Academic journal article Santa Clara High Technology Law Journal

No Free Beer - Practice Tips for Open Source Licensing

Academic journal article Santa Clara High Technology Law Journal

No Free Beer - Practice Tips for Open Source Licensing

Article excerpt


Open source software is big business. According to research conducted by Optaros, Inc., and InformationWeek magazine, 87 percent of the 512 companies surveyed use open source software, with companies earning over $1 billion in annual revenue saving an average of $3.3 million by using open source software in 2004. (1) Open source is not just staying in computer rooms either--it is increasingly grabbing intellectual property headlines and entering mainstream news on issues like the following:

i. A $5 billion dollar legal dispute between SCO Group Inc. (SCO) and International Business Machines Corp. (IBM) over IBM's alleged misuse of SCO's UNIX code within the open source Linux operating system. (2)

ii. The erosion of Microsoft Internet Explorer's market share caused by increasing use of Firefox, an open source Internet browser, (3)

iii. Sun Microsystems Inc. (Sun) releasing its digital rights management project under an open source license. (4)

iv. Sun and IBM pledging free use of 1,600 (5) and 500 (6) patents respectively to the open source community. Many others such as Computer Associates International, Ericsson, Nokia, Novell, and Red Hat also made pledges to the open source community. (7)

In today's market, the code for most commercial software packages is only provided in executable form, under software license conditions restricting users from decompiling, disassembling, or reverse engineering the code to a higher level language (8) (i.e., the source code (9) is "closed" or not available to the user) Yet software developers are increasingly making their source code available to users (i.e., the source code is "opened" to the user) under open source licenses. This article is intended to be a practitioner's guide to the open source landscape by offering practical tips on how to use and what to be aware of with open source software in today's marketplace.


Open source software can be an important tool in a company's go-to market strategy. It can be used to reduce product costs, decrease operating expenses, and even generate top-line revenue. The types of software being released under open source licenses are practically unlimited: operating systems, web browsers, word processing packages, web servers, and simple routines are merely a sample. (10) With this variety, organizations have a myriad of options to leverage open source tools, for example:

i. A company could use an open source office suite (11) like, (12) or a web browser like FireFox on the laptops/desktops of its workforce and avoid paying, or greatly reducing, software licensing fees.

ii. Pre-existing open source code, like the G3D-3D graphics library, (13) could truncate the development process, thus saving time and money compared with developing the code from scratch.

iii. A software package, such as Sun's OpenSolaris operating system, (14) could be used as a magnet to attract revenue from related commercial offerings such as maintenance, support, technical services, hardware, or enhanced software versions with greater functionality.

iv. Open source software could be used to internally power a company's commercial offering, as Google Inc. is doing by using Linux on tens of thousands of its servers to provide the answers to users' search requests.

Open source software is not just for university labs. Organizations should take open source software seriously, and think about how, not if, they can take advantage of this growing movement.


The key factors in evaluating whether, and under what conditions, a company should use open source software are:

1. Price

2. Technical suitability

3. Usage rights and restrictions

1. Price

"'Free software' is a matter of liberty, not price. …

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