Liability for Embedded Software Use

August 19, 2013

Open SourceA German court recently determined that software distributors are responsible for compliance with the open source licensing terms associated with all code that is integrated into the products they distribute.  Distributor liability for embedded code license compliance presents important and potentially complex licensing management issues for software distributors and integrators.

Open source software is distributed using a licensing model that is designed to make the underlying computer source code readily accessible to multiple parties for customization, refinement, and enhancement.  Traditionally, open source licenses do not make use of monetary license fees or royalties, but instead require licensees who distribute their software to provide the modified versions of their source code to other parties for additional modifications.

The District Court of Hamburg considered claims raised by an open source developer against the software distribution company, Fantec.  The developer alleged that media player software distributed by Fantec included open source code he had developed, and that the software containing the code was distributed by Fantec in a manner inconsistent with the open source license.

The court ruled in favor of the developer.  It concluded that Fantec had an obligation to ensure license compliance with regard to all code incorporated into the products it distributes.  The court also determined that the software distributed by Fantec did not fully comply with the license terms for the embedded code.

This case is important for the open source community.  It affirms the enforceability of open source licenses.  It also clarifies the scope of those licenses by confirming that all parties in the open source software distribution chain have responsibility for license compliance.

The case also helps to underscore the scope of license compliance obligations for software, in general.  Regardless of whether the code involved is distributed under an open source or other type of license, compliance issues are important and can be complicated.

Integration of previously developed code into new software products is a widely used process.  The Fantec ruling serves as a reminder that each time existing code is integrated into new software, all license requirements governing that pre-existing code must be followed.

Today’s environment of widespread use of embedded code from a variety of sources creates substantial license compliance challenges.  Software developers, integrators, and distributors must recognize the complexity of license compliance.  They should develop and implement compliance policies, practices, and procedures that can effectively manage active use of embedded code controlled by other parties.  The Fantec case is a reminder of the potential liability associated with failure to manage those licenses effectively.