Corporate Structures for Free Software Projects
Q: I have some software which I would like to form the basis of a GPL project. Should I set up an organisation and vest the copyright in that organisation. Would it make enforcement easier?
A: This is basically a difficult question and a lot depends on the circumstances. Some quick comments are:
* in theory, anyone who has contributed code, the copyright in which they hold, to a GPL project has standing to sue. The damages they can recover may be small if their contribution is small. However, the Act has provision for an award of additional damages where an infringer has been flagrant (etc) in their infringement. So there is still scope for recovering damages where actual damages are small.
* if an individual takes action they are exposed to the possibility of having to pay the other side’s legal costs.
* vesting copyright in an organisation makes the copyright an asset of the organisation. If the organisation is ever bankrupted (eg having to pay some other party’s legal costs), it would be one of the assets distributed among the organisation’s creditors.
* having assignments in favour of a single aggregating organisation will allow the organisation more flexibility in dealing with the material.
* having a separate entity will bring with it an additional administrative overhead and involve tax consequences.
* an organisation might be required by potential contributors or, equally, might not be acceptable to potential contributors.
* managing the assignment process and record keeping involve effort. It may discourage contributions.