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Slide 1: Implementing Your Open Source Business Strategy through Your Legal Strategy Open Source Business Conference 2008 Mark Radcliffe DLA Piper US LLP (650) 833-2266 mark.radcliffe@dlapiper.com PA/10542397.2
Slide 2: Global Locations  A global organization  64 offices in 25 countries  3,700 lawyers  8,000 people worldwide  Over 1,500 lawyers on each side of the Atlantic  Major presence in Asia  Only global law firm with strategic focus on technology and emerging growth PA/10542397.2 2
Slide 3: US Market Presence  One of the 10 largest law firms in the US  1,500 attorneys  National coverage in major US business, technology, and finance centers  Leading national corporate practice  250+ corporate and securities attorneys  250+ corporate finance attorneys  Corporate counsel to more than 120 public companies  Ranked among the top IPO, M&A, and venture finance firms in the country  National reputation in intellectual property  Leading litigation practice  Securities, intellectual property, product liability, commercial  550 attorneys  Distinctive government affairs and regulatory practice PA/10542397.2 3
Slide 4: Domestic Locations PA/10542397.2 4
Slide 5: IP Practice  Full-service IP  Litigation and Transactions  Patent, Trademark, Copyright, Trade Secrets, New Media, Domain Name, Internet  Acquisition, Development, Licensing, Enforcement  425 Lawyers Globally  Over 225 IP Lawyers in the US  80+ Patent Litigation  75+ Technology Transactions  50+ Patent  45+ Trademark and Copyright  40+ Technology and Sourcing PA/10542397.2 5
Slide 6: IP STRATEGIES: CRITICAL TO SUCCESS  Wrong IP strategy can be fatal  SCO  Napster  Grokster  Wrong IP strategy can be expensive  MP3.com $163,000,000 (and counting)  Wrong IP strategy can cost you: Think Dynamics exit price reduced by 30% because of uncertainty about open source PA/10542397.2 6
Slide 7: IP VALUES  Dr. Seuss Estate: copyright and trademarks - $1 billion  TI Licensing: patents and trade secret - $770 million - 42% of operating profits  IBM: patent licensing - $1 billion per year PA/10542397.2 7
Slide 8: Business Issues in IP Strategy  OS Revenue Sources  License fees (dual licensing)  Hosting fees  Customization  Support  Proprietary add ons  Consulting  Type of product  Application  Infrastructure PA/10542397.2 8
Slide 9: Business Issues in IP Strategy  Business model (may follow more than one)  Dual licensing (same code; MySQL)  Dual licensing (different functions; Zimbra, SugarCRM)  Subscription (Red Hat)  Services (Collabnet)  Training  Hosting  Integration  Type of project  Existing  New  Proprietary to Open Source PA/10542397.2 9
Slide 10: Business Issues in IP Strategy  Channels  Interaction with other software/relationship with third parties  Community type  Individual  Corporate  Domestic/foreign  Competitors  Possibility of being lost in the stack  Possibility of SAAS competitor PA/10542397.2 10
Slide 11: Legal Components of Open Source IP Strategy  Patents  Copyrights  Trademarks  Trade secrets  Domain names  License  Community PA/10542397.2 11
Slide 12: WHAT IS A PATENT?  An exclusive right to exclude (product/service can have multiple patents cover it)  Granted by the federal government Useful/Novel/Non-Obviousness  For a limited term - 20 years after filing (after June 8, 1995 (some extensions for drugs))  Examples: drugs, devices, manufacturing process, uses  Rights to exclude making/using/selling/importing PA/10542397.2 12
Slide 13: WHAT IS A COPYRIGHT?  Original works of authorship  Fixed in any tangible medium of expression  Capable of being discerned by someone directly or through use of a machine  Books, movies, software, music  Protects expression (not the idea)  Federal protection  Rights: Reproduce/Distribute/Make derivative works(modify)/Publicly perform/Publicly display  For a limited term (for new works, term is complicated for old works)  Individual: life and 70 years  Company (work for hire, not assignment): shorter of 95 years since “publication” or 120 years after creation.  Example: software, UI PA/10542397.2 13
Slide 14: WHAT IS A TRADEMARK?  Word, symbol, device, sound or smell which identifies a product as coming from a certain source and as being of a certain level of quality.  Examples: Linux, SugarCRM, Apple “bitten apple” logo  Rights: Prevent use of confusingly similar marks  Examples: Apple vs. Pineapple  Strongest: Arbitrary such as Apple or Xerox  Weakest: Descriptive such as Windows  Generic: PC for computers/’386 for microprocessors  Must “police” use of mark PA/10542397.2 14
Slide 15: WHAT IS A DOMAIN NAME?  Internet address:  Generic TLD (.com/.biz/.org/.net)  Country TLD (.us/.de/.uk)  Rights: Use as addresses  Similar to but not trademarks; quasi contract rights PA/10542397.2 15
Slide 16: WHAT IS A TRADE SECRET?  Information which:  Is not generally known to others  Confers an economic or business advantage  Is the subject of reasonable efforts to maintain secrecy  Term: potentially perpetual  Examples: source code, methods of programming  Rights: Prevent misappropriation (wrongful taking) but reverse engineering permitted unless contractually prohibited PA/10542397.2 16
Slide 17: Putting it Together: Linux Distributors  Existing project, Linux, so license choice is limited  Business model: subscription/services  Main intellectual property rights:  Trademark  Copyright (in company developed code) PA/10542397.2 17
Slide 18: Putting it Together: New Infrastructure Project  Business model: Dual licensing (different code) most fundable  License choice: open  Need to consider interaction with third party products (i.e. GPL is incompatible with Apache and many other licenses)  Acceptance by community  Main intellectual property rights:  Trademark  Copyright (in company developed code)  Patent  Trade secret (in part of code which is not distributed as OSS)  Possible license  MPL, CDDL, CPAL or limited third party integration: GPLv2, GPLv3, AGPL PA/10542397.2 18
Slide 19: Putting it Together: New Infrastructure Project  Business model: Services  License choice: open  Need to consider interaction with third party products (i.e. GPL is incompatible with Apache and many other licenses)  Acceptance by community  Ease of adoption  Main intellectual property rights:  Trademark  Copyright (in company developed code)  Possible license  Apache, BSD, MIT PA/10542397.2 19
Slide 20: Putting it Together: New Application Project  Business model: Dual licensing (different code) most fundable  License choice: open  Interaction with third party products likely to be less important  Acceptance by community  Type of competition  Main intellectual property rights:  Trademark  Copyright (in company developed code)  Patent  Trade secret (in part of code which is not distributed as OSS)  Possible licenses  GPLv2, GPLv3, AGPL, MPL, CPAL, CDDL PA/10542397.2 20
Slide 21: Famous Open Source IP Mistakes  SCO:  Failure to own copyright, and thus no right to file suit against non licensees (AutoZone)  “Silver bullet” waiver right by Novell and thus Novell can cure breaches by licensees (IBM)  Techwhale: No community acceptance  Medsphere: Release by founders  GCC License: GPL needs to be “amended” for library  JBoss: LGPL choice very confusing for licensees PA/10542397.2 21
Slide 22: Common Software Company IP Mistakes  Ownership: prior employers  Ownership: missing founder  Ownership: copyright transfer under “work for hire” not assignment  Patents: failure to file prior to release of software  Patent strategy: do patents cover current products/business  Trademarks: failure to register  Domain names: failure to register  License: use of software with incompatible licenses in the stack PA/10542397.2 22
Slide 23: KEY TO IP SUCCESS  Understanding business model  Understanding role of IP  Developing IP strategy  What to “give away”  What to license  Role of patents & trademarks PA/10542397.2 23
Slide 24: DEVELOPING PATENT STRATEGY  Patent with care: Only 15% of patents for most large companies are useful  Substantive scope – claims  Choke point  Picket fence  Geographic scope  Countries in which used  Countries in which manufactured PA/10542397.2 24
Slide 25: DEVELOPING A TRADEMARK STRATEGY  Overall strategy  Company  Single brand  Microsoft  Oracle  Product  Proctor & Gamble (Tide, Metamucil, Pantene)  General Motors (Corvette, Cadillac, Pontiac)  Mixed  Lead brand: Adobe Illustrator  Geographic scope  Family of trademarks PA/10542397.2 25
Slide 26: WHAT CAN YOU DO TO IDENTIFY & PROTECT YOUR IP? An Integrated Approach 1. Establish a program to identify & register your copyrighted works. 2. Establish a patent committee to identify potentially patentable technologies & implement procedures to determine when to file & abandon patents. 3. Review your security procedures to ensure that you are taking the necessary steps to protect such trade secrets if you have any. 4. Identify key trademarks & major existing & future markets in which trademarks should be registered; implement a registration program to obtain timely protection in the relevant marketplaces; and review value of trademarks to maintain or abandon. 5. Identify and protect domain names 6. Protect trade secrets through non disclosure agreements and other measures 7. PA/10542397.2 Adopt appropriate “contribution policy” (license v. assignment) 26
Slide 27: STRATEGIES FOR SUCCESS  Identify business model  Identify critical IP rights  Develop IP strategy for protecting your products  Develop IP strategy to challenge your competitors  Ensure that IP provides “unfair” competitive advantage PA/10542397.2 27