IP Advisor - January 2006 January 24, 2006
In This Issue

Open Source: Answers to 10 Common Questions

In recent years, there has been a tremendous buzz about open source software. Many constituencies believe that it is the ultimate destiny of the software industry, while others remain unconvinced that open source represents a viable business model. There is no doubt, however, that open source software is changing the software industry and is here to stay – in some form.

Here we answer some frequently asked questions about open source software and address some common misconceptions.

1. What is open source software?

The term “open source software” historically referred to software developed by volunteer programmers lacking any common affiliation other than an interest in developing a solution to a particular problem. The results of these “projects” were freely distributed in source code form1, with support provided via e-mail, bulletin boards and chat rooms. What started as a niche among software developers, however, has grown to the point where large corporations and government agencies regularly look to open source software for collaboratively developed solutions, and innovators in other technology areas, such as biotechnology and product design, are considering analogous collaborative approaches. What many people learned – and continue to learn – from open source is how people with an interest in solving a problem can work collaboratively to do so.

2. Is all open source software the same?

No. There are many different types of software that are open source. Likewise, there are different levels and types of commercial and community involvement, ranging from projects with a few hobbyists working nights and weekends to highly committed corporations that have entire businesses based on open source software. In addition, there are many different open source licenses.

3. Does use of open source software save time and money?

Open source software fosters software re-use, which can save time and money. However, it still needs to be specified, tested and deployed just like other software. Large open source projects can shave tens of thousands of dollars in up-front license fees from a company's IT budget, but training, compatibility, troubleshooting and license management costs can reduce that savings.

4. What are the different types of open source licenses?

At one extreme, some open source projects allow their code to be copied and distributed as part of other applications without any significant restrictions. At the other extreme, some licenses require that source code for derivative works be distributed, and that those derivative works be licensed under the same terms as the original open source code. In some circumstances, if a company includes and distributes such open source software in its proprietary software, the company might be required to distribute source code for at least some of its proprietary software under an open source license. And there are dozens of other license variations in between these two extremes. Just as when companies license commercial software, companies should understand the terms under which open source software is offered.

5. Do I even need to worry about complying with open source licenses?

Yes. Open source developers retain rights in their software and license the software under specific terms. Because software is covered by copyright law, unauthorized copying and/or distribution of code without a license from the copyright owner is prohibited. Use of software in a manner not consistent with its license terms runs the risk of being considered copyright infringement.

6. How do I get support for open source software?

Commercial software typically comes with support – either as part of the software license or as a separate support agreement. Likewise, some open source software vendors (generally the more established distributors such as RedHat and Apache) also offer support, and in fact many of these vendors rely on support revenues to maintain their business. For the smaller, lesser-known projects, third-party support providers may be available, but end users otherwise may need to rely on their own staff or the community of developers working on the project.

7. How does open source software affect my intellectual property?

Because software is protected by various intellectual property regimes (e.g., patents, copyrights and trade secrets), use of open source can affect a company’s IP rights in many ways. Companies that distribute proprietary software products should consider whether use of open source in their products would result in a potential loss of copyright or trade secret protection. Some open source licenses also may be interpreted as licenses to any of the company’s patents that cover the distributed code. Some licenses also include a “patent termination” clause that revokes any license to the open source software should a company assert patents against any current licensee of the open source software.

8. How does using open source software affect my litigation risks?

Some commercial offerings include indemnification protection, shielding the licensee from any IP claims made by third parties. Most open source software does not include such protection and instead relies on the members of the community supporting the project to police and defend themselves. This can be at least a theoretical risk if key portions of a company’s system are based on code that is taken “as is,” and may be a significant practical risk in some circumstances. The degree of risk will depend in part on the community involved, and the importance of the software to the company’s business.

9. How do companies make money giving their software away?

It seems contrary to conventional business practice, but many software companies are now providing their software (and in some cases the source code) free of charge. To compensate, these companies offer one or more alternative models for generating revenue. In a “services and support” model, a company sells services (e.g., implementation, customization, support and updates, etc.) for open source software it has developed or obtained from others. Some companies use a “dual license” model where different license terms – e.g., commercial and open source licenses – are available for the same software for different prices.

10. How can I safely implement open source into my development process?

As with any new technology or practice, companies can develop procedures that facilitate the identification, review, approval and ongoing compliance with the various license terms and internal guidelines. Typically, this involves scheduling management and developer time to review open source usage before it makes its way into a final product, maintaining a list of approved open source software and the associated licenses, and performing periodic or ongoing audits, possibly using new “code auditing” tools that are available.

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Like most innovations, open source emerged as the result of a confluence of factors. Even while software solutions became larger and more complex, management’s tolerance for long, costly development efforts shrank. The Internet made it easier for developers to collaborate and share problems and solutions. Also, many of the “basic” functional processes of large-scale applications became “commodities” – much like windshield wipers and tires became commodities for the automobile industry in the early 20th century.

It is no surprise then that the use of open source software is increasing. Using it can save development time and reduce some IT expenditures, but along with these benefits come certain risks. Like any other business decision, however, companies that take the time to analyze and understand these risks, and make informed decisions, can benefit from using open source.

Getting a Handle on the Software Patent Explosion

Companies in many different fields – not just Information Technology – are concerned about how to best protect their software technology. Changes in the legal landscape for the protection of computer software have resulted in an avalanche of patents geared toward software-related inventions. Here are answers to some basic questions about protecting software in this new environment.

Can I apply for a patent to protect my software?

Yes. Naturally, there must be an invention associated with the software – one cannot just submit software code to the U.S. Patent Office and get a patent on it. Basically, the invention is what the software does, not the software code itself.

The term “software patent” generally refers to a patent on a new process, system or device that involves manipulation of data, but these patents are treated no differently than any other utility patents in the United States. Any invention must be useful, new and non-obvious to be patentable.

The United States and Japan have led the way for the patentability of software-related inventions. One of the turning points in the United States was Diamond v. Diehr, a case decided by the U.S. Supreme Court in 1981, in which a claim to a computer-controlled rubber molding process was found to be patentable even though it contained a mathematical equation. Now, even business methods are permissible subject matter for patent protection in the United States.

Why should I apply for patents to protect my software products instead of just relying on copyright or trade secret law?

Copyright and trade secret law generally offer weaker protection than patent law. Also, it may be harder to establish a cause of action under copyright or trade secret law than to prove patent infringement.

Copyright only protects the expression of an idea, not the idea itself. Because software blurs the boundary between “idea” and “expression,” courts are reluctant to interpret copyright protection broadly for computer software.

Under trade secret law, one must show that specific actions have been taken to maintain the secrecy of the technology in question. Also, like copyright law, trade secret law may vary from jurisdiction to jurisdiction.

Most importantly, copyright and trade secret law do not protect a software owner against independently developed software. So, if someone comes up with your software technology on his own, you are out of luck unless you have patent protection.

How many software patents are being issued?

According to estimates derived from patent classification data published in August 2005 by the U.S. Patent Office,1 the number of software patents issuing per year in the United States has increased almost every year since 1990. In fact, the number of software patents issued in 2004 was about five times the number issued in 1990 (about 11,600 vs. 2,400 patents). Also, the percentage of utility patents issuing in a given year that are software patents has increased dramatically – from about 2.6% in 1990 to about 7.1% in 2004.

Is it possible to get patent protection for software outside the United States?

Yes. Rules regarding the patentability of software-related inventions are still being worked out in many countries, but an international consensus has been reached, asserting that an invention is no less an invention just because it is implemented by computer.

The patent offices of most countries follow the lead of the United States, Europe or Japan. In terms of the acceptability of software-related subject matter, the U.S. patent system is the most favorable, followed by Japan, then Europe.

I heard that a European Directive about software patents was recently rejected. What does this mean for the future of software patents in Europe?

On July 6, 2005, the European Parliament rejected a Directive that attempted to harmonize national standards in Europe regarding the patentability of computer-implemented inventions. This means there will continue to be some uncertainty in Europe regarding the patentability of certain kinds of software-related inventions. In light of the increasing number and legitimacy of software patents issuing in the United States and Japan, many believe Europe will eventually clarify, and possibly relax, its patentability standards for computer-implemented inventions.

What kind of patent portfolio should I build to protect my software? Should I try to include “defensive” software patents in my patent portfolio?

It certainly makes sense to patent within your technology space to stake out your territory and keep others out. In addition, many companies have patents in fields not of direct interest to them but which are of interest to competitors. These “defensive” patents provide a disincentive for would-be patent infringement plaintiffs who fear being accused, themselves, of patent infringement. Such patents may also be used as bargaining chips or to gain leverage in business dealings with other parties.

How strong are software patents? Aren’t they easy to invalidate if I try to enforce them?

Like any patent, a software patent is only as strong as its claims. A good patent contains claims with different levels of abstraction – some very broad claims that stake out a wide swath of intellectual property, as well as other more narrow claims. In an infringement case, the patent owner wins if he proves that any of his claims are infringed, while an accused infringer prevails if he shows either that the patent claims are invalid or that he doesn’t infringe. So, a patent with claims of varying breadth provides its owner with the best chance of success in litigation, because it is more likely the owner can prove infringement of at least one claim that withstands an invalidity challenge.

There have been concerns that too many software patents contain invalid claims. Issued patents are the primary source of prior art for patent examiners, so early applications in this field had lower hurdles on their way to allowance simply because there was less prior art around to support claim rejections. Now, there are more software patents to serve as prior art for examiners. There are also projects such as the Software Patent Institute (sponsored in part by IBM, Microsoft and Apple Computer) that have made more software prior art available to patent examiners in an effort to protect the quality and legitimacy of issued software patents.

The U.S. Patent Office is now addressing this issue. As announced in a press release on January 10, 2006, the Patent Office has created a partnership with the open source community in an effort to facilitate examiners’ access to software prior art. New initiatives will be discussed in a public meeting on February 16, 2006, at Patent Office headquarters in Alexandria, Virginia.

Will it be harder to get patent protection for my software if the U.S. Patent Reform bill passes?

No, there should be no change.

Profile: Doug Kline

Douglas J. Kline is a partner in Goodwin Procter’s Intellectual Property Group, where he concentrates his practice on all aspects of intellectual property litigation, particularly patent infringement matters and other disputes related to the enforcement of intellectual property rights. Doug received his law degree from Suffolk University Law School, graduating magna cum laude. He received his B.S. in mechanical engineering from Tufts University. Prior to joining Goodwin Procter in 2005, Mr. Kline was a partner at Testa, Hurwitz & Thibeault in Boston, where he chaired the Patent and Intellectual Property Practice Group and Intellectual Property Litigation Group.

Q: What got you interested in IP Law?

Doug: In high school, I tended toward math and science and always did well in those subjects. I studied engineering in college, having been encouraged by my parents to pursue a degree that, in their view, had at least reasonable job prospects. After working for a few years as an engineer in manufacturing, I began to develop the strong sense that working as a practicing engineer wasn’t for me. I considered a variety of options available to me, and law school emerged as the most attractive one to pursue (business school and the Peace Corps being some of the others). I was attracted to the intellectual discipline required to study law. During law school, I began to consider patent law as a specific field. It was a logical fit in light of my engineering background and, again, the job prospects were reasonable. From the first day I started working as an IP attorney, I have loved it and knew that I made the right decision.

Q: Why do you like IP law?

Doug: I love the variety of technologies that we deal with, and the complexity of intellectual property law. We spend time with some of the brightest scientists on earth – as clients, inventors and experts – and they teach us about fascinating and far-ranging technologies. We become, briefly, experts ourselves in areas we could never have expected to know anything about. I studied mechanical engineering in college, but today I understand, for example, how our immune system fights disease, how semiconductors are made and how blood clots cause strokes. I also love that the law we deal with is equally complex, which can give you a real edge over your opponent. There is a lot of room available to crawl around inside the patent statute and the case law to develop a strategy that will help your client get where it needs to be.

Q: Tell us about your interesting cases and clients.

Doug: We handle a lot of patent litigation for adidas, and you might be surprised how much technology goes into athletic shoes. It is very interesting to work with a client that operates at the intersection of biomechanics and fashion. Adidas often finds itself in the crosshairs of independent inventors who are convinced that they have revolutionized shoe design and their bold new designs are being copied by all the big companies. In one case we handled, a small company accused adidas of infringing a dozen or more patents that the small company argued, as near as we could determine, covered generally bumps on shoe soles. We were able to prove that bumps were not all that revolutionary considering shoes have had bumps for quite a long time, and certainly well before the company’s patents. In another case, concerning cervical cancer detection tests, Duncan Greenhalgh, who is another member of our IP Group here at Goodwin, and I had to determine whether certain chemicals would prevent cells from clumping. Duncan conceived a series of experiments that we wanted to test before we asked our expert to run them. The problem was, we needed a healthy supply of human cells to run the experiments. So, Duncan and I spent one, very long afternoon in lab coats repeatedly poking our fingers with stylets and bleeding into test tubes – anything for the client.

Recent Developments at Goodwin Procter

Recent Speaking Engagements

Keith A. Zullow moderated a panel entitled “Patent Litigation Update” at the 2005 CLE Fall Program of the New York Intellectual Property Law Association on November 18, 2005.

 

Publications

Daniel A. Wilson published “Best Mode Is Still Best When It Comes To Patent Applications” in Mass High Tech on December 12, 2005.

Jacqueline Klosek published “United States: Privacy: Frequently Asked Questions” in Mondaq on November 8, 2005.

Deborah S. Birnbach and Jacqueline Klosek published the 2005 Update to Deborah’s Chapter, “Data Privacy Statutes,” in the book Data Security and Privacy Law: Combating Cyberthreats (Thomson/West 2005).

 

Honors and Awards

Jacqueline Klosek was selected to serve as a member of the advisory board to the Privacy Advisor, a publication of the International Association of Privacy Professionals (IAPP). Jacqueline was also selected to co-chair IAPP’s International Law Working Group.

 

Upcoming Events

Goodwin Procter is sponsoring The Wall Street Transcript’s IP Conference: Maximizing Returns on Your Intellectual Property Portfolio, to be held at the Harvard Club in New York on January 26-27. Ira J. Levy will present “Due Diligence for Executing Your Licensing Strategy.”

Kingsley L. Taft will be speaking on “Patent Issues in M&A Transactions” at the Practising Law Institute on March 2.

Goodwin Procter is sponsoring the National Summit 2006 of the International Association of Privacy Professionals at the Omni Shoreham Hotel in Washington, D.C. on March 8-10.