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IP Frontiers: Open source expands to kale, quinoa and cars

Significant legal questions remain

By: Naresh K. Kannan//July 14, 2014

IP Frontiers: Open source expands to kale, quinoa and cars

Significant legal questions remain

By: Naresh K. Kannan//July 14, 2014

Naresh K. Kannan
Naresh K. Kannan

What do plant seeds, cars and software all have in common? The answer is open source, which has expanded from software to include these and other disparate technologies. Recently announced open source plant seeds and open source electric car patents demonstrate that the concept has broad applicability beyond its original realm of software. In addition, open source concepts have also been applied to 3-D printing, cola recipes and clothing design.

However, even as open source moves beyond software, significant questions remain regarding the legal implications of open source licensing for both business users and developers of technology. Businesses adopting open source technologies should understand that using open source is a two way street, and the many benefits come with many obligations. Developers of technology should understand how open source impacts their rights, and learn how to protect and enforce those rights against potential infringers.

Broadly, in an open source model, intellectual property is openly licensed at no cost to users, who in turn agree to openly license at no cost any improvements they make to other participants. The intellectual property covered by open source may include both copyrights and patents. A major goal of open source is to encourage collaboration by participants, who benefit from innovations made by other participants, which are available to all participants at no cost. Open source innovation is like planting a seed that grows through collaboration for the benefit of current and future participants.

Open source seeds and cars

In April, the Open Source Seed Initiative led by the University of Wisconsin celebrated the release of seeds for 29 new varieties of kale, quinoa, carrot, lettuce and other plants. The seeds are available to farmers and other users under an open source seed pledge agreement. In return for being able to use the seeds, users pledge to freely license any hybrids or derivatives of the original plants. The initiative seeks to create a system where seeds can be freely used, shared and perpetuated by farmers, see www.news.wisc.edu/22748.

The desire for open source seeds gained momentum after the Supreme Court unanimously ruled in Bowman v. Monsanto Co that a farmer may not reproduce patented seeds through planting and harvesting without the patent holder’s permission. In that case, a farmer obtained Monsanto’s patented “Roundup Ready” soybeans from a grain elevator, planted them without permission, and took advantage of their resistance to Roundup weed killer.

The Supreme Court found that, under the circumstances, the doctrine of patent exhaustion did not preclude Monsanto’s lawsuit, Bowman v. Monsanto Co., 133 S.Ct. 1761 (U.S. 2013).

In June, Tesla Motors accelerated into the headlines when founder Elon Musk announced that the company’s patent portfolio was open to all users of their technology “in the spirit of the open source movement.” The announcement received considerable press attention. Tesla, an innovator in electric car technology, argued that applying “open source philosophy” to its patent portfolio would strengthen innovation, see www.teslamotors.com/blog/all-our-patent-are-belong-you.

Comparison to public domain works

Although open source software, plant seeds and electric cars undoubtedly offer innovative technologies to users under generous terms, open source agreements do impose real legal obligations on those users, and can be a trap for the unwary.

Unlike truly public domain works, which are free to be used by anyone, open source intellectual property may be protected by copyrights and patents, and despite popular misconceptions, may not be freely used. Open source intellectual property may only be used by adhering to the terms of licenses, which are legally enforceable contracts between the creator and users.

The open source movement originated in software, and traces its origins to the early 1980s and the GNU Project. Indeed, today, millions of lines of software source code are licensed as open source 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-13-05160-SI, 2014 WL 490940 (N.D. Cal Feb. 4, 2014).

The court, citing precedent of the Court of Appeals for the Federal 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.

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