Corporate Structures for Free Software Projects

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.



2 Responses to “Corporate Structures for Free Software Projects”

  1. 1 Glenn 5 November 2012 at 10:16 am

    “having assignments in favour of a single aggregating organisation will allow the organisation more flexibility in dealing with the material.”

    If you mean more flexibility in a legal sence, then i have heard mention of this argument in other places, but i am unsure of any specifics. e.g. the FSF asks for copyright assignment as they believe its beneficial for enforcment reasons.

    I assume one benefit of only having one copyright holder, is that its easier to get a favourable out of court settlment, as if there are many seperate copyright holders then an out of court settlement with one party provides no certainty in regard to other possible cases.

    Are there other legal benefits for enforcment flowing from aggregation of copyrights, and do those benefits vary depending on country enforcment is done ? (e.g. do the has huge US statutory damages payouts for copyright, which i dont believe Australia has)


  2. 2 brendanscott 5 November 2012 at 8:34 pm

    Flexible in the sense that if the main people driving the project realise that something (eg licensing) about how the project is run needs to change, then it’s within their power to do it. Otherwise, you have an issue about chasing down and getting consents from everyone who might have an interest.

    Australia has “additional damages” (section 115(4)) which allows courts to award more than mere loss. There is no necessary relationship between actual damages and additional damages awarded.

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