THE DAILY RECORD Tuesday, July 15, 2014 WESTERN NEW YORK’S SOURCE FOR LAW, REAL ESTATE, FINANCE AND GENERAL INTELLIGENCE SINCE 1908 IP FRONTIERS Open source expands to kale, quinoa and cars used, shared and perpetuated by farmers, see www.news.wisc.edu/22748. The desire for open source seeds gained momentum after the What do plant seeds, cars and software all have in common? The Supreme Court unanimously ruled in Bowman v. Monsanto Co that answer is open source, which has expanded from software to a farmer may not reproduce patented seeds through planting and include these and other disparate technologies. Recently harvesting without the patent holder’s permission. In that case, a announced open source plant seeds and open source electric car farmer obtained Monsanto’s patented “Roundup Ready” patents demonstrate that the concept has broad applicasoybeans from a grain elevator, planted them without perbility beyond its original realm of software. In addition, mission, and took advantage of their resistance to open source concepts have also been applied to 3-D Roundup weed killer. printing, cola recipes and clothing design. The Supreme Court found that, under the circumHowever, even as open source moves beyond software, stances, the doctrine of patent exhaustion did not presignificant questions remain regarding the legal implicaclude Monsanto’s lawsuit, Bowman v. Monsanto Co., 133 tions of open source licensing for both business users and S.Ct. 1761 (U.S. 2013). developers of technology. Businesses adopting open In June, Tesla Motors accelerated into the headlines source technologies should understand that using open when founder Elon Musk announced that the company’s source is a two way street, and the many benefits come patent portfolio was open to all users of their technology with many obligations. Developers of technology should “in the spirit of the open source movement.” The understand how open source impacts their rights, and announcement received considerable press attention. learn how to protect and enforce those rights against By NARESH K. Tesla, an innovator in electric car technology, argued that KANNAN potential infringers. Daily Record applying “open source philosophy” to its patent portfolio Broadly, in an open source model, intellectual property Columnist would strengthen innovation, see is openly licensed at no cost to users, who in turn agree to www.teslamotors.com/blog/all-our-patent-are-belong-you. openly license at no cost any improvements they make to other participants. The intellectual property covered by open Comparison to public domain works Although open source software, plant seeds and electric cars source may include both copyrights and patents. A major goal of undoubtedly offer innovative technologies to users under generous open source is to encourage collaboration by participants, who benterms, open source agreements do impose real legal obligations on efit from innovations made by other participants, which are availthose users, and can be a trap for the unwary. able to all participants at no cost. Open source innovation is like Unlike truly public domain works, which are free to be used by planting a seed that grows through collaboration for the benefit of anyone, open source intellectual property may be protected by current and future participants. copyrights and patents, and despite popular misconceptions, may Open source seeds and cars not be freely used. Open source intellectual property may only be In April, the Open Source Seed Initiative led by the University used by adhering to the terms of licenses, which are legally of Wisconsin celebrated the release of seeds for 29 new varieties of enforceable contracts between the creator and users. kale, quinoa, carrot, lettuce and other plants. The seeds are availThe open source movement originated in software, and traces its able to farmers and other users under an open source seed pledge origins to the early 1980s and the GNU Project. Indeed, today, milagreement. In return for being able to use the seeds, users pledge to freely license any hybrids or derivatives of the original plants. lions of lines of software source code are licensed as open source Continued ... The initiative seeks to create a system where seeds can be freely Significant legal questions remain Reprinted with permission of The Daily Record ©2014 THE DAILY RECORD Tuesday, July 15, 2014 WESTERN NEW YORK’S SOURCE FOR LAW, REAL ESTATE, FINANCE AND GENERAL INTELLIGENCE SINCE 1908 Continued ... software under the terms of the GNU General Public License. The GPL grants a user the right to use software source code in return for imposing on the user certain legal obligations. The user is obligated, among other things, to include complete source code of the derived software upon distribution of the software. By way of contrast, in a public domain model, anyone may make unfettered use of public domain works without any control by the original creator. For example, expired or abandoned patents, and literary works for which copyright has expired, may be freely used by anyone to create derivative works, which may then be protected with patents or copyrights if appropriate. If, for example, patent holders, such as Tesla Motors, wished to dedicate their patents to the public, they could simply abandon them. However, in a public domain model, the creator loses the ability to control subsequent users. In the open source model, creators seek to control subsequent users, and have them adhere to the open source philosophy. Recent cases demonstrate potential pitfalls A recent set of cases illustrates the potential pitfalls users may face when making use of open source intellectual property under the GNU GPL. In these cases, involving intellectual property owned by plaintiff XimpleWare Inc., violation of terms of the GPL exposed open source users to charges of copyright infringement of the source code, and patent infringement of patents the users never even knew existed. The XimpleWare cases had unusual origins. Originally, Versata Inc. sued its customer Ameriprise Inc. in Texas for breach of contract for revealing Versata’s software source code for a financial software product to third parties. During the course of litigation, Ameriprise apparently discovered that Versata had included source code from XimpleWare under the GPL, obligating Versata to release the complete source code of the financial software product. Realizing that this could serve as a defense against Versata’s claims, Ameriprise apparently contacted XimpleWare, Versata Software Inc. v. Ameriprise Financial Inc., No. A-14-CA-12 (W.D. Tex. March 11, 2014). After being contacted, XimpleWare filed patent and copyright infringement suits against both Ameriprise and Versata in California federal court, claiming that both parties violated the terms of the GPL, and were thus liable for copyright infringement on the source code and patent infringement for patents that covered the same technology as the source code. In the copyright infringement case, the court (Ilston, J.) denied Ameriprise’s motion to dismiss, finding that XimpleWare had pleaded sufficient facts to make out a claim for copyright infringement, XimpleWare Corp. v. Versata Software Inc. et al., No. C-1305160-SI, 2014 WL 490940 (N.D. Cal Feb. 4, 2014). The court, citing precedent of the Court of Appeals for the Fed- eral Circuit, explained that: “Generally, a copyright owner who grants a nonexclusive license to use his copyrighted material waives his right to sue the licensee for copyright infringement and can sue only for breach of contract.” However, “if the license is limited in scope and the licensee acts outside the scope, the licensor can bring an action for copyright infringement,” Jacobsen v. Katzer, 535 F.3d 1373, 1379 (Fed. Cir. 2008). In the parallel patent infringement case, XimpleWare sued Versata and Ameriprise, and also added eight other Versata customers. On a motion to dismiss, the court (Grewal, J.) adopted Judge Ilston’s reasoning in the copyright case, and held that a defendant’s failure to adhere to the GPL rendered the use of the source code unlicensed. The court found that XimpleWare had pleaded sufficient facts for patent infringement by Versata and Ameriprise, regardless of whether they knew of the existence of the patents. However, the court found that for the other eight customers, the pleadings were insufficient, and did not demonstrate that those eight customers violated the terms of the GPL. The court also found that the pleadings were insufficient to allege willful infringement by any of the defendants, because of the lack of allegations regarding the parties’ knowledge of the existence of the patents, XimpleWare Inc. v. Versata Software Inc. et al., No. 5-13-CV-05161, 2014 WL 2080850 (N.D. Cal May 16, 2014). It is interesting to note that the XimpleWare cases concerned open source software licensed under the terms of an earlier version of the GNU General Public License, GPL v. 2.0, which was originally drafted in 1991, and did not clearly articulate the rights and responsibilities of the parties with respect to underlying patents embodied in the software source code. GPL v. 3.0, which was drafted by the Free Software Foundation in 2007, adds explicit language that distribution of the open source software also carries a license to underlying patents held by the creator, , see Section 11 of GPL v.30 at www.gnu.org/licenses/gpl.html. In addition to the GNU licenses, numerous other open source licenses, having different terms and conditions, have been used, and each such license carries unique legal obligations. As open source moves beyond software, business users and technology developers will have new opportunities to make use of innovative technologies to expand the scope of their businesses at a reduced cost. Careful consideration of the implications and obligations imposed by open source licensing can permit users and developers to avoid potentially costly litigation down the road, even as they enjoy the benefits of open source today. Naresh K. Kannan is an associate attorney with Heslin Rothenberg Farley & Mesiti P.C. He can be reached via email at [email protected], or at (518) 452-5600. Reprinted with permission of The Daily Record ©2014