Not open to interpretation'Copyleft' violations could pose legal problems to open-source use
Like many software development companies, Tripod Technologies LLC owes its steep growth trajectory — and extensive cost savings along the way — to deploying technology built on free and open source computer code.
"If you're building a house today, you're not going to build every wall brick by brick. You're going to build walls using prefabricated pieces — and it's the same thing with building software on top of open-source code," said Badri Nittoor, co-founder and CEO of the Cherry Hill-based company, which has outsourced open source-based software products and services to technology firms since its launch in 2002. "By using open-source code as a foundation for your software, you focus your resources and expertise as a developer on modifying it and adding more value and services on top of it, instead of wasting a lot of time and money rebuilding something that freely exists."
With more than 100 billion lines of the public computer code readily available on the Internet today — and technology companies from the tiniest startup to the largest global firm facing mounting pressure to increase the speed of software development and decrease the cost of licensing the final product — open-source technology has become a progressively more enticing and strategic resource for companies like Tripod.
But while such technology can be a saving grace for these companies, it doesn't come without potential pitfall, some attorneys say.
According to data compiled by opensource content management company Black Duck Software, more than 700,000 open-source projects began worldwide this year, compared to the fewer than 260,000 projects launched in 2010. And for the software companies behind those projects, venture capital investment has reached record levels, as it increased by nearly 50 percent last year, to $675 million.
While Nittoor said several of his past clients requested products solely developed with proprietary technology — which usually comes with expensive licensing costs and heavy capital expenditures — he said "close to 100 percent of our customers today have some form of open-source products from us."
But Kurt E. Anderson, chair of the intellectual property and technology law practice at Red Bank-based Giordano, Halleran & Ciesla P.C., said software developers incorporating open-source components in their products may want to take a closer look at the licensing terms of their borrowed code, as so-called "copyleft" open-source licenses — which require that all modified versions of a work be distributed under the same license as the original work and made publicly available for others to use and modify — could land unsuspecting developers in breaches of contract.
In a July 2012 industry survey by the New Jersey Technology Council, Giordano and Withum, Smith & Brown P.C. found 80 percent of the 138 New Jersey technology firms polled do not comply with the law behind "copyleft" open-source code, and nearly 40 percent indicated they do not monitor their programmers' use of it in their products.
"With programmers under high pressure to deliver software more quickly and cost effectively, it's very difficult for them to resist going out to the Internet, downloading this code and modifying it to achieve that goal," Anderson said. "But if you don't check what's in your final product, and your licensee finds snippets of open-source code in software you said was proprietary, then you've got problems on your hands."
According to the nonprofit Open Source Initiative, there are more than 60 different licenses under which open-source software is distributed, and "a lot of them allow you to use the software without paying any fees," Nittoor said, "though some put restrictions on how you distribute your end products, and you might have to provide them back to the Internet community in some way."
While Tripod Technologies closely adheres to the licenses of every piece of open-source technology included in its products, Nittoor said "there are certainly stories about major mishaps," which he said usually involve developers violating a license that prohibits the distribution of proprietary software containing open-source code.
Though Anderson said he hasn't heard of any violations of "copyleft" open source to date, he noted "with such a high percentage of people not monitoring it, there's got to be a high percentage of violation out there … and you can imagine if it was discovered in a private scenario, compensation would change hands between a licensor and a licensee to make sure things wouldn't become catastrophic."
Aside from the software company and its client, Anderson said there would likely be a third party in that scenario: A technology escrow agent hired by the licensee to not only hold the computer program in case the licensor goes out of business, but also to run tests that can detect the use of open-source code.
According to John Boruvka, vice president of sales for the intellectual property management arm of Iron Mountain — which has approximately 2,400 customers in New Jersey tied to escrow transactions — the segment involving "the validation and verification of what's being placed in escrow is one of the biggest areas of growth we've seen for our business lately."
"If you think of it like a cookie, we hold the recipe and we make sure all of the right ingredients and instructions to make it are in the deposit. Then, when we've finished baking it, we ask our client, 'Does this cookie taste like the cookie you're eating in the product you're running?' " Boruvka said. "We usually aren't outright giving an opinion that an open-source license is in conflict with any one piece of proprietary code, but we raise the same questions from a different angle by doing that type of check."
Though the increasing adoption of open-source code presents more potential licensing issues and legal consequences for software developers, Boruvka said it "has a place and has a value, and I think there are very good reasons to cautiously deploy it in proprietary products."
For Tripod Technologies, incorporating open-source code in the underlying components of its intellectual property — including a new product it is preparing to launch early next year to simplify business software testing — has positioned the firm to aggressively expand, as it is projected to grow by 50 percent by the end of 2012, Nittoor said.
"We use open source extensively and we have been using it since the early days when we started the company, which has gotten us to where we are today, with a little under 100 employees in two countries," Nittoor said. "Whether we're using an open-source product internally or building one for our customers, there's a business benefit to taking advantage of what's already out there, as long as you're careful enough with the licensing to avoid a headache in the future."
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