More Busybox Suits

More Busybox Suits

Received an email from the SFLC today.  It seems that Best Buy, Samsung, Westinghouse, JVC and Western Digital are all defendants to a busybox based lawsuit initiated through the SFLC.  Complaint is here.

New Aussie Supercomputer Runs Linux

New Aussie Supercomputer Runs Linux

The fact that a new supercomputer runs Linux should hardly come as a surprise to anyone.  What else would it run? W7? ROFL.  Well, if it did run W7 I’m pretty sure someone would have been all over the reporters for the Sydney Morning Herald making sure that they mentioned it in their article “Australia’s new supercomputer outflops the lot“.  However, since it isn’t, the reporter had a discretion on what to report, and they didn’t mention what operating system it ran.   I had to look the thing up on Wikipedia, where it told me that it runs Linux – Centos actually.

It is hardly surprising that closed software systems are so prevalent in Government when Governments themselves fund extensive lobbying and marketing by their vendors.  Of course, the line item doesn’t say “marketing and lobbying”.   No, instead it reads “Ridiculously Inflated Monopoly License Fees Courtesy of the Copyright Act” (sometimes it’s just “License Fees”).  Governments need to even the playing field and support open source marketing to the same extent they subsidise closed source marketing.

Microsoft/Linux: Don’t Cross License with Us?

Microsoft/Linux: Don’t Cross License with Us?

Last week saw the purchase, by OIN, of a portfolio of patents which ultimately originated from Microsoft.  OIN has alleged that Microsoft had described this portfolio as relating to Linux.   Red Hat has speculated that Microsoft auctioned these patents off in the hope of them being picked up by a patent troll and used ‘offensively’ against Linux (which I take to mean ultimately by way of litigation).

Without being a potential bidder I can’t say whether or not any of this speculation is true, but what if it is?

First, if this speculation is true, it means that Microsoft believed that the patents would be of value in litigation against Linux.  By selling the patents it therefore consciously decided not to litigate over them itself.

Second, what is the impact of this sale on manufacturers of Linux based devices who are entering cross-licensing arrangements with Microsoft?  What is the value of a cross licensing deal intended to protect against Linux related patents if the very patents you want to license are, will be, or have been, sold off to third parties?

Is Microsoft undermining its patent cross licensing push?

Netbooks, Microsoft, a Turning Point

Netbooks, Microsoft, a Turning Point

“If we win one more such victory … we shall be utterly ruined.”

Pyrrhus of Epirus, quoted by Plutarch in Life of Pyrrhus.

About 18 months ago a silver (actually white) bullet known as the eeePC running Linux appeared.   They were literally sold out immediately (example story) – despite the fact that they were pre-loaded with Linux, and well before the onset of austerity from the financial crisis.   Within 2 or 3 months a version of the eeePC running Windows XP was announced, first shipping in early (perhaps Jan??) 2008.   At about the six-eight month mark (give or take) people were happy to report the form factor being sold at 70-30% in favour of Linux (google it or see Brendan Leblanc’s claim of “under 10%” in the first half of 2008).

Since that time something has happened.  The specifications for this class of portable device have been steadily increasing, closing the gap between them and standard laptops (so much so, that there may not be a “netbook” market anymore).    With that the price of these machines has also increased.  Linux versions of the eeePC are either not available at all, or are only available on the lowest specification models.   Microsoft now claims to have dominated the  netbook market  with Windows installations (see the Leblanc post referenced above). [One comment notes that Linux based netbooks are available in China.  I would guess that they are available more generally in SE Asia (more price sensitivity) than in the West.]

Windows/Netbooks = Game Over?

Microsoft’s reaction to the success of the eeePC seems, on reflection, to have been well and professionally executed.  Indeed, now that the specifications have been upscaled, Microsoft has announced an intention to increase the licensing fees for this form factor.  That leaves open to question however, how the eeePC was able to be released sans Windows in the first place.  It is difficult to believe that Microsoft had no  knowledge of it.  If they did have knowledge, they certainly could have struck a deal over it (as the fact that they subsequently struck such a deal demonstrates).  They presumably chose not to strike such a deal.  Only ASUS and Microsoft really know what happened, but it does not seem wildly outside the evidence available to speculate that ASUS was initially rebuffed by Microsoft and then has had Microsoft approach them cap in hand.

If so, the eeePC has imposed a heavy price on Microsoft.  It was not a monetary price, although Microsoft has been reporting substantially reduced revenues (indeed, apparently its first ever quarterly revenue decline) and attributing those reductions to the netbook form factor (random example stories- one, two and three).  Rather, that price was its credibility.  The eeePC experience has indicated:

(a) that Linux based products can be a commercial success in their own right; and, as a corollary,

(b) that Linux allows manufacturers to dictate terms to Microsoft;

- and that is the crux of it.  In 2007-08 ASUS appears to have achieved what no other computer manufacturer has managed to do in perhaps over 20 years – it dictated the terms of supply of Microsoft’s products, both in terms of price and availability (XP’s sales availability was either ended or imminently to end).  Given the position of Microsoft this, of itself, is a remarkable achievement.  However ASUS’ achievement was even more far reaching.  Not only do they appear to have dictated terms, but the terms were, in effect, that XP be sold both as a commodity and as a complement to the eeePC.  Commoditising your complements is the holy grail of business.  It allows you to extract the most value/price premium from the sale of your products.

Far from showing strength, the wide availability of Windows on netbooks is a sign of weakness.

Looking forward

The eeePC was the proof of concept for a Linux based future.  There is something incredibly powerful about achieving an apparently unachievable goal.   Until something has been shown to be achievable, only the very brave or committed will even attempt it.  However, once something has been shown to be possible,  many people suddenly become willing to attempt it, and with more people attempting it, each new comer learns faster from the experiences of others.  Consider the history of scaling Everest, with some 30 years from the first attempt in 1922 to Hillary and Tenzing’s first successful ascent in 1953, the time since has been peppered with many additional ascents, including ascents under different conditions such as an ascent without supplementary oxygen, which was once thought too difficult.

It should therefore not be much of a surprise that many companies are now making strategic investments in Linux (reload the link if you don’t get there on the first attempt).   Some companies (such as Dell, Acer and HP) are expressly supporting Linux as a desktop operating system.

Rumours of My Death…

Nothing here should be taken as indicating backruptcy any time soon (- or ever!), or that there is imminent danger of Microsoft ceasing its participation in the IT sector.  It’s involvement is broad and deep and will not fade for a long time.  General Electric, for example, continues to live on after having diversified into many different areas over the past 100 years (Wikipedia claims that half of its revenue now comes from financial services).   Rather, it seems that the days of Microsoft-as-we-knew-it, the corporation which could dictate, at least to some non-trivial extent, many aspects of the IT industry through its leverage over OEMs are over.  Microsoft cannot afford for an OEM to stare them down on the next  eeePC – another Linux based success on the scale of the eeePC would remove any doubt from the minds of the industry.

If this assessment is correct, we would expect to see other industry participants investing in open source, and in Linux in particular, as both a hedge and as negotiating leverage.  Indeed, assuming that ASUS has extracted concessions from Microsoft, other OEMs will be disadvantaged if they do not follow a similar strategy (see this story on Acer’s proposed support of Linux for example).  Loading Linux now appears to be a path to strength.  Google is pursuing it.

In addition, we would expect to see Microsoft to continue to back track on its licensing requirements.   We have seen the start of this in its removal of the three concurrent applications limitation on the starter edition of Windows 7, and also in its repeatedly pushing back the end of availability to manufacturing of XP (it is now 30 June 2010 for the netbook form factor - however despite Microsoft’s end of sales date ASUS has apparently secured an agreement to load XP on its eeeTop).  2008 seemed to be a particularly fruitful year for backpedalling (including limits on CPU speed, RAM, hard drive size, use of hybrid storage and screen size – apparently screen size for a netbook is now 14.1″, – hardly a substantive limitation on the netbook form factor).  [One comment indicates that the screen size for windows 7 is 10.2" - it will be interesting to see how this plays out, although 12" netbooks don't seem to have done that well]

The Final Analysis

The eeePC experience was the case study for the viability of a Linux based future.  If ASUS has used the Linux eeePC to extract negotiating concessions from Microsoft, then it has, in the process, also undermined Microsoft’s credibility, opening the way for other vendors to play into this gap.   Further, if ASUS has secured concessions then other vendors who do not pursue an aggressive Linux strategy will put themselves at a disadvantage.  There is therefore an internal logic to the market which will drive support for Linux installations going forward.

Notes:

I’ve not been able to pinpoint the initial launch date for the eeePC, although it seems to be 16 October 2007.

I recall, but cannot find a reference to, thieves taking the Linux notebooks, but leaving the Windows based ones behind when they robbed a store.  I think it was in the UK and I think it was around March 08. [-> See comment from Al, re Elonex netbooks]

Many secondary documents had to be referred to because primary documents were updated, losing the time relevant information.

The Windows versions of the eeePC were curiously configured in such a way that there was no direct comparison between Linux and Windows versions.   This was also true of some Acer models.  Dell now seems to offer direct comparison (eg lattitude 2100).

Post script

The eeeTop appears to not be available with Linux – however it is shipping with OpenOffice installed.  I guess  other vendors don’t offer an OpenOffice option on their installs – a quick look at the Dell 2100 indicates that Microsoft Office is available as a customisation on the Windows version, but no office suite is available on the Linux version.   Office suites may be next…

Microsoft contributes code to the Linux Kernel

Chris Smart reports that Microsoft has contributed code to the Linux Kernel… under GPLv2.  I guess this means they will now have standing to sue people for GPL violations in respect of that part of the Linux code they contributed?

Other coverage: Greg, Steve, lkml

Release of IFOSSLR

Release of International Free and Open Source Software Law Review

Today marks the (soft) launch of a new journal dedicated to Free and Open Source Software legal issues (a “hard” launch with printed copies is happening in London on Wednesday).   The  International Free and Open Source Software Law Review is an initiative of the freedom taskforce run  by FSF Europe.   I am on the editorial panel and am also happy to take credit for initially floating the idea of having a journal.  I am also happy to praise the enormous effort that has gone into putting the law review together by the other members of the editorial committee and to the sponsors for supporting it.

There is, I think, a great need for a journal like this dedicated to free and open source software related legal issues.  At the moment, these issues remain hidden among other more generalist law journals – and are likely to be country specific.  Moroever, such articles are unlikely to be appropriately licensed.  Authors who are supportive of free and open source software are put in the ironical position of having to forego their (and their readers’) freedom if they want to publish articles on the topic.  The IFOSSLR rectifies these problems.  It will allow relevant articles to be grouped in one convenient place.  It will allow exposition of the cross-jurisdictional issues which are particularly important for communities which are by  nature multi-national.  Finally, its publication policy requires that all of the articles be openly licensed. In  general this means CC BY or BY-SA – so go download yourself a copy and share.  I expect to see it at the top on the torrents soon…

Pope on IP: Repent! Repent!!!

Patently O reports that the Vatican is coming out against monopoly rights over intellectual endeavour.  Quoting from an encyclical:

“On the part of rich countries there is excessive zeal for protecting knowledge through an unduly rigid assertion of the right to intellectual property, especially in the field of health care.”

Netgear Open Source Router

Netgear Open Source Router (<- Hello Michael?)

I am trying to anticipate what I will need to have a wired gigabit network set up for a small office.  I can find gigabit switches, but gigabit routers don’t seem to be promoted.  Anyways, when looking I came across some stuff on Netgear’s site specifically advertising open source as a feature, notably the Open Source Router but also the “4-Port Web Safe Router with 10/100 Mbps Switch RP614“.   How nice to see mainstream vendors now selling open source as a benefit.   Now more glad I bought one of their switches yesterday.

Call for Tax Deductibility for Donating (to) FLOSS (AU)

Call for Tax Deductibility for Donating (to) FLOSS (AU)

Brendan Scott

May 2009

Summary

There is cause to believe that an entity could be established in such a way as to be a deductible gift recipient under the Australian Income Tax legislation and that donations of open source software to that entity would give rise to a tax deduction to the benefit of the donor while preserving public access to the software.  Such an arrangement would benefit individual FLOSS developers (who have an income against which a deduction can be claimed), including those whose FLOSS activities are pro bono at the moment.  There is no reason to think the same principles would not apply to other licensing schemes, such as open content.

Background

Some while ago Open Source Victoria (OSV) asked me to investigate some issues relating to the tax deductibility of donating FLOSS to charities as a means of promoting participation in FLOSS within Australia.  OSV agreed to partly fund the work, and I mapped out some options for them at the time.  I’ve recently spoken with OSV and they were happy for some aspects of work to be made public.

Who Benefits?

Policy makers too often overlook the fact that the whole of the community benefits whenever software is released under a FLOSS licence.   The intended beneficiary of such a scheme are therefore the community as a whole.  However, consistently with existing government policy to provide incentives for the creation of works, the donors of such FLOSS software would also benefit through a tax benefit in return for the donation.   Further, as businesses will likely be able to deduct the costs of development of software which is created in the course of their business, the donors most likely to benefit are those individual developers engaged in pro bono development.

That is, such a scheme would provide an incentive to individual developers to create and donate FLOSS.

Outline of the Arrangement

In some circumstances the donation of gifts to charities gives rise to a tax deduction to the value of the gift.  Such deductions are not available for all donations, but whether the gift is money or an asset does not remove its deductability.   Software is an asset, so it can be a gift.  The arrangement therefore involves establishing an entity which grants OSI compliant licences over software donated to it in such a way that the gift of copyright to the entity would give rise to an entitlement to claim a tax deduction for the value of that copyright.

Discussion

Eligibility for a Deduction

There are a number of things to be established in order for a donation to an entity to be tax deductible. These are:

1. that the donation falls into one of a number of specific categories of things which can be gifts;

2. that the recipient of the gift has a special character as a Deductible Gift Recipient (DGR). This involves both being entitled to endorsement as a DGR and actually receiving that endorsement;

3. that any additional special conditions are satisfied. Special conditions can apply to gifts based on the character of the DGR and/or the circumstances of the donation; and

4. that the donation has the character of a gift as defined by taxation law. This includes both the nature of the gift itself and the manner in which the gift is given.

Deductible Gift Recipient

The legislation does not make it particularly easy to become a DGR.  Indeed, it has a Byzantine structure which the unkind might think was specifically designed to prevent entities becoming DGRs.  The tax deductibility of gifts is dealt with in Division 30 of the Income Tax Assessment Act 1997.  Section 30-15 has a table which sets out the circumstances in which a gift will be deductible (Deductibility Table).  The Deductibility Table sets out not only the categories of gift recipient, but also links the gift recipient to specific categories of gift and/or special conditions on gifts and/or deductibility of gifts.  A gift recipient may appear in different rows of the table, indicating that the same recipient may receive different categories of gift or that different gifts are subject to different special conditions (or both).

From a review of all of these the following seemed promising:

“(1) A fund, authority or institution covered by an item in any of the tables in Subdivision 30‑B”;
“4(b) a public library in Australia”; and
“4(c) a public museum in Australia”.

The tables in Subdivision 30-B list a large number of funds, authorities and institutions.  Some of these are named specifically (eg item 2.2.19 “the Foundation for Gambling Studies”), while others are identified by category (eg item 2.1.1 “a public university”).  Of all the entities listed in Subdivision 30‑B, the only ones likely to be applicable in the proposed circumstances are:
(a)  4.1.1 a public benevolent institution;
(b)  12.1.2 a public library; and
(c)  12.1.3 a public museum.
In certain circumstances, there may be other categories which are appropriate – for example, certain research arms of universities are entitled to be DGRs.  In addition, there would be the possibility of having the entity specifically listed in the legislation – if a specific naming was possible it would be the easiest route home, but the least likely to be able to be achieved. Failing that, the most promising seem to be establishing a library or a museum.    The detail of what constitutes a public benevolent institution is rather stringent and would be difficult to qualify under.

Gifts

In addition to the entity being established as a DGR, the gifts themselves need to have the requisite character.  These requirements are set out in a number of court cases and include:
(a)  that there is a transfer of money or property;
(b)  the transfer is made voluntarily;
(c)  that there is no material benefit to the donor by way of return; and
(d)  it essentially arises from benefaction and proceeds from detached and disinterested generosity.

There is no reason why the donation of code could not qualify under this definition as a gift.

Anti-Avoidance

In addition to the provisions qualifying what is, or is not a gift, the Act also has “anti-avoidance”  provisions which are relevant.  These are intended to apply to invalidate gifts where a scheme or arrangement has been contrived to avoid the spirit of the deductible gift recipient provisions.  In essence a gift is not deductible where as a result of a gift:
(a)  the value of the gift to the recipient is reduced (including where the reduction is from an event that happens after the gift is given);
(b)  another fund other than the recipient becomes liable to another person;
(c)  the donor of the gift (or an associate) receives a benefit (other than the tax deduction); or
(d)  there is a requirement for the recipient or another fund to acquire other property from the donor.

There is no reason in principle why the anti-avoidance provisions should preclude software donations of the kind contemplated by these arrangements.

How Much of a Deduction?

In theory the whole value of the asset is deductible.  The Act has different rules for different categories of gift.  In some circumstances no deduction is available for the donation of assets worth less than $5,000.  However, it is plausible that a gift of software under the arrangements contemplated would not be subject to this $5,000 minimum.    There are specific procedures in the Act to establish a value of assets.  For the arrangement to work could require establishing software valuers approved by the relevant department.  Presumably the market value of the donation of a substantial project (Joomla? ) would be signficant.

What needs to be done?

From here there is still a fair bit of work to be done before such an entity could commence operation.   A start would be to establish the infrastructure for such an entity – eg finding people to run it, creating constituting documents which would be consistent with an open source donation, establishing a valuation procedure and making an application for deductible gift recipient status.

See also:

This post from Stormy Peters on GNOME foundation/KDE in the US

FSF-Cisco announce settlement

FSF-Cisco announce settlement

As I guessed earlier, there was a settlement in the offing between Cisco and the FSF and now one has been announced.  Very similar terms to what we’ve been seeing in other settlements.