SFLC Blog[RSS]

There has been a growing interest among Free and Open Source Software ("FOSS") projects in the use of crypto-currencies such as Bitcoin and its myriad derivatives (hereinafter "Bitcoin"). However, uncertainty over the treatment of these currencies by US law has dissuaded developers from from using Bitcoin. This post provides some general guidance on the legal consequences of using such convertible virtual currency.

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We've been watching with great interest this week as the travails of FOSS organizations with the US Internal Revenue Service have become a hot topic. When our client, Jim Nelson of Yorba, discussed blogging about the IRS rejection of Yorba's application for 501c3 status with us, we hoped but did not expect that the situation, to which we had discreetly called community and company attention for years, would finally receive some. We're very glad that's now happening. Unfortunately, it's really too late. Because of the long delays in determination imposed by the IRS in its increasingly anti-FOSS positioning, neither the full consequences of the IRS's present position nor the state of our legal technology in response can be seen from the materials currently under discussion.

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In each Supreme Court brief that SFLC has filed over the years we have included a little note on the first page declaring that the brief was made using only free software. This point was particularly important in our most recent brief, for a case named Alice Corporation v. CLS Bank, which was argued in front of the court last week. Our use of free software was particularly important this time because we argue in our brief that free software has been responsible for the major software innovations of the modern era. In partial support of that claim I want to show you our document creation process and tell you about the free software we use to take text from an email and turn it into a camera-ready Supreme Court brief, then a website, then an eBook.

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Free and open source software projects live on the web—even projects that don't build web applications use software repositories, forums, social networks, project management software, and other online tools to engage developers. But with user engagement comes a certain amount of risk: if a user posts copyright-infringing content to a project's site, the project could find itself threatened with a lawsuit for hosting the content. A compliant DMCA policy gives the project a ready defense to claims related to user activity. Without one, even a bogus claim could cost the project significantly more time and legal expense.

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Several times in recent years, opponents of software patents have looked hopefully to Congress and the Supreme Court for a solution to the expensive problem of software patents, and several times we've been disappointed. The narrow Bilski v. Kappos ruling invalidated one business method patent but left the question of software patents to one side, and even arguably weakened a rule—the "machine-or-transformation" test—intended to limit the scope of patentability. The reforms of the America Invents Act were half-hearted; they provided additional opportunities to challenge patents at the USPTO, but did not fundamentally affect the rules for patenting software.

Despite these missed opportunities, there are signs of slower but consistent reform in the courts, and yesterday's ruling in the Eastern District of Texas in Uniloc v. Rackspace is one of them. The Uniloc ruling is about as good as it gets for a defendant in a software patent case: the judge dismissed the case at an early stage on the grounds that the claim at issue described an unpatentable mathematical formula.

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Software patents and data mining are the major ecological issues confronting technologists today. Startups' prevailing business models have predictable consequences that pollute the environment for innovation and endanger users. Companies that elect these models, either by design or by default, no longer have the luxury of ignoring their inherent ethical problems. We have to start designing for sustainability. If we don't, we're selling out the future of software and the rights of actual human beings.

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Twin Peaks Software, Inc., which makes proprietary data replication and cloud storage software, sued Red Hat and its subsidiary Gluster for patent infringement back in February. Last week, Red Hat filed a counterclaim in that litigation, alleging copyright infringement by Twin Peaks in misappropriating GPL'd software. Today SFLC begins an investigation of Twin Peaks' products, to ascertain whether any of our clients' rights are being infringed through the violation of FOSS licenses.

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The recent curbs on social networking websites in India demonstrate the unpredictability of the legal environment, both for businesses and the citizens. Whether its the Government of India's (GoI) insistence on getting access to corporate emails and text messages sent via BlackBerry devices, or changing stances on "pre-screening" user generated content, the authorities seem to be doing a tap dance around legal issues. The implementation of rules seems surreptitious as they are bent conveniently in the name of "security".

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In yesterday's New York Times, Ellen Ullman argued that we need artificial intelligence, not more testing, to prevent high-volume trading catastrophes like the one at Knight Capital. But artificially intelligent market watchers are an expensive and possibly unworkable solution. Instead, by collaborating on an open infrastructure for high-volume algorithmic trading, firms could reduce errors, improve stability, and possibly avoid expensive regulation.

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