Pillsbury Winthrop Attorney Clarifies Latest Open Source Myths Following Government Guidance and Microsoft Posturing

Demystifying common misconceptions about open source, patents and legal


Dec 15, 2004, 00:00 ET from Pillsbury Winthrop LLP

    MCLEAN, Va., Dec. 15 /PRNewswire/ -- Recent guidance by a Federal advisory
 council on the use of Open Source software (OS), along with saber rattling
 from Microsoft Corp. alleging that over 200 software patents are used in the
 Linux operating system, have raised fresh concerns over the legal risks for
 companies using or switching to OS software according to intellectual property
 lawyers at Pillsbury Winthrop LLP.
     "It is crucial that end-users and developers alike understand the reality
 of legal implications and patent issues surrounding OS software," says James
 Gatto, an intellectual property partner in the Northern Virginia office of
 Pillsbury Winthrop.  "However, it is important that people not fall prey to
 unfounded myths or succumb to the fear, uncertainty and doubt (FUD) tactics
 that some people say Microsoft is using."
     In October, the Federal Financial Institutions Examination Council
 (FFIEC), which sets standards for financial institutions, issued guidance
 regarding the use of OS. The FFIEC members include the Board of Governors of
 the Federal Reserve System and the Federal Deposit Insurance Corporation,
 among others.
     The FFIEC guidance takes a balanced approach, indicating that the use of
 OS poses many risks similar to those of proprietary software, but cautions
 institutions that OS necessitates implementation of "unique risk management
 practices" due to potential licensing, infringement, indemnification and
 warranty issues. The FFIEC does not take a "sky is falling" approach. Rather,
 it advises companies involved with OS to be aware of certain strategic,
 operational and legal issues and to work with knowledgeable attorneys to adopt
 suitable risk management practices.
     Microsoft, on the other hand, has recently made public statements that
 some say are an attempt to create FUD to slow the amazingly rapid adoption of
 OS software. For example, Microsoft CEO Steve Ballmer recently commented that
 the Linux operating system violates 228 separate software patents, suggesting
 that Linux users are likely to get sued for patent infringement. Not a single,
 specific patent was identified.
     It is no surprise that the company with the most to lose by the adoption
 of OS would try to slow its adoption. But OS usage is only gaining momentum. A
 2004 Forester survey of 140 large North American companies revealed that 46%
 of these companies already are using OS software and another 14% plan to do so
 soon. With 60% of the large North American companies using OS software, if the
 sky is falling, it is not falling on the OS community, but in Redmond.
     "Between Microsoft's posturing and the latest guidance from the FFIEC, it
 is clear that companies migrating to Open Source need to tread carefully,"
 Gatto stated.  "However, there are a number of strategies and tactics that can
 mitigate potential liability."
     Gatto noted that some unique legal issues arise with OS software but that
 there are unique benefits as well. The suggestion that users of OS software
 are more likely to be sued for patent infringement than those that use
 proprietary software, like Microsoft's does not appear supported by actual
 experience. It is interesting to note that while Microsoft has had several
 dozen patent infringement lawsuits filed against it in the past few years,
 none have been reported against Linux, the most popular of all OS programs.
     It is also not correct that OS software can not be patented. Many
 companies that are involved with OS have significant patent portfolios and
 have declared that they will use these patents defensively to protect against
 patent lawsuits. For example, in October, Novell vowed to use its patent
 portfolio to protect open source software products and voiced its opposition
 to proposed changes to the European Union software directive that would ease
 restrictions on software patents. Jeremy Bevan, a Novell VP, added, "there
 have been various rumors about the possibility of patents in open source
 technology and what will happen," saying that the company wanted to reassure
 its customers that "there's no greater risk" with open source than with
 proprietary technology.
     "Any software, whether Open Source or proprietary, is equally eligible for
 patent protection," Gatto explained.  "Companies need to take steps to patent
 their software to build a patent portfolio in the event they are accused of
 infringement.  This defensive strategy could ward off lawsuits or if sued,
 create leverage by being able to counter sue.  However, before proceeding
 along this path careful consideration needs to be given to a number of unique
 issued raised by OS, and consultation with experienced counsel is crucial."
     The use of OS software is only going to increase because some of the
 business benefits are overwhelming. The legal risks, while not
 inconsequential, appear manageable. "My recommendation for any company
 considering the use of an OS solution is the same put forth by the FFIEC --
 the company should 'seek qualified counsel regarding the requirements and
 restrictions of the particular license governing use of the software.'"
     James Gatto is a member of Pillsbury Winthrop's highly-rated Intellectual
 Property practice and the firm's Open Source team.  He was recently voted by
 his peers as one of the top IP/IT attorneys.  He frequently advises companies
 regarding Open Source legal issues, strategic patent portfolio development,
 Internet business methods, and other software issues.   His national practice
 includes clients ranging from Fortune 500 companies to startups and
     About Pillsbury Winthrop
     Pillsbury Winthrop is an international law firm with core practices in:
 litigation, technology, energy, capital markets/finance, and intellectual
 property.  The firm has 16 offices and over 700 attorneys worldwide.  For more
 information, visit http://www.pillsburywinthrop.com
      Contact: Nathan Burgess, nburg@esq.cc, 212-721-3495, 212-721-7468
               Crystal Rockwood, crockwood@pillsburywinthrop.com, 800-729-9830

SOURCE Pillsbury Winthrop LLP