The risk arising from unknowledgeable and unmanaged use of open source software by tech companies is no longer merely theoretical or such that only involves a remote possibility of exposure. The exposure is tangible, here and now.
by Adv. Ido Shomrony, Head of Open Source Practice at Shibolet & Co.
A New York court is presently hearing a claim that was recently brought by CoKinetic Systems, a developer and manufacturer of in-flight entertainment (IFE) software, against a global technology giant, which is also one of the leading players in the IFE market, whose systems are used by numerous airlines. The suit, which alleges anticompetitive acts and abuse of monopoly power, seeks damages of $100 million.
A substantive argument of the plaintiff (among other arguments relating to anticompetitive acts) is that by failing to comply with the requirements of the GPL open source license and refusing to distribute the source code for the open-source Linux based operating system of its IFE hardware, the global corporation blocked competitors and in fact denied them the ability to develop software that interfaces with basic features of its IFE solution, which they sought to offer to the many airlines that use the system.
In addition to the monetary claim, CoKinetic requests that the global corporation be compelled to comply with the requirements of the GPL and reveal the source code for the software that serves as the basis for the IFE system.
In parallel, a second open source claim, also recently brought, is presently under way in the court in California. The suit was filed by a software company, against a Korean public company, Hancom, Inc. Here too, considerable damages, their amount as yet undetermined, are expected to be sought.
The plaintiff in this case is Artifex Software Inc., whose software (the subject matter of the claim) can be obtained under the dual-licensing model; i.e. the same software may be used under the GPL license or under a standard commercial license in return for a fee.
Artifex argues that since Hancom chose not to purchase a commercial license for the software, its use of the software constitutes consent to the terms and conditions of the GPL; however, Hancom failed to comply with the provisions of the GPL, including the requirement to distribute the source code for its own software.
The author advises clients on all open source legal aspects, including, among others, legal analysis and advice re open source licensing, due diligence and projects based on the open-source model.
Artifex is seeking an injunction against Hancom’s continued use of Artifex’s source code, monetary relief (of an amount as yet undetermined), and enforcement of the provisions of the GPL against Hancom, compelling it to reveal its own source code.
The court has already rejected Hancom’s motion to dismiss the claim in limine (on the start), and in reference to Hancom’s argument, the court asserted, inter alia, that an open source license is tantamount to a binding contract between the parties in all respects.
We have recently also witnessed public demands made by WordPress’s founding developer, addressed to Wix, relating to an alleged breach of the terms and conditions of the GPL, as well as a suit filed with the court in Hamburg, Germany, against VMware, alleging violation of the provisions of the GPL (although the claim was dismissed on a technicality – lack of locus standi (standing right) – the plaintiffs have announced their intention to appeal to seek for a ruling on the merits).
To the extent that the two claims first presented in this article (against the global corporation and against Hancom) continue to be litigated, additional light will be shed on the open source issue in technology law, a field that is increasingly gaining prominence. Either way, even as things stand now these cases illustrate the continuing (and growing) trend of companies driven by the desire for gain (as distinguished from claims originating in ideological organizations), filing suit for use that allegedly violates the terms and conditions of open source software, as we witnessed in the Versata case some two years ago, as well as the perpetuation of the trend of lawsuits in which the relief sought is monetary (of considerable amounts), and not only (but also) enforcement of the obligation to reveal the source code.
As for the conclusion to be drawn, the advantages of open source software are obvious, and it is not without reason that its use has become so prevalent, so much so that it is doubtful whether there are any tech companies that do not make use of it to some degree or another. However, the need to make use of it in a way that is right, knowledgeable and properly managed is growing increasingly prominent. Consequently, adopting the appropriate corporate policies and work procedures for the use of open source software, which provide an adequate and tailor-made response to exposure of this kind, is vital to the risk management and the management of IP strategy in tech companies.
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Adv. Ido Shomrony, Head of Open Source Practice at Shibolet & Co.