Open source license in software spat

The two firms signed a contract last year under which Webswell would consult, develop, and test software for Auto/Mate. It appears that starting point for the work to be performed included both existing proprietary software, owned by Webswell, and open source code licensed under the Academic Free License (AFL). Note: The original version of this story incorrectly identified the license as the Artistic License.

In the lawsuit filed in the United States District Court, Northern District of New York, Auto/Mate asserts that it owns the software developed for the company by Webswell, and that by posting the source code for that software on various open source Web sites, Webswell has violated its copyright.

The agreement between the two firms discusses ownership of the finished product in the following section:

5 DEVELOPED SOFTWARE AND DOCUMENTATION

All components previously developed or acquired by Webswell under any commercial or Open Source license shall remain under original license.

Any software components developed for Customer by Webswell will be owned by Customer. The
Customer shall have all rights of ownership in the developed software, except to the extent that any of Webswell’s previously developed proprietary software, is embedded in the developed software, Webswell’s proprietary software shall remain the exclusive property of Webswell and Customer shall have no ownership interest therein. Customer shall have a nonexclusive right to use Webswell’s proprietary software to the extent embedded in the developed software. The ownership and copyright provided under this paragraph, is subject to payment in full of all Services performed in creating the developed software or portions thereof.

Note that while the agreement specifically covers previously developed proprietary and open source code remaining under their original licenses, there is no further mention of ownership of code developed from open source code. There is, however, that unequivocal statement that “Any software components developed for Customer by Webswell will be owned by Customer.”

The AFL includes these terms:

Grant of Copyright License. Licensor grants You a worldwide, royalty-free, non-exclusive, sublicensable license, for the duration of the copyright, to do the following:

1. to reproduce the Original Work in copies, either alone or as part of a collective work;

2. to translate, adapt, alter, transform, modify, or arrange the Original Work, thereby creating derivative works (“Derivative Works”) based upon the Original Work;

3. to distribute or communicate copies of the Original Work and Derivative Works to the public, under any license of your choice that does not contradict the terms and conditions, including Licensor’s reserved rights and remedies, in this Academic Free License;

4. to perform the Original Work publicly; and

5. to display the Original Work publicly.

Larry Rosen, the author of Open Source Licensing: Software Freedom and
Intellectual Property Law and Lecturer in Law at Stanford University,
declined to comment on the case itself. But he did offer this advice:

What I will say is that it is *always* important to understand fully the
requirements of both any open source and proprietary licenses for software
you use, and to make your contracts clear and unambiguous. Ownership of
software depends upon that.

After reading the consulting agreement and a copy of the lawsuit, two questions stand out in my mind that will have to be settled by the judge, if the case goes to court.

First, did Webswell promise something it could not deliver — the ownership of open source code — in the agreement? Second, who owns the copyright to the non-proprietary code developed under the terms of that agreement — the open source project(s) involved, or Auto/Mate?