Patent Defense

The CPL license terminates automatically under two situations as of the date that a Recipient initiates certain kinds of patent litigation.

Many commercial open source licenses contain this kind of patent defense clause. A company such as IBM, with its vast portfolio of patents, wants to be able to terminate patent licenses when it is sued for patent infringement. That defensive use of patents is an important part of such companies' patent strategies.

This is the first situation:

...If Recipient institutes patent litigation against a Contributor with respect to a patent applicable to software (including a cross-claim or counterclaim in a lawsuit), then any patent licenses granted by that Contributor to such Recipient under this Agreement shall terminate as of the date such litigation is filed. ( CPL section 7.)

This termination provision applies to "litigation against a Contributor" and "a patent applicable to software," regardless of whether it is applicable to the software licensed under the CPL.

This is the second situation:

...If Recipient institutes patent litigation against any entity (including a cross-claim or counterclaim in a lawsuit) alleging that the Program itself (excluding combinations of the Program with other software or hardware) infringes such Recipient's patent(s), then such Recipient's rights granted under Section 2(b) shall terminate as of the date such litigation is filed. ( CPL section 7.)

This termination provision applies to litigation against "any entity" and "a patent applicable to the Program" only.

The first provision terminates "any patent licenses granted by that Contributor to such Recipient under this Agreement." The second provision terminates "rights granted under Section 2(b)." Curiously, there are no patent licenses granted by the CPL other than those in its section 2(b). I don't understand why the two termination provisions are worded differently in this way.

Notice also that the termination provisions apply to the patent license only; the copyright license remains. So if there are no patents that the Contributor actually licensed (i.e., the intellectual property in the software is merely copyrightable, not patentable), the termination provision doesn't apply. The CPL license provides no patent defense benefits to a licensor without patents.

Some companies do not want to in-license software under this kind of patent termination provision. Their concern is with the first half of section 7, which applies to infringement litigation "with respect to a patent applicable to software." This is the scenario they don't like: Suppose Company A licenses its software under the CPL to Company B. Company B then accuses Company A of infringing an entirely different software patent unrelated to the licensed software. Company B's license to the software terminates.

Should Company B have accepted Company A's software in the first place? Should it ever accept the risk of relying on open source software under the CPL if by doing so it may make the rest of its software patents unenforceable against Company A?

Some companies refuse to accept such license conditions. Open source projects need to decide whether such license conditions will frighten away too many prospective licensees . This may also present an opportunity for open source projects to use dual licensing, where they can offer a lower risk license alternative to such risk-averse companies ”at a price. (See the discussion of dual licensing in Chapter 11.)

By the way, this situation can occur under the MPL as well. Under the defensive termination provisions in both the MPL and CPL, the licensor's patent licenses terminate if the licensee sues the licensor for patent infringement. Under both MPL and CPL, a licensee may eventually have to choose between continuing the license and suing for patent infringement.

Is that really such an unreasonable bargain? In return for accepting valuable free software from Company A, Company B must accept that its software patents are effectively unenforceable against Company A. But the software is free! Why should it not come at a price? Why isn't reciprocity of patent licenses a reasonable bargain?

One further comment: The OSL and AFL licenses described in the next chapter take license termination for patent infringement one step further than the MPL and CPL. In those licenses, both the copyright and patent licenses terminate, not just the patent licenses. Some believe that such enhanced reciprocity is justified, specifically for open source projects that don't own patents.