring disclosure of proprietary source code that is only linked (combined in object code form) with LGPL software. The LGPL, however, does require that users be allowed to reverse-engineer the software to which the LGPL software is linked, which may or may not be acceptable in certain situations. There are other well-known open source licenses, some of which have terms that are very different from the GPL and the LGPL. A group called the Open Source Initiative (OSI) has taken it upon itself to “certify” open source licenses as being OSI-compliant. The full text of the licenses certified by the OSI may be found at the OSI Web site, www.opensource.org. CHALLENGES FOR BUSINESSES Companies that use open source software in a commercial setting can face a number of difficulties. For example, there are many open source software utility programs or code fragments that can be incorporated into a larger custom proprietary program to provide useful functions. The benefits to incorporating open source software include time savings for the programmer and the fact that the software has already been used and tested by others. However, if the software is provided under the GPL (or similar open source license), then its use in a larger custom proprietary program could require disclosing the source code for the entire larger custom program, which, in many cases, may be unacceptable. A related difficulty may occur by use of the Linux operating system, which is licensed under the GPL, to create executable code from proprietary source code. Original source code written on a computer that uses Linux would not be covered by the GPL. Similarly, unlinked object code (an intermediate format) compiled from just the source code on a Linux computer would also not be covered by the GPL. However, to turn the unlinked object code into executable code capable of running on a Linux computer, it is necessary to link the unlinked object code with libraries (collections of precompiled object code routines) provided with the Linux operating system. These libraries may be licensed under the GPL, and therefore the resulting executable software is arguably covered by the GPL, requiring disclosure of all of the original source code. In other instances, the libraries may be licensed under the LGPL, in which case there would be no requirement to disclose the source code of the user’s program, but the user would not be allowed to prohibit reverse-engineering of the executable code, which may be unacceptable. Venture capitalists that invest in companies that are not publicly traded are becoming increasingly aware of open source software issues. Often, as a condition of receiving investment money, a company is required to warrant that no portion of its software includes or incorporates any software that is distributed under a license that would require the company to release any portion of its source code or that would require the company to permit free redistribution of its software. A company that seeks investment from a venture capitalist should be aware of the sensitivity of investors to the use of open source software. The company should either completely avoid the use of any open source software or use it in a way that could be made acceptable to investors. Failure to do so could result in the company not receiving investment money or in the company having to rewrite its software so as to remove open source code as a condition of receiving investment money. Another difficult situation is in the context of joint ventures. A company may be very careful with its own software to avoid the difficulties of open source software, only to find that its joint venture partner is not so careful. If the joint venture includes combining the software of both partners, the result could be that the company’s software becomes subject to an open source license requiring, for example, that the company make its proprietary software publicly available. It is thus recommended that companies entering into a joint venture in which proprietary software will be combined place restrictions on the use of open source software. A different sort of risk of using open source software has been introduced by the recent activities involving SCO, IBM and Red Hat. In March, Caldera Systems (predecessor to SCO) filed suit against IBM based on allegations that IBM breached its Unix license agreement with Caldera by disclosing portions of the licensed Unix operating system source code (AIX on IBM systems) in connection with IBM’s significant contribution to the Linux project. The SCO Group v. International Business Machines Corp., No. 2:03cv0294 (D. Utah filed March 6, 2003). SCO followed up on filing the suit by sending letters to more than 1,500 users of Linux (mostly large corporations) in May and June of 2003 warning them of possible consequences (including substantial legal and licensing fees) if they continued to use Linux without a license rom SCO. See http://news.com.com/2100-1016-1001609.html. The suit and subsequent activity by SCO raises the possibility that users of Linux, even if they are not distributing any software, could still be liable to SCO and/or could be required to stop using Linux if SCO is able to establish IP rights in Linux. For any company that has made a substantial investment in a Linux system, being required to stop using Linux could be costly. Interestingly, SCO has offered a run-time-only license to Linux users for $700 per processor. However, initial reports indicate that most users have not taken the license offer or felt sufficiently threatened by the SCO letters to change their plans. Furthermore, on July 21, SCO received a U.S. federal copyright registration for its version of System V Unix. Copyright registration is a requirement for bringing a copyright infringement suit, so this may change some people’s view as to whether they need an SCO license or if they need to stop using Linux. Recently, IBM and Red Hat have taken the offensive. IBM has answered SCO’s complaint and has asserted some claims of its own. IBM has pointed out that SCO itself has been a distributor of the Linux operating system and, therefore even if Linux at one time contained trade secrets of SCO (disputed by IBM), SCO’s own distribution of Linux has caused the technology to be publicly disclosed and thus no longer subject to trade secret protection. IBM also points out that the terms of the GPL, under which SCO distributed Linux, prohibits SCO from attempting to assert IP rights in Linux against IBM (or anyone else). In addition, IBM has counterclaimed by asserting that some of SCO’s products infringe IBM’s patents. In a separate action, Red Hat has sued SCO, seeking, among other things, a declaratory judgment that Red Hat Linux does not violate any copyrights or trade secrets of SCO. Red Hat Inc. v. The SCO Group, No. 03-772 (D. Del. filed Aug. 4, 2003). Red Hat has also asserted claims against SCO of false advertising, deceptive trade practices, unfair competition, tortious interference with prospective business opportunities and trade libel disparagement. In its complaint, Red Hat points to a number of alleged instances in which SCO appears to have targeted Red Hat customers and/or investors with information that Red Hat claims is false. Red Hat also points out instances in which SCO had mentioned Red Hat by name in connection with SCO’s allegations that use and distribution of Linux constitutes infringement of SCO’s IP rights. Red Hat has also set up a defense fund to cover legal expenses of open source developers targeted by SCO. The Linux/open source community appears to be upset about what they see as SCO’s attempt to dampen the market for Linux. The community interprets the suit by SCO, its follow-up letters to corporations, its license offer and its statements to the press as a cynical attempt by SCO to use the U.S. legal system to increase the company stock price to the benefit of a few insiders at SCO. In response to SCO’s offer to negotiate a settlement, Linus Torvalds, the originator of the kernel for the Linux operating system, posted an open letter on Sept. 9 to SCO CEO Darl McBride. The letter states, in part, “we find your reference to a negotiating table somewhat confusing, since there doesn’t seem to be anything to negotiate about. SCO has yet to show any infringing IP in the Open Source domain, but we wait with bated breath for when you will actually care to inform us about what you are blathering about.” See www.newsforge.com/software/03/09/10/2321224.shtml. The open source community, of course, holds that no one needs a license from SCO to use Linux or any other open source software. As the use of open source software increases, it is essential to understand the relevant issues and risks so that, with careful planning, they can be avoided. Companies should take an inventory of the software they are using as well as any software they are developing to determine if any of it comes under any open source licenses. When open source software is found, it is important first to determine the legal consequences (by reviewing the relevant license) and, from that, determine the impact on the company’s business and/or the risks. Of course, for now, Linux users can only monitor the SCO, IBM and Red Hat cases, which will determine the fate of open source Linux and will probably also have a significant impact on all open source software. Donald W. Muirhead is a partner in the intellectual property practice department at Boston’s Choate, Hall & Stewart (www.choate.com). He can be reached at [email protected]. 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