For software vendors, open source software (OSS) should be
treated like a compliance issue - in the same way that corporate,
securities or environmental compliance is a concern for many
companies. The failure to manage compliance can be costly
- just like it would be if a company ignored its environmental
or securities compliance obligations. An environmental remediation
order or a cease-trade order might result from compliance failures
in those other areas.
What does it look like in the case of OSS compliance
We need look no further than the Versata litigation which has
spawned no less than 5 cases in the US:
Versata Software Inc. f/k/a Trilogy Software, Inc. and
Versata Development Group Inc. f/k/a Trilogy Development Group Inc.
v. Ameriprise Financial Inc., Ameriprise Financial Services, Inc.
and American Enterprise Investment Services, Inc., Case No.
D-1-GN-12-003588; 53rd Judicial District Court of Travis County,
Versata Software Inc. v. Infosys, Case No. 1:10cv792,
U.S. District Court, Western District of Texas
Versata Software Inc. v. Ameriprise Financial Services Inc.
et al., Case No. 1:14-cv-12, U.S. District Court, Western
District of Texas, Case No. 1:14-cv-12, U.S. District Court,
Western District of Texas
XimpleWare Corp. v. Versata Software Inc., Trilogy
Development Group, Inc., Ameriprise Financial, Inc., Ameriprise
Financial Services, Inc., Aurea Software, Inc., Case No.
3:13cv5160, U.S. District Court, Northern District of
XimpleWare Corp. v. Versata Software Inc., Aurea Software
Inc., Trilogy Development Group, Inc., Ameriprise Financial
Services, Inc., Ameriprise Financial, Inc., United HealthCare
Services, Inc., Waddell & Reed, Inc., Aviva USA Corporation,
Metropolitan Life Insurance Company, Pacific Life Insurance
Company, The Prudential Insurance Company of America, Inc.,
Wellmark, Inc., Case No. 5:13cv5161, U.S. District Court, Northern
District of California (San Jose).
In a nutshell, the lawsuits centre around the use of an open
source component in Versata's Distribution Channel Management
(DCM) software. Versata originally sued Ameriprise for breach of a
software license agreement for the use of the DCM software. In the
course of that litigation between Versata and Ameriprise, it became
clear that there were significant underlying issues related to an
XML-parsing component called VTD-XML, distributed by
While XimpleWare does offer VTD-XML under a "closed"
commercial license, Versata had not obtained a
commercial license for the component, and thus the component was
governed by GPLv2, an open source license. This in turn
laid bare the gaps in Versata's OSS compliance and raised
questions of whether the DCM was a derivative, making the whole of
Versata's proprietary code subject to the GPLv2. XimpleWare,
for its part sued Versata, Ameriprise and all of Versata's DCM
customers based on breach of the GPLv2 and patent infringement.
We will be watching whether any judicial
guidance comes out of this US litigation. In the meantime, it
serves as a cautionary tale for software vendors: OSS compliance
must be addressed with the same attention and diligence as a
regulatory compliance issue.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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