Open-source Software Doesn’t Necessarily Mean it’s “Free”
At the end of July, a federal court in New York issued a decision that put a high price on “open-source” or “free” software. Companies are looking more and more closely at ways to cut expenses, and using open-source software is one way to take advantage of software licensing without purchasing software. Open-source software, however, does not fall outside the bounds of copyright law. Contrary to conventional wisdom, it is not in the public domain.
The software involved in the New York case is titled BusyBox. It is described as a series of small utility-type programs that are tailored for and embedded in various products, such as wireless routers, firewalls, modems, internet radios, PDAs, media players, and HDTVs. Various manufacturers use the BusyBox software and its source code to make their products work. Although BusyBox and its source code are available without charge, the use of BusyBox is subject to the GNU General Public License (or “GPL”). GPL is an open-source copyright license. Although the software is free, the license places requirements on further distribution of the licensed software. For example, if a product is embedded with BusyBox software, the product’s manufacturer/distributor must provide the source code and any upgrades or modifications available on the same terms, i.e. without charge. The GPL also prohibits licensees from distributing the software under a license that is more restrictive than the GPL. Gartner, Inc., a leading international IT firm, estimates that 85% of companies use open-source software in some fashion (Source: www.groklaw.net).
BusyBox claimed that Westinghouse, in addition to 13 other distributors, infringed the copyright license in the software. Westinghouse distributed HDTVs that were embedded with the BusyBox software while, at the same time, imposing more restrictive licensing terms than those in the GPL. The more restrictive licensing terms included a limitation for “personal, non-commercial purposes only.”
The federal judge deciding the case
- found that Westinghouse’s infringement was “willful” and awarded treble statutory damages of $90,000,
- granted a permanent injunction against the distribution of HDTVs embedded with the BusyBox software,
- ordered all infringing HDTVs returned to the plaintiff, and
- awarded attorneys’ costs and fees of $47,865.
The significance of the case is particularly evident considering the software at issue is available at no cost. Businesses should be familiar with the licensing terms of open-source software and abide by those terms. Open-source software remains subject to copyright law and the parameters of the license agreement.
If you are distributing products that rely on the use of open-source software, be aware of potentially infringing activity if you do not make the source code and any modifications available at no-cost, and if you impose more restrictive licensing terms than the GPL, or whatever license the open-source software is subject. The GPL is not that difficult to comply with, see http://www.busybox.net/license.html. If you are contacted by an organization representing any software company or developer, do not ignore their demands. Consult with Wright Penning & Beamer immediately.
Dan A. Penning
Still wondering how the federal Patient Protection and Affordable Care Act (”PPACA”) will affect you or your business? Not sure what changes you may need to implement to avoid penalties? You’re not alone. While the nation attempts to navigate the overhaul of the health care system, here are a few key points to help you understand some aspects of this complex law:
If a large employer does not provide any coverage, and for that reason an employee qualifies for a subsidy (or “premium credit”), the employer faces a monthly penalty, calculated as follows:
With a tremendous amount of hoopla, Michigan’s law banning texting while driving took effect this past July 1, 2010. In so doing, Michigan joined somewhere between 14 and 23 states (the reported numbers vary widely) and the District of Columbia, that have taken this approach in an effort to deal with the growing problem of distracted drivers. A summer 2009 study by the Virginia Tech Transportation Institute found that the act of writing a text message while driving substantially increased the chances of becoming involved in an accident. According to figures published by the National Highway Traffic Safety Administration, accidents resulting from some form of distracted driving resulted in 6,000 deaths and 500,000 injuries in 2008. Overall, distracted drivers accounted for almost 80% of all accidents and 65% of near accidents, nation wide. Here in Michigan, some 3,315 accidents were attributed to distracted driving in 2009, with 900 of those specifically linked to some sort of cell phone use.
(a) For a first violation, $100.00.
It’s too early to tell. I do know this. As someone who rides a motorcycle, distracted drivers scare the daylights out of me. On a motorcycle, I am pretty much at eye level with drivers, and can easily see what they are doing. Just this past weekend, on a trip to the west side of the state, I encountered numerous erratic drivers; you know the ones, driving too slow, too fast, drifting in and out of their lanes, and so on. In every instance, the driver was either talking on a cell phone or texting while driving. Very scary stuff.
Until recently, most U.S. nonprofit organizations were not required to file an annual information return with the IRS. Beginning January 2007, all that changed when even the smallest of nonprofits became subject to IRS annual reporting requirements. The only exceptions were state organizations, churches and their affiliated organizations, and certain religious groups. Nearly all others were required to file some version of Form 990, and the failure to do so for three consecutive years would mean automatic loss of the organization’s tax-exempt status.
Welcome relief for small nonprofits only
For charities that receive an IRS revocation letter next year, all is not lost. A nonprofit can regain its tax-exempt status by filing a lengthy application (Form 1023 or Form 1024) with the IRS and paying the applicable user fee. (Unfortunately, this application process applies even to organizations that did not have to apply in order to gain their initial tax-exempt status.) Reinstatement will usually be effective as of the date the application is filed. However, if a nonprofit can demonstrate that it had reasonable cause for failing to file returns for three years, reinstatement will be effective as of the date of revocation.
For the time being, the Senate has again abandoned efforts to impose a “carried interest tax” on venture capitalists, investors, and managers of family businesses. The tax would have increased the 15% capital gains tax rate on certain investors’ profits to the top income tax rate, which is scheduled to hit 39.6% on January 1st (H.R. 4213). The share of investors’ profits is called “carried interest.” It might appear at first glance that it’s perfectly fine for investment managers to be taxed at higher rates on their “carried interest.” But venture capitalists and investors don’t reside exclusively on Wall Street. The law was written so broadly that it could have hit approximately 6.5 million people invested in real estate partnerships that own anything from a single dwelling to sizable commercial properties.
In reality, the proposed legislation could have imposed a higher tax rate on any partnerships invested in particular assets. The higher rates would apply to investment gains and also to gains from the sale of the partnership, and therefore, a sale of the family business would not qualify as a capital gains transaction. Family operations are commonly formed as partnerships and managed by a family member. Under the proposed legislation, the managing family member could be subject to the “carried interest tax.” For a family partnership to gain liability protection and also not be subject to the higher taxes, an outsider – not a family member — would have to manage the partnership. The House version of the legislation exempted family farms and ranches held in partnerships. Other family partnerships would have had to wait for the Treasury Department to exempt them through regulations.
Previously, we informed you of a Michigan Court of Appeals decision from 2008, which held that a parent’s waiver of liability for a child’s personal injuries is ineffective. On June 18, 2010, the Michigan Supreme Court decided that the Court of Appeals reached the correct conclusion: parental waivers are unenforceable. The Court reasoned that parental waivers are an attempt to contractually prohibit a minor from filing a lawsuit. Since parents cannot legally contract on behalf of their children, such waivers cannot be enforced.
In fact, a bill is currently pending in the Michigan House of Representatives that would allow a parent or guardian of a minor who participates in a recreational activity to sign a written waiver releasing a person (the sponsor or organizer of the activity, or the owner or lessee of the property) from liability for resulting injuries. The bill would authorize parents or guardians to sign the waivers in advance of the activity. It is unknown at this time, however, if and when the bill will become law.
Also, some establishments may want to investigate the suitability of contracts that provide for the parents themselves to “indemnify” (or reimburse) the establishment for any losses that arise from the injuries that a child suffers while participating in the activity at the establishment. While parents cannot contract for their children, they can enter contractual commitments of their own. An indemnification agreement would essentially have a parent agreeing that, “If my child is injured while participating in your activity – and if that injury leads to a claim against you – I will reimburse you for the cost of that claim.” While not nearly as clean or as risk free as a release, such an agreement would at least provide one additional tool to use in defense of an injury claim.
These days it’s hard to listen to the radio, watch television or go on-line without being inundated by ads pitching the latest and greatest do-it-yourself, on-line, estate plan documents: who needs those money grubbing lawyers anyway? One thing all of these pitches have in common is the assurance that the forms are legally valid and binding. Truth be told, “legally valid” is not a tough threshold to meet. If the person signing the Will (or trust, or, you name it) has the requisite mental capacity under the laws of the state where the document is being signed, and the document is signed, witnessed, or notarized in accordance with the laws of the state, it is legally valid. Legal validity, however, is only part of the story. Imagine the shock years down the road when it is discovered that an estate plan put in place by well meaning parents, intending to provide for each other and their children upon their disability and eventual deaths, does nothing of the sort.
Second, the document was premised upon property law concepts that are not followed in Michigan. Admittedly, this is where the explanation can get technical and complicated, so I’ll convey only the basics. Insofar as property ownership between a husband and wife is concerned, 40 states follow concepts derived from, and based upon, English common law. There are 10 states, however, that characterize property owned by a husband and wife pursuant to concepts that can be traced to French and Spanish civil law. Those states are said to be “community property” states. And, even within these groupings of common law and community property law jurisdictions, there are many variations. The salient fact remains, however, that property owned by a husband and wife is treated differently in community property and common law jurisdictions. Michigan is not a community property state. Yet, this document, although touted to be a Michigan specific document, employed community property terminology and concepts.
Wright Penning & Beamer is pleased to announce that Dan A. Penning has been named a FIVE STAR Wealth Manager by HOUR Detroit magazine in its June, 2010 issue. 
Wealth managers, broadly defined, are those individuals who help you manage your financial world and/or implement aspects of your financial strategies. Common examples of wealth managers are financial advisers, life insurance agents, accountants, tax advisors, attorneys, etc. With more than 11,000 wealth managers in the Detroit area, how do you find someone who listens to you, represents your interests and operates with an emphasis on integrity and service? HOUR Detroit magazine can help. The magazine formed a partnership with Crescendo Business Services to find out which wealth managers scored highest in overall satisfaction.
The resulting list of 2010 FIVE STAR Wealth Managers is an elite group, representing less than 7 percent of the wealth managers in the Detroit area. Only 686 of the top-scoring wealth managers made this year’s list. . . . ”
When our oldest son asked the very next week, after they were home from the hospital, “When can they go back?” I looked at him blurried from little sleep and said lovingly, “No, sweetheart, they are here to stay.”
Recently, many of my firm’s clients who own multiple acres of land in northern Michigan have been contacted by petroleum company representatives and offered oil and gas rights leases for their land. While many of these companies are reputable and offer fairly standard terms in their leases, they are generally trying to secure leases that are most favorable to them. The landowner should be aware of provisions that can be included to protect their investment and maximize the owner’s financial return.
A “Pugh Clause” protects the landowner by requiring the oil and gas company to release certain land subject to the lease after termination of the lease term that has not been pooled into the land subject to the royalty payment in the event an active well results from the lease and exploration. For example, an oil and gas company may only pool an apportion of the leased land for royalty purposes and without a Pugh Clause, the companies in some instances can tie up the entire parcel subject to the lease even though they are only paying royalties on a portion of the land.
