19 May 2015 Tim Harris, Bird & Bird LLP Software Licences 19 May 2015 Tim Harris, Bird & Bird LLP

What are we going to look at? Myths Overview of Software Licences Overview of OSS Proprietary vs Open Source Permissive v Restrictive Key OSS Licences in detail OSS Business Models Considerations for Developers © Bird & Bird LLP 2015

There are a number of OSS myths Open Source Software can't be used in companies All Open Source Software is free Open Source Software can't be used with proprietary software Open Source Software can't be used with other OSS All Open Source Software licences are viral Open Source Myths All Open Source Software developments must be made public You can't charge for Open Source Software Open Source Software licences are not enforceable You can't make money from Open Source Nobody knows If we use Open Source Software All these myths are wrong…….

Software Licensing: Overview

Why do I need a software licence at all? © Bird & Bird LLP 2015

OSS: Overview

What is open source software (OSS)? The freedom to run the program for any purpose. The freedom to study how the program works and change it so it does your computing as you wish. The freedom to redistribute copies so you can help your neighbour. The freedom to distribute copies of your modified versions to others. © Bird & Bird LLP 2015

Open Source Initiative & Open Source Definition Free redistribution Source Code Derived Works Integrity of the Author's Source Code No discrimination against persons or groups No discrimination against fields of endeavour Distribution of licence Licence must not be specific to a product Licence must not restrict other software Licence must be technology neutral © Bird & Bird LLP 2015

What are the most popular OSS licences? Source: //osrc.blackducksoftware.com/data/licenses/ © Bird & Bird LLP 2015

What are the most popular OSS licences? Permissive or Restrictive? 2010% 2014% 1 GPL 2.0 Restrictive 49 27 2 MIT licence Permissive 4 16 3 Apache Licence 2.0 15 GPL 3.0 6 11 5 BSD Licence 2.0 7 Artistic Licence (Perl) 9 LGPL 2.1 8 LGPL 3.0 0.5 2.5 Microsoft Public Licence (Ms-PL) 1.6 10 Eclipse Public Licence (EPL) © Bird & Bird LLP 2015

Proprietary licences v. OSS licences

Proprietary licences Restrictions on right to use No right to modify No access to source code Some warranties and other protection Licence fee or royalties payable Restrictions on distribution © Bird & Bird LLP 2015

OSS licensing – key concepts Still a licence – ownership remains with licensor! Scope of licence is not restricted: Right to use for any purpose No restriction on duration of licence No restriction on number of users etc. You are entitled to modify the software yourself Right to re-distribute the software to any person Generally, no warranties as to condition or performance Generally, no protection against IPR infringement claims No licence fees or royalties payable to the licensor © Bird & Bird LLP 2015

OSS licences: permissive v. restrictive

Permissive OSS licences Minimal restrictions on use Ability to combine with proprietary software Modifications can remain proprietary Distribute under other licence terms Distribute object code version only But not simply public domain! © Bird & Bird LLP 2015

The philosophy of copyleft "[they] allow uncooperative people to convert the program into proprietary software. They can make changes, many or few, and distribute the result as a proprietary product. People who receive the program in that modified form do not have the freedom that the original author gave them; the middleman has stripped it away" - http://www.gnu.org/copyleft/ To copyleft a program, we first state that it is copyrighted; then we add distribution terms … that gives everyone the rights to use, modify, and redistribute the program's code, or any program derived from it, but only if the distribution terms are unchanged. Thus, the code and the freedoms become legally inseparable. © Bird & Bird LLP 2015

Restrictive OSS licences No restrictions on your own use No obligation to re-distribute Must re-distribute on same licence terms Source code must be made available "Viral" effect on proprietary software More complex terms and conditions © Bird & Bird LLP 2015

The OSS licence spectrum MIT GPL LGPL Mozilla Apache AGPL BSD Strong copyleft Weaker copyleft Permissive licenses Restrictive Permissive © Bird & Bird LLP 2015

Let's look at some examples …

The beer licence <phk@FreeBSD.ORG> wrote this file. As long as you retain this notice you can do whatever you want with this stuff. If we meet some day, and you think this stuff is worth it, you can buy me a beer in return. © Bird & Bird LLP 2015

OSS imposes a number of requirements Procedural Obligations Derivative Works Distribution Aggregation

OSS imposes a number of requirements Procedural Obligations Derivative Works Distribution Aggregation

The MIT licence Grant of broad rights to use, modify etc. Copyright © <year> <owner> Permission is hereby granted, free of charge, to any person obtaining a copy of this software … to deal in the software without restriction, including without limitation the rights to use, copy, modify, merge, publish, distribute, sublicense, and/or sell copies of the software The above copyright notice and this permission notice shall be included in all copies or substantial portions of the software. THE SOFTWARE IS PROVIDED "AS IS", WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED … IN NO EVENT SHALL THE AUTHORS OR COPYRIGHT HOLDERS BE LIABLE FOR ANY CLAIM, DAMAGES OR OTHER LIABILITY … ARISING FROM, OUT OF OR IN CONNECTION WITH THE SOFTWARE OR THE USE OR OTHER DEALINGS IN THE SOFTWARE Grant of broad rights to use, modify etc. Obligation to include copyright notices etc. Disclaimer of liability by authors Note: Licence terms have been edited for these purposes © Bird & Bird LLP 2015

The BSD licence Grant of broad rights to use etc. Copyright © <Year> <Owner> Redistribution and use in source and binary forms, with or without modification, are permitted provided that: - Redistributions must retain the above copyright notice, this list of conditions and the following disclaimer. Neither the name of <ORGANIZATION> nor its contributors may be used to endorse or promote products derived from this software without specific prior written permission. THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND CONTRIBUTORS "AS IS" AND ANY EXPRESS OR IMPLIED WARRANTIES … ARE DISCLAIMED. IN NO EVENT SHALL THE COPYRIGHT HOLDER OR CONTRIBUTORS BE LIABLE FOR ANY … DAMAGES … ARISING IN ANY WAY OUT OF THE USE OF THIS SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. Grant of broad rights to use etc. Obligation to include copyright notices etc. Non-endorsement obligation Disclaimer of liability by authors Note: Licence terms have been edited for these purposes © Bird & Bird LLP 2015

The Apache licence Each Contributor hereby grants to You a perpetual, worldwide, non-exclusive, no-charge, royalty-free, irrevocable copyright license to reproduce, prepare Derivative Works of, publicly display, publicly perform, sublicense, and distribute the Work and such Derivative Works in Source or Object form. You may … provide additional or different license terms and conditions for use, reproduction, or distribution of Your modifications, or for any such Derivative Works as a whole, provided Your use, reproduction, and distribution of the Work otherwise complies with the conditions stated in this License. Derivative Works shall not include works that remain separable from, or merely link (or bind by name) to the interfaces of, the Work and Derivative Works thereof Broad grant of rights; no obligation to distribute source code Explicit that you can use other licence terms Different approach to the "viral" issue Note: Licence terms have been edited for these purposes © Bird & Bird LLP 2015

OSS: Business Models

2015 Future of Open Source Survey (Black Duck) 78% of companies run open source Use of Open Source to run Business IT environments has gone up 2X since 2010 More than 50% said that more than half of their engineers are working on OSS More than 66% consider OSS options before proprietary software alternatives © Bird & Bird LLP 2015

Why do companies use OSS? Developers Flexibility, cost savings, reliability Start-ups Removes barriers to entry (cost) & growth (difficulty in scaling) SMEs Balanced views of OSS benefits and pitfalls Large Corporates Risks associated with OSS major barrier to entry. Use of OSS difficult to control The Key OSS Licences

OSS Business Models Professional Services on top of OSS Dual Licensing Re-licensing under proprietary licence Proprietary extensions Proprietary data Advertising-supported software [SaaS] © Bird & Bird LLP 2015

Developers: How to approach OSS

How to approach developing with OSS Identify the OSS concerned and the licence terms under which the OSS has been made available Assess whether that licence imposes any particular relevant terms (and if so, what)? Assess the effect that those terms have on your ability to exploit the Work, Derived Works etc. © Bird & Bird LLP 2015

Restrictive OSS Licences

1. Your internal use of code GPL v.2 (Section 0) Activities other than copying, distribution and modification are not covered by this License; they are outside its scope. The act of running the Program is not restricted GPL v.3 (Section 2) This License explicitly affirms your unlimited permission to run the unmodified Program ... You may make, run and propagate covered works that you do not convey, without conditions so long as your license otherwise remains in force. Key Points You can use GPL code internally without restriction You are not obliged to distribute GPL code "Distribute" (GPL v.2) v. "convey" (GPL v.3) © Bird & Bird LLP 2015

What we are going to look at: Requirements imposed by OSS licences Procedural Obligations Derivative Works Distribution Aggregation © Bird & Bird LLP 2015

Mechanics of distribution under GPL GPL v.2 (Section 6) Each time you redistribute the Program (or any work based on the Program), the recipient automatically receives a license from the original licensor to copy, distribute or modify the Program subject to these terms and conditions GPL v.3 (Section 10) Each time you convey a covered work, the recipient automatically receives a license from the original licensors, to run, modify and propagate that work, subject to this License. Key Points Distribution is not achieved by sub-licensing Instead, there is a direct licence from the original licensor © Bird & Bird LLP 2015

Distribution of unmodified copies of code GPL v.2 (Section 1) You may … distribute verbatim copies of the Program's source code as you receive it, in any medium, provided that: you conspicuously and appropriately publish on each copy an appropriate copyright notice and disclaimer of warranty; keep intact all the notices that refer to this License and to the absence of any warranty; and give any other recipients of the Program a copy of this License along with the Program. You may charge a fee for the physical act of transferring a copy, and you may at your option offer warranty protection in exchange for a fee. Key Points Similar to permissive licences, but with the addition that any distribution must be on the terms of the GPL itself. © Bird & Bird LLP 2015

Distribution of modified copies of GPL code GPL v.2 (Section 2) You may modify your copy of the Program, thus forming a work based on the Program, and copy and distribute such modifications or work, provided that you also meet all of these conditions: b) You must cause any work that you distribute or publish, that in whole or in part contains or is derived from the Program or any part thereof, to be licensed as a whole at no charge to all third parties under the terms of this License. Key Points There is a clear right to modify the GPL code The modified work must be licensed under the GPL terms But confusing (and different) language being used here … © Bird & Bird LLP 2015

Scope of a "Work based on the program" US copyright law recognises 2 distinct concepts: Derivative works "A work based upon one or more pre- existing works, such as a translation … or any other form in which a work may be recast, transformed or adapted." Example: A software program that has been enhanced from an earlier version Collective works "A work … in which a number of contributions, constituting separate and independent works in themselves, are assembled into a collective whole." Example: A set of separate office programs distributed on a single disc or in a single package Does the GPL merge these 2 concepts? GPL v.2 (Section 0) a "work based on the Program" means either the Program or any derivative work under copyright law: that is to say, a work containing the Program or a portion of it, either verbatim or with modifications and/or translated into another language. © Bird & Bird LLP 2015

Scope of a "Work based on the program" GPL v.2 (Section 2) If identifiable sections of that work are not derived from the Program, and can be reasonably considered independent and separate works in themselves, then this License, and its terms, do not apply to those sections when you distribute them as separate works. But when you distribute the same sections as part of a whole which is a work based on the Program, the distribution of the whole must be on the terms of this License ... In addition, mere aggregation of another work not based on the Program with the Program (or with a work based on the Program) on a volume of a storage or distribution medium does not bring the other work under the scope of this License. Key Points The first bullet is fairly obvious (except for underlined words) Intended relationship between second and third bullets is not clear © Bird & Bird LLP 2015

What does the FSF say? What is the difference between an “aggregate” and other kinds of “modified versions”? An “aggregate” consists of a number of separate programs, distributed together on the same CD-ROM or other media. Where's the line between two separate programs, and one program with two parts? This is a legal question, which ultimately judges will decide. We believe that a proper criterion depends both on the mechanism of communication (exec, pipes, rpc, function calls within a shared address space, etc.) and the semantics of the communication (what kinds of information are interchanged). If the modules are included in the same executable file, they are definitely combined in one program. ([i.e. static linking]) If modules are designed to run linked together in a shared address space, that almost surely means combining them into one program. ([i.e. dynamic linking]) By contrast, pipes, sockets and command-line arguments are communication mechanisms normally used between two separate programs. So when they are used for communication, the modules normally are separate programs. But if the semantics of the communication are intimate enough, exchanging complex internal data structures, that too could be a basis to consider the two parts as combined into a larger program. © Bird & Bird LLP 2015

Obligation to provide source code GPL v.2 (Section 3) You may copy and distribute the Program (or a work based on it) in object code or executable form … provided that you also do one of the following: accompany it with the complete corresponding machine-readable source code … on a medium customarily used for software interchange; or, accompany it with a written offer … to give any third party, for a charge no more than your cost of physically performing source distribution, a complete machine- readable copy of the corresponding source code. Key Points Applies to the original work and "a work based" on it Obligation to provide a copy of the source code Written offer to provide source code separately (at minimal cost) © Bird & Bird LLP 2015

GPL and the "SaaS loophole" Does the provision of software on a SaaS basis trigger the GPL obligations? GPL v2.0 GPL v3.0 Affero GPL v3.0 "Distribution" is not defined in GPL v2.0. To “convey” a work means any kind of propagation that enables other parties to make or receive copies. Mere interaction with a user through a computer network, with no transfer of a copy, is not conveying. Notwithstanding any other provision of this License, if you modify the Program, your modified version must prominently offer all users interacting with it remotely through a computer network … an opportunity to receive the Corresponding Source of your version. A company is running a modified version of a GPL'ed program on a web site. Does the GPL say they must release their modified sources? The GPL permits anyone to make a modified version and use it without ever distributing it to others. What this company is doing is a special case of that. Therefore, the company does not have to release the modified sources. © Bird & Bird LLP 2015

OSS imposes a number of requirements Procedural Obligations Derivative Works Distribution Aggregation

OSS imposes a number of requirements Mozilla Pubic Licence You may create and distribute a Larger Work* under terms of Your choice, provided that You also comply with the requirements of this Licence for the Covered Software. *Larger Work means a work which combines Covered Code or portions thereof with code not governed by the terms of this License Aggregation © Bird & Bird LLP 2015

Tim Harris Senior Associate Tim.Harris@twobirds.com +44 (0)20 7905 6374 Bird & Bird LLP is a limited liability partnership, registered in England and Wales with registered number 0C340318 and is authorised and regulated by the Solicitors Regulation Authority. Its registered office and principal place of business is at 15 Fetter Lane, London EC4A 1JP. Bird & Bird is an international legal practice comprising Bird & Bird LLP and its affiliated and associated businesses and has offices in the locations listed on our web site: twobirds.com. The word “partner” is used to refer to a member of Bird & Bird LLP or an employee or consultant, or to a partner, member, director, employee or consultant in any of its affiliated and associated businesses, who is a lawyer with equivalent standing and qualifications. A list of members of Bird & Bird LLP, and of any non-members who are designated as partners and of their respective professional qualifications, is open to inspection at the above address. www.twobirds.com