Nokia Acquires Trolltech, Continuing the Trend of Greater Involvment of Traditional Software Companies in Open Source

Nokia announced that it will be acquiring Trolltech. This acquisition continues a trend of traditional software companies becoming active in using open source software and business models. For example, Citrix acquired Xensource and Yahoo acquired Zimbra. Consistant with this trend, Nokia provided the following explanation:

"The technology landscape evolves and, for Nokia, software plays a major role in our growth strategy for devices, PCs and the integration with the Internet. We continue to focus on areas where we can differentiate and add more value. Common cross-platform layers on top of our software platforms attract innovation and enable Web 2.0 technologies in the mobile space," said Kai Oistamo, Executive Vice President, Devices, Nokia. "Trolltech's deep understanding of open source software and its strong technology assets will enable both Nokia and others to innovate on our device platforms while reducing time-to-market. This acquisition will also further increase the competitiveness of S60 and Series 40."

http://money.cnn.com/news/newsfeeds/articles/prnewswire/UKM00728012008-1.htm


Traditional software companies understand that open source is a very powerful force in the software industry, a view confirmed by several recent reports on the penetration of open source software. Dennis Byron, the anaylst, summarized these reports very effectively in his post http://www.ebizq.net/topics/open_source/features/8842.html?page=1. He notes that according IDC open source software revenue in 2006 was $1.8 billion (about 1% of all software revenue), but has a growth rate three times the growth rate of traditional software. He also provides a very useful discussion of the difficulty of measuring the growth of open source software.

These reports are consistant with Gartner's report last year: Gartner declared open-source software "the biggest disruptor the software industry [Gartner] has ever seen and [Gartner] postulated it will eventually result in cheaper software and new business models." They stated that open-source products accounted for a 13 percent share of the $92.7 billion software market in 2006, but should account for 27 percent of the market in 2011 when revenue is expected to be $169.2 billion, according to Gartner research. http://lawandlifesiliconvalley.blogspot.com/2007/09/open-source-paradigm-shift.html. IDC has estimated that open source revenues will increase to $5.8 billion in 2011, which represents an annual growth rate of 26 percent from 2006 to 2011.

Byron's conclusion is that open source and closed source models are converging and that over time software users will be more concerned about functionality and price rather than "open source" or proprietary. http://www.ebizq.net/topics/open_source/features/8842.html?page=5. This conclusion is consistent with the results from our 2007 Open Source Think Tank http://thinktank.olliancegroup.com/index.php?option=com_content&task=view&id=34&Itemid=61 (We will be holding our Third Annual Open Source Think Tank next week and you may find out more about this invitation only event athttp://lawandlifesiliconvalley.blogspot.com/2008/01/thinking-forward-on-commercial-open.html)

Open source has entered the mainstream and needs to be part of the strategy of all software companies.

HP Launches New Websites to Manage Open Source Software

HP announced the launch of two websites to assist companies in managing open source software:

http://www.fossology.org/: This site provides a tool that HP developed internally to assist in the management of FOSS. The tool was designed to "quickly and accurately describe how a given open source project was licensed." It is designed to analyze all of the source code for a given project and uses license declarations and "tell tale" phrases to identify which software licenses are being used.

http://www.fossbazaar.org/: This community site provides access to information on FOSS and how to manage it. FOSSBazaar is designed to be a site share information and best practices on managing open source software, with issues ranging from license management to vulnerabilities in FOSS projects. HP has posted significant material on FOSS Governance in the "Getting Started" folder.https://fossbazaar.org/?q=topics/gettingStarted


The site is unique because it provides a single location to discuss information which is currently spread across multiple sites. I think that the site will be very valuable to the FOSS community, but only if they use it. In fact, I have contributed information on intellectual property to the site: https://fossbazaar.org/?q=topics/ipIssues.


The availability of this tool as well as the more familiar Black Duck and Palamida tools mean that the use of FOSS will be receiving increasing levels of scrutiny. We have already seen much greater scrutiny of these issues both at funding for venture capital backed startups and in mergers and acquisitions. In fact, several large companies have established specific, separate due diligence procedures focused solely on open source use. Since more than 95% of venture backed startups exit through acquisition, the management of FOSS use should be a priority for technology startups. Moreover, with the increasing use of litigation by some projects, http://lawandlifesiliconvalley.blogspot.com/2007/12/busybox-files-lawsuit-against-verizon.html the management of FOSS use needs to become a priority for all companies using software (which is essentially all companies)


I recommend that you take the sites for a spin.

Buying an Open Source Company

451 Group has recently published a report on why companies would buy an "open source" company. Although I have not read the report, I have been impressed by the quality of their work in the past. Ironically, the report came out on the day of announcement of the Sun acquisition of MySQL. Such acquisitions will be attractive to the open source companies for the same reasons that it was attractive to MySQL: the ability of a large company like Sun to provide the strong service component which is critical for smaller software companies (and particularly open source software companies) to be successful in selling to the enterprise. http://lawandlifesiliconvalley.blogspot.com/2008/01/sun-microsystems-buys-mysql-for-1.html

Matthew Aslett summarizes the report in his posting. http://blogs.the451group.com/opensource/2008/01/18/why-buy-an-open-source-company/. The 451 Group identifies the following drivers for open source M&A:

Entrance into new markets
Portfolio expansion
Consolidation play
Business overhaul
Technology play
Project acquisition
Technology transfer
Carve out

I agree with Martin Schneider that for many traditional software companies "Business Overhaul" is the most compelling reason for an open source acquisition. They need to learn more about the open source business model. However, I think that it is important to place open source acquisitions in the broader context of the consolidation going on generally in the software industry. http://www.networkworld.com/news/2007/111307-hp-ceo-consolidation-openworld.html. The factors driving this general consolidation will also drive open source acquisitions.

Sun Microsystems Buys MySQL for $1 Billion

Sun announced today that they are purchasing the open source database vendor, MySQL AB, in a deal valued at around $1 billion. The transaction is scheduled to close late in the third quarter or early in the fourth quarter of Sun's fiscal 2008. According to The Street: "Sun will pay approximately $800 million in cash for all of MySQL's stock and assume about $200 million in options." http://www.thestreet.com/s/sun-to-buy-mysql/newsanalysis/techsoftware/10398964.html?puc=_googlen?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA



Sun's CEO, Jonathan Schwartz, described the acquisition as based on MySQL's unique position: MySQL's database is the "M" in the LAMP stack which is favored by web companies, yet MySQL is having difficulties selling to more traditional companies, because CIOs want traditional "big company" commercial support. MySQL has stated that "more than 100 million copies of MySQL's open source database software have been downloaded and distributed and an additional 50,000 copies are downloaded daily." Sun gains the advantage of MySQL's customer base while supplying the commercial support that MySQL needs to sell into more traditional enterprises. http://blogs.sun.com/jonathan/ Jonathan's post is particularly interesting for the vision behind the acquistion:

So why is this important for the internet? Until now, no platform vendor has assembled all the core elements of a completely open source operating system for the internet. No company has been able to deliver a comprehensive alternative to the leading proprietary OS. With this acquisition, we will have done just that - positioned Sun at the center of the web, as the definitive provider of high performance platforms for the web economy.


Jonathan's post also provides details about how Sun will integrate MySQL into its offerings.


And he announced that Sun will be funding additional developments at universities through global research fellowships designed to advance the state of engineering on the internet. The announcement of this academic initiative follows Sun's announcement in December that Sun will be establishing an "award program" to support innnovation and advance open source development relating to its products. http://lawandlifesiliconvalley.blogspot.com/2007/12/paying-developers-new-way-to-develop.html



2008 is starting with a bang for open source.

Thinking Forward on Commercial Open Source: Third Annual Open Source Think Tank

Commercial open source software is at an exciting cross roads. In the last year, its importance has been acknowledged by Gartner which declared open-source software "the biggest disruptor the software industry [Gartner] has ever seen and [Gartner] postulated it will eventually result in cheaper software and new business models." http://lawandlifesiliconvalley.blogspot.com/2007/09/open-source-paradigm-shift.html. The first revision of the General Public License in 15 years was completed. http://lawandlifesiliconvalley.blogspot.com/2007/07/general-public-license-version-3-legal.html. The cloud over Linux created by SCO's litigation, almost forgotten, came to a dramatic end in one of the most spectacular melt downs in the history of intellectual property litigation. And many traditional software companies, such as Adobe and Yahoo, have become involved in open source software. http://netscape.com.com/Year-in-review-New-players-enliven-open-source/2009-7344_3-6223153.html

However, success brings new challenges. We will be discussing those challenges again at the Third Annual Open Source Think Tank on February 7 to 9 at the Silverado resort in Napa Valley which is an invitation only gathering for leading global experts to get together and work collaboratively on the issues facing commercial open source. The Think Tank will focus on the continuing evolution of commercial open source companies, customer adoption trends, impact of software-as-a-service, implications of industry consolidation, and legal developments. The keynote speaker will be Chris Anderson of author of the Long Tail and editor in chief of Wired. For a preview of his thoughts, you can read his interview on Matt Asay's blog: http://blogs.cnet.com/8301-13505_1-9845106-16.html?part=rss&subj=news&tag=2547-1040_3-0-5.

The Open Source Think Tank is unlike a traditional conference; all the attendees who participate are expected to contribute in the brainstorming and workshop format and to take advantage of the CIO panels. If you are interested, you can apply to participate at https://thinktank.olliancegroup.com/

Like last year, we will publish a report of the results of the http://thinktank.olliancegroup.com/

2007 Top Ten Free and Open Source Legal Issues

The year 2007 has been the most active year for legal developments in the history of free and open source (“FOSS”). In fact, you would have been hard pressed in past years to enumerate even five important legal developments. However 2007 permits the creation of a traditional “top ten” list. My list of the top ten FOSS legal developments in 2007 follows:

1. Publication of GPLv3. The GPLv2 continues to be the most widely used FOSS license, yet the law relating to software has developed significantly since the publication of the original publication of the GPLv2 in 1991. The first revision of the GPLv2 had a number of drafts over an 18 month period. However the new GPLv3 license is much more comprehensive than GPLv2 and addresses the new issues which have arisen in software law in the last 15 years.

2. SCO’s Attack on Linux Collapses. SCO filed lawsuits claiming that Linux infringed SCO’s copyrights in UNIX. These suits suffered a fatal blow when the court in the Novell litigation found that SCO did not own the copyrights in UNIX. The ownership of the copyrights is essential to prosecute cases for copyright infringement. The melt down of SCO’s strategy was complete when it filed for bankruptcy soon after this loss.

3. First Legal Opinion on Enforcing a FOSS License. In August, the district court in San Francisco surprised many lawyers by ruling that the remedies for breach of the Artistic License were in contract, not copyright. Most lawyers believe that the failure to comply with the major terms of an open source license means that the licensee is a copyright infringer and, thus, can obtain “injunctive relief" (which means that the court orders a party to cease their violation). On the other hand, if the remedy is limited to contract remedies, then the standard remedy would be limited to monetary damages. Such damages are of limited value to open source licensors. The district court decision has been appealed.

4. First US Lawsuit to Enforce GPLv2. The Software Freedom Law Center filed the first lawsuit to enforce the GPL for the BusyBox software in August. Subsequently, it filed three other lawsuits. Although the first three lawsuits were against small companies, the most recent lawsuit was against Verizon. These lawsuits represent a new approach for the SFLC which, in the past, has preferred negotiation to litigation. SFLC has settled two of the lawsuits. Each of the settlements has required that the defendants pay damages, another new development. These suits may be the first of many.

5. First Patent Infringement Lawsuit by Patent Trolls against FOSS Vendors. IP Innovation LLC (and Technology Licensing Corporation) filed suit against Red Hat and Novell in what may be the first volley in a patent war against a FOSS vendor. Acacia is a well known patent troll which has been buying patents for some time and works through multiple subsidiaries. The FOSS industry provides a tempting target because of its rapid growth. These suits could slow the expansion of FOSS because many potential licensees express concern about potential liability for infringement of third party rights by FOSS.

6. First Patent Lawsuit by a Commercial Competitor against a FOSS Vendor. Network Appliances, Inc. (“NetApps”) sued Sun Microsystems, Inc. (“Sun”) for patent infringement by Sun’s ZFS file system in its Solaris operating system. The ZFS file system posed a challenge to NetApps products because it permits the connection of less expensive storage devices to the operating system.

7. Microsoft Obtains Approval of Two Licenses by OSI. Microsoft Corporation continues its schizophrenic approach to FOSS by simultaneously asserting that the Linux operating system violates Microsoft’s patents and submitting two licenses for approval by OSI. In October, the OSI Board approved the Microsoft Public License (Ms-PL) and the Microsoft Reciprocal License (Ms-RL) as consistent with the Open Source Definition.

8. German Court Finds that Skype Violates GPLv2 The enforcement of the GPLv2 in Germany continues with a Munich court finding that Skype had violated GPLv2 by not including the source code with the binary version of the software (instead, Skype had included a “flyer” with a URL describing where to find the source code version). The suit was brought by Harald Welte, who has been the plaintiff in virtually all of the German enforcement actions for GPLv2. Harald runs gpl-violations.org, an organization which he founded to track down and prosecute violators of the GPL.

9. New License Options. Two of the most controversial issues in FOSS licensing, network use and attribution, were addressed in new licenses adopted this year. A “network use” provision imposes a requirement that when a program makes functions available through a computer network, the user may obtain the source code of the program. Essentially, it extends the trigger requiring providing a copy of the source code from “distribution” of the object code (as required under the GPLv2) to include making the functions available over a computer network. An “attribution” provision requires that certain phrases or images referring to the developing company be included in the program. This provision was very controversial on the License Discuss email list for OSI. The Free Software Foundation published the Affero General Public License in the fall which expanded the scope of the GPLv3 to include a “network use” provision. A limited form of attribution was included in the GPLv3. And OSI approved the Common Public Attribution License which included both the “network use” and “attribution” provisions.

10. Creation of Linux Foundation. The Open Source Development Labs and the Free Standards Group merged to form the Linux Foundation. The FOSS industry is unusual because of the extent to which it depends on non profit entities for guidance. These entities include the OSI, Free Software Foundation, Mozilla Foundation, Apache Foundation and Eclipse Foundation. This merger provides a much stronger platform to promote Linux and open standards.

BusyBox Settles Second GPL Suit

The Software Freedom Law Center ("SFLC") has settled a second BusyBox sofware lawsuit. The settlement for Xterasys is confidential, but appears to be virtually identical to the settlement for Monsoon Media. Dan Ravicher, the SFLC attorney for BusyBox, stated:

As a result of the settlement, Xterasys has agreed to cease all binary distribution of BusyBox until SFLC confirms it has published complete corresponding source code on its Web site. Once SFLC verifies that the complete source code is available, Xterasys' full rights to distribute BusyBox under the GPL will be reinstated.

Additionally, Xterasys has agreed to appoint an internal Open Source Compliance Officer to monitor and ensure GPL compliance, and to notify previous recipients of BusyBox from Xterasys of their rights to the software under the GPL. Xterasys will also pay an undisclosed amount of financial consideration to the plaintiffs.

The settlement suggests that SFLC has adopted a template for settlement. The lessons for FOSS management are the same as I suggested in my post about Monsoon Media. http://lawandlifesiliconvalley.blogspot.com/2007/11/monsoon-media-lessons-for-foss.html


1. You need to respond quickly and appropriately to any complaints about non compliance with open source licenses.


2. You should have a FOSS Use Policy to avoid these problems.


3. Your FOSS Use Policy should include a procedure for responding to these types of complaints.

4. Non-compliance, even “innocent” non-compliance, is getting more expensive.


If you don’t take these steps voluntarily, they may be imposed on you and you will have your own Open Source Compliance Officer.