`Viral' Open-Source License Can Destroy Software's Value, Wolf Greenfield Lawyers Tell Conference; SCO vs. IBM Further Muddies Picture.

Business Editors/Legal Writers/High-Tech Writers

BOSTON--(BUSINESS WIRE)--Nov. 21, 2003

"Your employee could grab a piece of open-source code off the Internet and you no longer have a proprietary product. Your $50,000 software package is now worth zero," Steve Henry, a senior intellectual property lawyer with Wolf, Greenfield & Sacks, P.C., told the Software Business 2003 Conference in Boston.

This "time bomb" lurks because a popular license for open source, the GNU General Public License, (GPL) is "viral." The license attaches to any product with GPL-licensed code, including a derivative work, he said. The entire software package becomes open source and the company thus must distribute it freely and let anyone copy it. A widely used open-source utility, for instance, could "infect" hundreds of software products and destroy their commercial value.

Henry and Liza Vertinsky, an associate with Wolf Greenfield, made a joint presentation on open source issues. They said that any company considering or already using open source, whether to acquire software, to distribute its own software, or to collaborate with others, must know the risks and opportunities and how to avoid the pitfalls.

The two also covered one of the industry's most controversial cases: SCO vs. IBM, which "casts clouds over the open-source movement and could profoundly affect practices involved in the licensing of intellectual property rights."

The SCO Group sued IBM for $1 billion, claiming IBM destroyed SCO's corporate market for UNIX. SCO claims IBM has inserted UNIX code into Linux, to make it an "enterprise" platform, violating IBM's UNIX licenses. IBM contends it is not in breach of contract because at least in part SCO or its predecessors licensed that code under the General Public License, giving IBM and other companies the right to use and redistribute it however they see fit. Trying to "re-claim" rights and defend against the challenge, SCO challenges the validity of the GPL, claiming copyright law preempts it (and apparently that the GPL licenses are therefore invalid).

Most legal experts say SCO's GPL attack is weak, but if SCO wins, it could have profound implications for software licensing agreements and all copyright licensing, putting stringent limits on the kinds of contracts that could be written. The entertainment industry, which abounds with restrictive copyright licenses, could be heavily impacted.

Wolf Greenfield is one of the most experienced law firms devoted entirely to the practice of intellectual property law, including patents, trademarks, copyrights, trade secrets, IP litigation, franchise and distribution agreements, confidentiality agreements, and software licenses. Articles and plain-English booklets on intellectual property can be found online at www.wolfgreenfield.com.