Problems and Opportunities of Open Source Software Licensing - Case Study Example

Instructor: Date: Problems and Opportunities of Open Source Licensing Introduction Open-source software (OSS) is computer software with a code that has been licensed through an open-source license. The particular copyright holder has provided all the rights to alter and distribute the software to any person for different uses. OSS is mostly developed to the public domain. OSS has developed a movement of an open-source community which has already recognized the reality that the production of software may be boosted through establishment of an environment that is in favor of open source. A public domain refers to a pool of human knowledge from where anyone may select a given idea in order to come up with a different piece of knowledge. OSS has attracted the attention of not only governments but also educational institutions as well as universities around the world and has also involved quite a number of user groups. These groups are charged with the responsibility of providing initial help to new entries in different schools of thought. Open source software is not a solution on its own rather it requires concrete resolution of issues relating to technology insertion, flexibility, cost effectiveness surrounding intellectual property and licensing (Bitzer, 39). Conventional licensing generally does not in any way reveal the actual true nature of rights. It is rather important to understand licensing in open source software from the point of view of creative commons’ perspective and intellectual property rights perspective. The intellectual property rights have been developed to manage open source software. Most developing countries require not only quick but also inexpensive access to build a knowledge society. It is important to note that free and open source software definitely enhance easy access to information and also has develops a strong and diverse public domain of information resource. OSS has been built mainly on the legal foundations of the copyright law of the United States (US) and other related countries such as Canada and the United Kingdom (UK). Basing on copyright law, OSS encourages an intransigent system of permission which provides contact methods to the third party user. This software does not provide a solution in situations where an orphan copyright is in operation. It also does not provide a solution in cases where the eventual user is not part of the orphan text since there is no authority that allows him to do so; this creates a form of boundary in terms of creativity. OSS therefore provides a practical solution to these kinds of problems. Open source system greatly differs from traditional copyright licensing such that it allows for open distribution as well as an open modification which result to innovation, reliability as well as longevity. Open source software can be seen to be bent on developing open standards which are quite interoperable along with other open standard systems. The free and unlimited access adds value to the work. This particular concept leads us to the need to understand intellectual property laws as well as the business related to intellectual property. Introduction to IP Law and the Business of IP It may be quite difficult to protect any idea since the idea may be easily copied or even imitated. It is easy to duplicate an idea through copying of a piece of material or use a similar brand name, or even a creation of a given commodity while imitating someone else’s product. There is a long interval of time between the development of a product and the time which a product enters the market. This time frame allows other people and institutions to copy and imitate the given products that have been developed. Intellectual property basically are the ideas that are regarded as “owned” by a given person or organization and as such they are protected by the law (Peter, 135). Intellectual property law seeks to promote innovation of new ideas and concepts by giving inventors and creators of different ideas ample time to be able to reap the rewards which generate from their inventions. Intellectual property receives full protection of the law right from the time it is created; assuming that it is an original idea. When these matters go to court, making the case becomes quite difficult given that all that you have to go on and refer to one’s records. Intellectual property registration therefore comes into play in order to allow individuals as well as companies to make an official record of their ideas and also protect them more easily in case any conflict arises (Stoll, 58). Intellectual property protection is divided into the following categories; Patent: A patent protects an invention in the form of a novel which is new or original as well as not obvious to everyone. This patent was used traditionally to protect physical devices such as electronic devices, machines and manufactured products; however over time patents have mainly been used and associated with computer software. Trademark: This particular protection relates to protection of brands; for example the brand name of a product or even the name of a company. It is important to note that the range of trademark protection is limited only to the business field. An example of this is say a company in the computer industry is allowed to use the name “Nike” as its company name since they are not in the same line of business. This would not constitute trademark infringement because Nike is in the shoe industry. Copyright: On the other hand, a copyright aims at protecting the specified form that the ideas were recorded and instituted; it seeks at protecting the form of literary works such as books, articles as well as poems. Copyright protection also applies to artistic works such as cartoons and music. It is important to note that any kind of material which you either write or record is immediately given full protection basing on copyright law; this law however does not apply if the work has been placed under public domain or under any other form of licensing agreement such as user agreements on the use of a website. Registered design: This forms another category of intellectual protection and is mainly focuses on the appeal of an object. It seeks to protect the particular vision design of a given product which is mostly non-utilitarian. It is mainly made up of the unique shape of a product. Registered design aims at protecting the unique color combination as well as an aesthetic value of a product. It may take the form of either two or three-dimensional pattern that is used to develop a product. Confidential information: This is a form of intellectual property protection which deals with secrets and private information relating to a given company. Confidential information cannot be registered; but when there is a breach of confidence, the court may stop the disclosure of information that is considered confidential and also if the information was revealed to a person with full knowledge of the required confidentiality. This particular protection is based on the concept that individuals receiving information privately should not take advantage of it. One remains obliged to keep the information confidential until when the confidential information reaches to the public domain and becomes free for all parties to use. Problem of an employee vs. an independent contractor It is important to understand whether an individual employed by a company is an employee or a contractor mainly because the answer to this significantly affects the commercialization of intellectual property. The level of control that an individual has in a company determines whether he is an employee or a contractor. Less control in a company makes one to be regarded as an independent contractor. It is important to clearly distinguish between an employee and an independent contractor when dealing with intellectual property rights. An employer considers any kind of intellectual property which is created under a contract of service to be his property. A company will find it quite difficult to claim ownership over any intellectual property that has been created by an independent contractor. A good example to this may be in the form of copyright (Susan, 64). The copyright Act considers all creators of any original wok to be the actual owners of their work; however, section 35(6) of the copyrights Act explicitly provides that where such kind of work created in a contract of a service nature of agreement, then the employer is considered to be the owner of the copyright in those works. Contrary to this, if in the above case there was no contract of service, the initial creator of the work retains the copyright on condition that there is no contrary agreement. Similar provisions are present under section 13 of the Designs Act 2003 relating to the ownership of a design. It can be noted that a given employer shall be the registered owner of a particular design created by his employee in the process of his employment unless of course if there is an agreement contrary to this. When assigning intellectual property, the distinction of an employer or an independent contractor also comes into play. Intellectual property may be assigned either way between a given company and its workers. The agreement to assign these rights must be in written form since it bears significant legal consequences. The above scenario clearly shows the need for a proper distinction between an employer and an independent contractor. This will help in ascertaining the exact party that will retain ownership of the copyright or any other intellectual property. A distinction of these two concepts will help in the clarification both the rights as well as obligations relating to a given party. Ownership and General Contractual Agreements Ownership of an intellectual property varies greatly depending on the particular organization. Ownership issues between companies and their innovators often arise mostly when it comes to copyright law. Under copyright law, the individual owner of a patentable idea or formula has the power to exclude other parties from using the asset or idea without his direct and express permission. IP may however be purchased, licensed or even sold. Although many exceptions exist to these rights, most companies and universities on a generally scale retain the ownership of IP assets which their employees and students develop within the scope of their normal employment and study programs. In the case of patents, the law relating to patents provides that the inventor of any IP asset shall be regarded as the owner of his particular creation and hence he is granted patents relating to his invention. In order to preempt this particular requirement, most companies develop a requirement which asks all the employees to assign to the company all the rights to pertaining to their invention to the company. This is achieved through specific employment contracts as well as company employment policies that are issued to the employees before being allowed to work for the company. For the case of universities, similar laws apply although with little caveats (Stamelos, 53). First is that for the inventions that are developed under federal sponsored agreements, the federal government is given the first right to a future use of the invention, but the government seldom takes advantage of this requirement and thus most of the universities retain the specified title inventions that are developed using federal funds. Contrary to this, in the situation where the university fails to undertake commercialization of technology, the inventor has the authority to request for a return of ownership of the given creation. When the inventions were done without government funding, for example, private foundations, ownership of these IP assets varies greatly; however, the funding institution shall generally require assignment of these rights as a pre-condition for funding (Stoll, 137). In a corporate setup, the employer takes possession of any work or inventions that have been created by an employee within the course of his employment unless there was an initial agreement contrary to this. In a university setting, all forms of scholarly works shall remain the property of the creators unless there were significant resources used by the university during the development process, in which case special assignment of rights may be required. Dealings generally: structure and negotiation of license agreements/assignments Types of Licenses Sole license: In this form of license, the copyright owner authorizes the person who has been licensed to use the copyright in any manner which he finds fit, and only he is allowed permission and access to the copyright. Exclusive License: Under this form of license, the copyright owner authorizes the licensee to exercise an exclusive right of the copyright owner in relation to copyright material to the exclusion of anyone else; this also includes the initial copyright owner. For this copyright license to be considered as being valid, the particular exclusive licence must be developed in written form as well as signed by the copyright owner. Express Licence: In this form of licence, if it allows the licencee to sell a device which has no infringing uses under conditions that clearly show that the grant of a given licence should be inferred. It is quite vital to understand that non-infringing requirement is lifted when the patentee expressly licenses a given manufacturer to sell its particular commodities for infringing purposes. In an express licence, material is availed to the public along with an attached copyright notice which expressly states the exact ways and manner in which the particular product or work may be used without the need to contact the owner of the copyright. If material has been legally placed on the internet, one can argue out that he has an implied licence to direct use of the work in different means; however, this is quite difficult on rare occasions since it is not easy to be able to demonstrate hence cannot always be relied upon. Implied licence: This kind of licence applies mainly in situations where all the available circumstances suggest that the copyright owner did expect his copyright material to be put to use in the way that the user wishes. It is argued that any item uploaded on the web is fair game and therefore it is subject to implied licence. Legally this is not the case; it is however only possible to argue out that an implied licence only does exist in situations where all the surrounding circumstances suggest that the owner of the copyright did expect his work to be used in any way contemplated. An implied licence is developed by the law in cases where there is no specific form of agreement between parties; mostly in situations where the conduct of the parties in some way indicates that the licence may be extended between the owner of the copyright and the licencee but however, the parties themselves did no bother to create the actual licence (Sowe, 10). Oral Licence: This is a form of licence whereby the terms and conditions between the owner of the copyright and the user of the work are agreed upon in an oral manner. In this form of licence, there are no written agreements that state the manner and extent of use, rather these terms are agreed upon orally. Written Licence: This form of licence requires that the terms and conditions of the copyright must be in written form and clearly signed by both the copyright owner and the user of the work. Compulsory Licencing This is also known as statutory licence. In this form of licence, the law provides that the actual owner of a given patent or copyright licences, the eventual user of their rights which are formed through arbitration. In compulsory licence, the person or company that is seeking the right to use a given work of another person is allowed to do so without the need to have the authority or permission from the owner; he only pays the holder of the right a given fee to cater for the licence. An example of this may be in radio broadcasting. Radio broadcasters are supposed to have a licence to play music that is published through the web. These people do not need to obtain permission from copyright holders in order to play a given song; however, they are required to pay some usage fee to the holder of the copyright depending on the frequency that the song is played. Registration and Assignment Intellectual property can be registered in the Intellectual Property Office as well as at the European Patent Office. This kind of registration is not mandatory, however, is bears significant advantages to the owner of the work. Registration helps in the transfer of legal ownership of assets. Regardless of the nature of the licence as either exclusive or non-exclusive, legal registration is important since it helps to ensure that any party thereafter acquiring the rights in relation to the work, the owner of the work is made aware. This aspect comes mostly into play when the rights which have been granted to the user become inconsistent with the rights granted previously. Take for instance, the right has not been registered previously, a licence thereafter that is an exclusive one or even assignments shall be given first priority over the other initial licence whereas the subsequent licence shall not be given priority. On the contrary, if the other licence had been registered initially, the subsequent licencee or assignee is stopped and prevented from rejecting the knowledge of the licence regardless of the fact that he may have not checked the register. Thus, the initial licencee may continue to exercise their rights (Raju, 58). The legal ownership of a given copyright or patent belongs strictly to the person who has his name on the copyright or patent register. In the case where a given patent has been assigned through a form of agreement between the two parties although there has been no registration of the agreement, it is important to note that the legal ownership of the patent would not have been passed. It is only the “beneficial ownership” that would have been transferred. It is thus very important to register a copyright or patent assignment if the subsequent assignee wants to receive all the benefits provided to a legal owner of the intellectual property. It is also quite important to note that a given assignment of a patent or copyright that is not registered with the IPO within a period of 6 months from the date of the assignment agreement, the particular assignee shall subsequently lose their initial right of recovering their costs and expenses in case of any successful infringement proceedings. In order for registration of any kind of intellectual property such as a patent, the aspect of territory comes into play since they are territorial rights. A given patent which covers more than one country must be registered in all the relevant countries except for European patents. Employees’ statutory compensation rights: Ownership disputes are often very complicated and costly as well as time consuming which clearly results to damaging of the employer-employee relationship. Presently, the law is not quite clear or sufficient enough when addressing matters relating to the employee’s statutory compensation rights; however, most of the matters are usually covered in the contract of employment. This is important in avoiding the disputes which result from uncertainty. Upon provision of a clear position from the employer, it is thereafter quite simple and practical to alter the terms of the contract through negotiation between the two parties in order to establish a mutual beneficial arrangement; for instance, in the case of an assignment, a licence or even the parties sharing an agreement which shall allow an employee to be able to share in the profit of his particular invention, and this greatly enhances the productivity of the staff. Know-how and trade secrets: Know-how actually lies in the category of IP which is quite difficult to define. It may be seen as the knowledge that an individual possess, which he uses as a competitive advantage over other competitors. In some other cases it may give rise to patents, copyrights, or even trademarks, but however, it is important to note that in know-how, confidentiality is what matters. The confidentiality of the information might take the form of both confidentiality and restraint provision in employment contracts. It only limits itself to key employees with access to information. It may also take the form of non-disclosure and non-competition agreements with third parties with whom the confidential information has been shared. Trade secret law does protect information as well as know-how, which is deemed to be valuable to a company due to its secrecy. The actual owner of a given secret is required to take reasonable steps to protect the secret. Misappropriation of any trade secret as well as violation of a given non-disclosure agreement is considered as a tort and in other cases may be taken as a criminal act. The major requirement of this is that the owner of the secret should keep this information as a secret. Any form of information that may range from manufacturing know-how, and formulae or even devices relating to market intelligence may be protected as trade secrets and any misappropriation may result in conviction and the convicted party may be sued for damages as well as ceased from using the given secret (Christopher, 39). Franchising: In franchising, the overall idea is usually the act of transferring the right to use a given business-concept along with everything that belongs to it; this applies just like copyright law as well as trademarks. A good example of this was the shell BP Company. In this kind of agreement, mostly the products being developed are standardized. The franchise-taker is considered as a legal and independent enterprise. This forms the difference between a franchise-taker with chain shops. The major issue is the aspect of financing and bearing the risk associated with the business. Photography: In photography, copyright law does apply. The right exists in every photo right from the time it is taken and lasts for a period of 50 years from the exact end of the calendar year that the photograph was taken. This right provides him with exclusive rights to make copies for him, control copying of his work, issue copies to the public as well as allow other people to use copies of the photograph. Software licensing, shrink wrap, dealing with software Shrink wrap license: In order to enhance commercial transactions in the mass market environment, the software industry developed the concept of “shrink-wrap licence”. In this concept, a licence agreement which sets the terms and conditions that the developer was selling a right to use given software is printed on the package which contains the software. It includes restrictions on the use of the product as well as limitations on the scope of the developer’s warranty and liability. It may be seen as an end user licence agreement (EULA) which is usually enclosed with the software in a plastic-wrapped packaging. Upon the opening of the package, the agreement is deemed to have taken effect. Major concerns emerged on the legality of a given agreement. The legal user may not examine before purchase. In a bid to address this, most manufactures adopted the use of an onscreen version which requires the user to agree before any installation may proceed. This is called “click-wrap” agreement. Outsourcing and IP Outsourcing entails a specific customer allocating permission to a specified outsourcer specifically for operation as well as general care and overseeing of the operations of the customers as well as business operations. After the agreement, the part of the business which has been outsourced, the outsourcing party replaces the customer. The major point of concern results from licencing, sharing, upgrading as well as the return of IP; this is the customer possesses trademarks as well as the patents which may be applied to the business for a long time and the outsourcing company requires access to this information in order to run the business. It is important for the owner to identify the component parts of the IP and sort out what he owns. He is to establish the nature of an agreement so that he may be disclosed to an outsourcing company. Thereafter it is important for him to determine what may and may not be transferred to the outsourcing company and also decide on who owns the IP whether it is the customer alone, or joint ownership with the outsourcing company (Sandeen, 42). Share purchase versus business purchase When purchasing an intellectual property, it is quite important to establish whether the purchase is a business purchase or a share purchase. These two terminologies refer to the amount of ownership that a buyer is entitled to upon purchase of intellectual property. Under a share purchase, all options available to a given purchaser are tied. He is restrained from selecting an intellectual property which he intends to acquire. On the other hand, a share purchase involves a purchase of the entire property of the company. This is because, shares of the company form the wealth of the company, therefore, when an individual purchases any shares in the company, he would be taking over the company as a whole (Uphill, 57). Valuation of IP rights There are many different ways that are used to value IP rights and each method has its strength and weakness; however, quite a small group of methods are commonly used and are accepted. These methods may be varied and combined in order to form the basis of most methods of valuing intellectual property. They include; Income method: This the form of IP valuation is based on the ability of the IP rights to be able to generate revenue in form of profit upon selling of the patented product or royalty. The Market method: This method is based on a unique valuation which seeks to balance both demand and the supply with particular reference to initial transactions which have comprised exactly the same rights on also a similar market. Cost method: In this method of IP valuation, the value of the asset is estimated using the costs such as research and development, installation and also the cost of protecting the right as well as the cost of replacing the rights in question. Unfortunately, there has been no conclusive means of valuing IP but however, most companies opt to use interactive means so as to slowly lower the assumptions that are made. This may result to useful findings which may refine the valuation process (Peter, 75). Domain name disputes Domain names currently are considered as quite precious commodities since the internet has no boundaries as well as the closing hours. Unlike trademarks, each particular domain name is quite unique. This implies that there is always constant pressure for persons or companies to be the first to register a given domain name, and this has led to disputes on the “right” to register. Thus domain name disputes come up. All registrars are required to follow the Uniform Domain-Name Dispute-Resolution Policy, (UDRP) which requires most domain disputes to be resolved through written agreements, court action or even arbitration prior to this, the registrar shall be entitled to cancel, suspend, or even transfer the domain name. In order to invoke the policy, the owner of the property is required to file a complaint in a court that is of proper jurisdiction against the holder of the domain; secondly, in the case of abusive registration, one is required to submit a complaint to a specified dispute resolution service provider (Feller, 116). Website design/hosting: In the case of website design and hosting, the owner of the site reserves all the rights and he may control access as well as usage of the content on the web. Each of the port web design, hosting client is solely responsible for the activities of users. Through acceptance of service from the port web design hosting, it forms a way of agreeing in order to ensure that each of the client and end user sticks to the rules relating to the policy. Any complaints are to be forwarded to the port web design hosting client’s postmaster for relevant action. Upon violation of any manner, the web policy host reserves the right to be able to terminate all the services from the page without any form of prior notice (Bitzer, 24). Conclusion Proponents of open source software have expressed concern on the laws governing intellectual property such that they may stifle the growth of new inventions as well as intellectual property. Proper management of intellectual property is very important. It helps to protect the assets. It also allows the owner to be in a good position to defend himself in case of an action against him in court. Reforms on the terms of OSS are necessary in order to provide a greater level of certainty to both the users as well as developers of open source software. Despite the many new opportunities that come along with development of intellectual property, careful management is very vital in order to protect both the creators as well as the final end users of the works. Works Cited Bitzer, Jürgen. The economics of open source software development. Amsterdam: Elsevier, 2006. Print. Feller, Joseph. Perspectives on free and open source software. Cambridge, Mass.: MIT Press, 2005. Print. Fitzgerald, Brian. Adopting open source software a practical guide. Cambridge, Mass.: MIT Press, 2011. Print. Intellectual property: principles governing jurisdiction, choice of law, and judgments in transnational disputes: discussion draft (April 10, 2006). Philadelphia, PA (4025 Chestnut St., Philadelphia 19104-3099): Executive Office, American Law Institute, 2006. Print. Koch, Stefan. Free/open source software development. Hershey PA: Idea Group Pub., 2005. Print. May, Christopher, and Susan K. Sell. Intellectual property rights: a critical history. Boulder, Colo.: Lynne Rienner Publishers, 2006. Print. Raju, C. B.. Intellectual property rights. New Delhi: Serials Publications, 2006. Print. Sowe, Sulayman K., Ioannis G. Stamelos, and Ioannis M. Samoladas. Emerging free and open source software practices. Hershey: IGI Pub., 2008. Print. Stoll, Peter. WTO--trade-related aspects of intellectual property rights. Leiden: Martinus Nijhoff Publishers, 2009. Print. Uphill, Kevin, and Alex McMillan. Buying and selling a business for wealth. London: Thorogood, 2007. Print. Sandeen, Sharon. K Intellectual property deskbook for the business lawyer a transactions-based guide to intellectual property law. 2nd ed. Chicago, Ill.: ABA Business Law Section, 2009. Print. Read More