1. Key Issues in Licensing Software and Associated Intellectual Property: Matching Licensing Models to Business Strategies
Steve Mutkoski
Regional Director, Interoperability & Innovation
Microsoft Corporation

2. What We License Software and the four distinct bodies of IP law
Patent
broad protection for a range of implementations of an innovation
“software” patents vs. other patents
Copyright
protection limited to copying of “expression”
also does not prevent others from independently developing same ideas
primarily a tool to prevent “piracy” (reproduction of entire work or key components)
not very effective at preventing “cloning” or duplication of features
Trade Secret
broad protection
but does not prevent others from independently developing same ideas
Trademark
icons, logos and stylistic elements;
User Interface
End User Product Licensing vs. Technology Licensing
Different terms and purposes

3. Co-existence of Open Source and Commercial Models
Unlikely that either licensing model will disappear soon
OSS itself depends heavily on IP laws
Developers mix and match
Must understand implications of mixing code
Significant implications on how you monetize what you as a developer create
End users really care about products
Total cost, security, reliability, usability

4. End User Licensing
Proprietary software licenses typically restrict the licensee’s right to copy, redistribute, or modify the software and normally do not grant access to the software’s source code.
These restrictions help to protect the developer’s investment in the software by preventing third parties from expropriating the software’s economic value without the developer’s authorization. This approach is reflective of the fact that proprietary software developers typically generate revenue and fund future R&D by exploiting the economic value of their software (specifically, the intellectual property (IP) embodied in the software) in the marketplace.
While some proprietary software developers accomplish this by selling their software outright to customers, others – particularly those who distribute their software to multiple customers – do so by means of commercial software licenses with the provisions described above

5. Developer Licensing
Dozens of inbound, outbound and cross licenses with key players in the industry
And increasingly “related” industries
Convergence of devices and portfolio overlap
Guarantee “freedom to innovate”
“Currency of innovation” that can be traded
Less frequent “offensive” use in industry today- more and more, licensing is seen as the solution
A positive direction for the industry- contrast with historical “MAD” viewpoint
Patent reform can play a role too

6. “Open Source” Business Models
Subscription model
Software is distributed either in “static” form for one-time fee or “dynamically” for annual per user fee
Enables distributor to receive “per copy” subscription fee that looks a lot like a software license fee
End user effectively pays for update service, as opposed to initial release of software
Services/Consulting model
Give away software, make money on consulting services
Commoditization
In portions of software “stack” where company has no competency
Some interesting wrinkles in subscription model
Subscription agreement that entitles licensee to ongoing stream of security and performance enhancements
Requires payment of per server fee; Includes audit clause typical of traditional EULA; Terminated if OSS code is modified
Starts to look a lot like the proprietary EULA
Challenges
The desktop: Fedora
Services and the average user- how to monetize?

7. Similarities among models
Community
Both OSS and Commercial companies benefit from this to some degree
Question how broad participation is and how much “support” an enterprise can get from community alone
Hybrid products
Part OSS, part proprietary
Shareware or “liteware”
Try-before-you-buy version is free
Up-sell into enterprise features, other products or support

8. Services vs. Licenses
Is this about “Open” vs. “Proprietary” or more about the way companies make money?
There is room for both models
From End User standpoint
Total cost, security, reliability, usability
From a Developer standpoint
Hard work and lots of competition in both models
VC funding- do you have a solid business plan?
How will I make money to pay my employees? Pay for R&D within my company?
Does the services model favor larger established participants?