Editor’s note: This is the second of three articles regarding the lawsuit between SCO and IBM over possible misuse of proprietary Unix code owned by SCO. The authors, Rebecca Fiechtl, Michael McCoy, and George Taulbee are Charlotte-based attorneys in the intellectual property law practice of Alston & Bird LLP. George Winborne is an intellectual property law attorney practicing in Alston & Bird’s Raleigh office..Open source software is subject to a license agreement requiring that downstream users be allowed to access and modify the software source code.

While there are many types of open source software licenses, the most common type is a GNU general public license (GPL). The GNU GPL is published and copyrighted by the Free Software Foundation. The GPL provides licensees the right to copy and redistribute an open source software source code so long as a copyright notice and disclaimer of warranties is included.

GPL licensees receive no warranties or indemnification against any type of intellectual property infringement in the source code, but the GPL does permit warranty protection to be offered for a fee. In addition, the cost of the open source software program (i.e. object code) may be any amount, but the cost of the open source software source code can only be the actual cost of distribution, which is typically only the cost of the storage medium and shipping.

The GPL also provides licensees the right to make derivative works from the source code for their own use. In the software context, derivative works are generally described as any type of modification to the source code or any integration of another application into the source code such that it becomes a single program. If, however, the derivative work is distributed, then the work must be identified as modified source code and licensed under the GPL. The distributor may charge a one-time fee for each sale of the derivative work, but cannot tie any fee to later distributions of the work, i.e., no royalties. Again, the source code must be made available to buyers of the derivative work.

Another type of open source software license is the Lesser General Public License (LGPL), which is used for some specially designated software packages, typically libraries, to encourage wider development of applications running on Linux operating systems. Software libraries are collections of programs written to perform commonly required functions. Programs that rely upon libraries for routine functions can be smaller and programmers need not “reinvent the wheel” each time a new program is written. Linking to LGPL libraries rather than GPL libraries allows developers to keep their source code proprietary. Other open source software licenses include the BSD license, the Mozilla public license, and Perl’s artistic license. The provisions in these licenses vary, particularly regarding the provisions, if any, for downstream user protection against intellectual property claims by third parties. All open source software licenses, however, include provisions granting rights to the licensee for copying, modifying and distributing open source software source code.

The Positive Aspects of Open Source Software

Because open source software is not controlled by one or more proprietary vendors, open source software users can tailor their computer systems and programs by modifying the source code in any desired manner. So long as the user does not redistribute its systems or programs based upon the modified source code, the modified source code can remain a secret. If, however, the user redistributes its systems or programs based upon the modified source code, then it must also offer the modified source code, but it may charge any fee for the object code of the modified systems or programs.

Many open source software proponents also claim that open source software is more stable than proprietary software because many different programmers eventually read and work in the source code, which means there are more eyes to spot and fix bugs in the code. In particular, open source software proponents allege that the independent peer review of open source software results in software that is faster and has fixes that are more reliable over a longer period of time than proprietary software. Furthermore, because the source code is freely available with the distribution of open source software programs, open source software proponents claim that the development costs associated with open source software are typically lower than development costs associated with proprietary software.

Legal Issues Regarding Open Source Software

The most troubling legal issue regarding open source software is the potential liability of downstream users to third parties who allege that an upstream user or developer has violated the third party’s rights via the open source software. The worst scenario for the open source software movement is that it becomes a Trojan Horse. For example, if someone prior to the current end user or developer made changes to open source software source code that infringes on a third party’s patent, the patent owner could assert claims against the end user, even though the end user had no knowledge of the patent infringement. As another example, an upstream user or developer may have copied and incorporated code that was written by someone else, without obtaining the author’s permission. The original author of the code may hold a copyright in that code and, therefore, could make a copyright infringement claim against any downstream user of the code, regardless of whether that user knew of the copyright infringement. When one considers the volume of open source software code that is written daily, it is very difficult, if not impossible, to ensure that none of the source code was illegally copied by an upstream user, which creates a large risk for any downstream user of the code whose license does not contain any liability protection against upstream infringement.

While an open source software license generally restricts upstream users and developers from enforcing their intellectual property rights against downstream licensees, those not parties to the license may enforce their intellectual property rights against downstream users or developers. Thus, a licensee of open source software may be vulnerable to claims from third parties for injunctive relief, e.g., a court order to stop using the software, or monetary damages, i.e., a payment of cash. A warranty and/or indemnification from the licensor may provide some limited protection in the form of a promise that the software is free from intellectual property traps and a promise to provide financial support should the licensee be subject to legal action if the first promise proves untrue. Though some open source software licenses go beyond the GPL and address intellectual property infringement claims resulting from modifications made by upstream users or developers, most open source software is licensed “as is” without any warranty of non-infringement or indemnifications.

In Part III we discuss specifics of the SCO lawsuit against IBM, attempt to clarify some of the risks highlighted by the suit and provide some suggestions for open source software users.

This column is presented for educational and information purposes and is not intended to constitute legal advice.

Rebecca Fiechtl (rfiechtl@alston.com), Michael D. McCoy (mmccoy@alston.com), and George Taulbee (gtaulbee@alston.com) are Charlotte-based attorneys in the intellectual property law practice of Alston & Bird LLP. George O. Winborne (gwinborne@alston.com) is an intellectual property law attorney practicing in Alston & Bird’s Raleigh office. In 2002, IP Worldwide magazine ranked Alston & Bird No. 3 on its list of IP firms most frequently used by Fortune 250 companies.