Introduction
The lesson addresses these topics:
- Business models for F/OSS
- Software patents and harm to software developers
- CODECS in software-patent countries
Advanced Organizer
During the lesson, look for answers to the following questions –
- How can a company make money by developing F/OSS?
- How is twin licensing possible?
- What are some questions you will want to ask when considering F/OSS for educational organizations (enterprise) use?
- Should mathematic equations be patentable?
- Why are software patents widely opposed by programmers?
- How do software patents affect end users of F/OSS?
Walk-through
1. Read Business Models in FLOSS-based Companies (PDF, 7 pages)
A frequent question from people who are unfamiliar with F/OSS is – why would developers contribute if they can’t make money on it? You’ve already seen that money isn’t the primary motivator for many developers and that quality F/OSS can be developed without the backing of a business. However, this question assumes that F/OSS can not be the basis of a successful business. In fact, there are many businesses built around the development of F/OSS.
This paper was developed during the FLOSSMETRICS project, a 2006-2009 endeavor funded by the European Commission. In the paper, you will find an analysis of 80 F/OSS -based companies and business models, providing a simplified classification of F/OSS business modles. After reading it, you should understand how a company might generate revenue in each of the six categories:
- Twin licensing
- Split OSS/commercial products
- “Badgeware”
- Product specialists
- Platform providers
- Selection/consulting
2. Read Red Hat: The first Billion Dollar Linux Company (HTML)
Red Hat, the go-to example for how business can generate revenue with F/OSS, generated a billion dollars in revenue for fiscal year 2012.
- Which of the business categories described by Carlo Daffara does Red Hat fall into?
- How does Red Hat generate revenue?
- Why would a company pay for Red Hat Enterprise Linux, when they can have CentOS or Fedora (both RHEL clones without Red Hat’s trademarks) for free?
3. Read Sizing Up Open Source: Not so Simple (HTML)
Comparing F/OSS projects to proprietary projects isn’t usually an apples-to-apples proposition. Prospective enterprise users need to be aware of the size and strength of the community behind F/OSS project, especially when considering smaller projects that may not have a corporate backer. Consideration of your own willingness and ability to contribute back to the project is also important. This article references a university adoption of a single sign-on portal as a case to discuss these issues.
4. Watch: Ghost (Video, 3:17)
Crowdfunding has emerged as a non-traditional approach to launching F/OSS projects. The Ghost Kickstarter initiative was funded in May, 2013 and will result in an MIT licensed blogging platform. Crowdfunding platforms such as Kickstarter and IndieGogo provide an alternative to traditional venture capital and other financing methods. You might want to follow the Ghost project as it evolves.
- If the software is released with the MIT license, what commercial options will be available to the makers of Ghost?
- What other F/OSS projects are currently trying for crowdfunding?
4. Review pp. 167-169 in Chapter 10, Producing Open Source Software:
Software patents are widely held as a major threat to F/OSS, including commercial F/OSS. In fact, “a majority of all programmers think that software patents should be abolished entirely” (Fogel, p. 167). Patenting an invention is generally intended to spur innovation by providing protection for inventors, allowing them to market their invention without fear of competitors duplicating their work and undercutting their market. In software, however, this concept applies only abstractly as an “invention”. As a patent is “a blanket injunction against implementing a certain idea” (Fogel, p. 167), any number of programmers could potentially write similar code without ever realizing that it’s patented. Worse, patent issues are settled through lawsuits – and the nature of community F/OSS developments means that there are rarely resources to engage in legal challenges – even when they’re unfounded. Programmers find it increasingly difficult to write software they won’t be liable to be sued for.
Patents are territorial in nature. To obtain a patent, inventors must file patent applications in each and every country in which they want a patent. Unfortunately, the software patent situation in the US is woeful. It has many negative outcomes including secrecy among firmware developers (who wants to provide source code when it could become the grounds for a patent lawsuit?), discouragement of market entry (if you might have to litigate with Apple or Oracle, how can small software shops hope to get started?), and higher end-user costs (we all pay higher prices when companies spend millions on legal battles rather than R&D – even for commercial F/OSS).
While some licenses such as the GNU GPL and the Apache License have included language to discourage software patents, they are still considered a threat to the entire F/OSS community. Patent Licenses and GPL Licensing are clearly incompatible, since they have opposite objectives.
“To learn more about the problem, and how it’s being fought, go to http://www.nosoftwarepatents.com/. The Wikipedia article http://en.wikipedia.org/wiki/Software_patent also has a lot of useful information on software patents. I’ve also written a blog post summarizing the arguments against software patents, at http://www.rants.org/2007/05/01/how-to-tell-that-software-patents-are-a-bad-idea/.” (Fogel, p. 169)
5. Watch Patent Absurdity (Video, 29 min.)
Patent Absurdity explores the case of software patents and the harm being done to software developers and the wider economy. The film is based on a series of interviews conducted during the Supreme Court’s review of in re Bilski — a case that could have had profound implications for the patenting of software. The Court’s decision, unfortunately, declined to affirm its previous rejections of software patents.
There are some hints of hope, as there are some changes brewing as the Obama administration makes attempts to reign in the gratuitous litigation stemming from “patent trolls“. “Patent trolls” refers to the practice of suing anyone and everyone, knowing that it’s almost always cheapest and easiest to pay off the litigant. Some companies, such as Newegg, have recently drawn lines in the sand and beaten patent trolls at this game. However, a fundamental reform, such as invalidation of software patents may be the only way to quash these problems.
New Zealand passed a law outlawing most software patents (August 2013) , citing the seemingly obvious point that “a computer program is ‘not an invention.'” Perhaps the USA will see the light at some point.
6. Discussion – Software patents, CODECs, and consumers
Software patents affect you, even if you haven’t been aware of it. For instance, the software that encodes and decodes commercial multimedia files is frequently patented. Patents restrict implementation/use of the patented thing (machine, process) unless the implementer has (paid for) received a patent license. That means, in order to play the audio or video content you already paid for (CD, MP3, DVD, Blu-Ray, etc.); you also have to pay for a patent license. When you pay for a proprietary operating system, or a dedicated appliance like a DVD player; part of your money goes to this patent license. In other words, you pay more because media companies use patented software to store the content. That software is generally aimed at restricting your use of the content, known as DRM. DRM means digital rights management, or from the F/OSS perspective – digital restrictions management. It depends on whose viewpoint you view the restriction from – the users’ or the copyright or patent holders’.
Did you know that when you buy a DVD in a store, you do not have the legal right to watch it until you also own a device or software that will unscramble it? DVD’s are protected by the Content Scrambling System (CSS), a DRM and encryption system employed on almost all commercially produced DVD-Video discs. When you pay for a DVD player, part of the cost goes to a patent license. As a F/OSS user, you have a few options for watching DVDs on your computer:
1. You can download libdvdcss, a F/OSS software library for accessing and unscrambling DVDs encrypted with the Content Scramble System (CSS). The problem with this is that in countries that allow software patents, use of libdvdcss may in fact be illegal. It hasn’t yet been challenged in court, most probably because it has now been superseded by newer DRM schemes such as Content Protection for Recordable Media (CPRM), or by Advanced Encryption Standard (AES) in the Advanced Access Content System (AACS) DRM scheme used by Blu-ray Discs.
2. If you want to use a F/OSS operating system in an enterprise environment without risk of running afoul of patent law, you can pay for the privilege of watching DVDs (that you already own) by licensing the codecs from Fluendo, a company that provides patent-licensed codecs to F/OSS users in countries like the USA that allow software patents.
There are other legally grey (in the USA) codec options for F/OSS users in addition to Libdvdcss. For Ubuntu, they are conveniently packaged as a single item, ubuntu-restricted-extras, for users who opt to use them; but not included in the standard installation media due to legality questions.
Activity
None
Assignments
Spend time on your Final Project or study for the Final Exam!
Additional Material
- The Commercial Open Source Business Model (2009, PDF) – defines and explores the differences between community and commercial open source
- 451 CAOS Theory – “A blog for the enterprise open source community”
- This American Life podcast: When Patents Attack! (Podcast, 1 hour); PDF Transcript 25 pages – to read along; relates personal experiences with the software patent system
- The Danger of Software Patents – Richard Stallman discusses the issue and possible responses to it
- How to Tell Software Patents are a Bad Idea – Karl Fogel’s blog summarizes nicely
- Why Upgrade to GPLv3 – the upgrade is partially based on resisting patents
- Innovation Happens Elsewhere (Book, HTML) – Open Source as Business Strategy
