nhumphreys at AkinGump.com
Mon Oct 15 16:04:00 UTC 2001
I submit this posting for purposes of furthering the discussion. You are not my client, and you are not entitled to rely upon these words as legal advice. I hope you will find this helpful.
Julian Hall writes:
Having quickly scanned the archives of the license discussion mailing
list I can't find much reference from when I submitted version 1.0, but
I did note that there was some concern about the license requiring the
committee to be an incorporated body. Although I have not specifically
consulted over this issue, I am aware that under English law at least
non-incorporated bodies are free to act in this fashion (being similar
to the formation of a club or society), at least for as long as they do
not derive an over-all profit from their activities, and the latter is
only due to taxation issues. The license, I believe, makes it clear
that taxation issues must be resolved by any individuals concerned.
Generally under US law, the proposed committee can act in the manner proposed regardless of incorporation. If the committee is not incorporated, the proposed arrangement may create unwanted phantom income or other tax consequences for the holders of Merit Shares, to whom the revenue would likely be attributed, if those persons are subject to US income tax law. On the other hand, US income tax law would probably not impose a tax at the committee level (that is, on the committee's receipt of the
income), assuming it's not an incorporated body. These issues are unrelated to the issue of whether revenue exceeds expense, for US income tax law.
As a partnership for US law purposes generally, the committee would probably be legally authorized to act in the manner proposed.
If you expect to have Merit Share holders in multiple jurisdictions or if you anticipate revenue from sources in multiple jurisdictions, please consult a lawyer about optimizing your committee's organization and structure.
Section 2.4 may prove troublesome. It reads:
The Software may contain code that uses methods which have been patented either worldwide or in your locality. While it is not in general illegal to produce or distribute software such as this that uses patented methods, it may be illegal to use such software for any purposes other than 'private experimentation'. You bear the sole responsibility for determining if your use of the Software is in breach of any patent regulations. The authors may have produced a list in the documentation of the
Software that details patents that they are aware of that the Software may be subject to; any such list however should not be regarded as complete.
If a method is subject to a patent, and the user has no license from the patent holder, that user may well be deemed an infringer and may be subject to damages. If the patent is on a list that alerts the infringer that use of the software is subject to a patent held by a third party, then the infringer might be deemed subject to extra damages for willful infringement. If the executive committee is distributing software that incorporates a patented method, the executive committee and its
members could be subject to damages for infringement.
Section 3.1 reads:
3.1. Subject to the terms of section 2.4, your personal or business use of this Software is not restricted in any fashion. You may use the Software for any purpose you see fit, provided that if this purpose is in any fashion illegal you will bear sole responsibility for your actions.
This language may prove troublesome. Is this a guarantee or a warranty? Is this a statement that this license imposes no limitation? Why is section 2.4 the only section referred to? Other sections limit business use of the software. For example, a person distributing it can't charge for it, and a person distributing it must provide source code access. Those limits are not in Section 2.4.
Section 2.1 of the license reads, in part:
Specifically, the Authors do not guarantee that the program will function as expected in any particular circumstances. If you have received the program under the terms of this license, the Authors have not received any money from you for the provision of the Software, therefore laws of fitness for sale do not apply to the Software.
"Authors" may not be a good concept for this language. The concept you probably want is the entity that holds the copyright rights, whether that's the authors or the committee or someone else. Alternatively, the person you want may be the person who is making available the copy to whoever is receiving it, whether that is the Authors or a subsequent person distributing under the license.
Section 5.1 reads in part:
Upon submitting new code, modifications to existing code or any other work for inclusion in the Software, you agree to surrender any and all rights that you hold in such work to the current and any future Executive bodies as decided by the Authors of the Software, subject to terms layed out herein, on the understanding that once your work is included in a future release of the Software, the status of Author will be conferred upon you, and some Merit Share will be allocated to you in exchange
for these rights
You may find this language troublesome in the future. This paragraph provides unclear answers to these questions, for example:
* The "Software" is used here to mean the Software published, distributed or promulgated by the Executive Committee from time to time, but that doesn't correspond to the way the license defines the Capital S Software.
* Is the conferral of Merit Shares in exchange for the rights or a gratuitous act? In other words, does the act of submission of the proposed code by a would-be author confer the status of Author, whether or not the proposed code is accepted for incorporation into the distribution?
* Does a submitter receive some Merit Shares by virtue of the submission or by virtue of having the submission accepted for incorporation?
* In the same vein, does the conveyance of the rights occur whether or not the submission is accepted for incorporation into the distribution?
* What do the words "as decided by the Authors of the Software" modify? The submission? the conveyance or surrender of rights? the quality of rights? the timing? the form of the executive? the decision whether the surrender is to a current or a future executive body? It's not clear.
* Article 5 uses "Executive" and "Executive Committee" and "Executive Bodies" in a way that suggests that you believe them to be equivalent. Better drafting would call for you to use the same term throughout the document, whenever you mean the same group.
* The obligation to actually carry out the conveyance of rights in the software is not-self-executing (as lawyers say), but instead would occur by means of a separate piece of paper (or maybe by some online means, if any, recognized by courts in the appropriate jurisdiction). Must that piece of paper accompany the submission? Maybe you should provide that the submitter must make the submission by means of a form to be provided by the Executive, by which the submitter would convey those
I alert you to the possible reach of securities laws that may restrict grants of Merit Shares. Those may well be deemed "securities" for US securities law purposes.
I also recommend that you put the definitions into alphabetical order and that you spell "layed out" as "laid out," "procede" as "proceed" and without an "e" in the middle of "judgment"
Noel D. Humphreys
Akin, Gump, Strauss, Hauer & Feld L.L.P.
voice - 212.872.1016
fax - 212.872.1002
590 Madison Avenue
New York, New York 10022
nhumphreys at akingump.com
The information contained in this e-mail message is intended only for the personal and confidential use of the recipient(s) named above. This message may be an attorney-client communication and/or work product and as such is privileged and confidential. If the reader of this message is not the intended recipient or an agent responsible for delivering it to the intended recipient, you are hereby notified that you have received this document in error and that any review, dissemination, distribution, or copying of this message is strictly prohibited. If you have received this communication in error, please notify us immediately by e-mail, and delete the original message.
license-discuss archive is at http://crynwr.com/cgi-bin/ezmlm-cgi?3
More information about the License-discuss