How's your Grandfather?

Posted On: 11 May 2007

Author: Iain G. Mitchell QC

Download full article: How's your Grandfather? [pdf-83.6kB]

PROFILE SOFTWARE LIMITED against BECOGENT LIMITED [2005] CSOH 28
Lord Kingarth, Court of Session, 16th February, 2005

In this article, Iain G. Mitchell QC discusses a Scottish case which can be used to suggest a radically different approach to the thorny Grandfathering problem in Open Source Software Licensing.

It is one of the great paradoxes of life that Open Source Software is made open and free (as in speech, not beer) by using the licensing mechanism, used in the proprietary world to keep copyright locked up, to impose terms which force the software to be kept open - for example as provided for in clauses 1 to 3 of the GNU General Public Licence.

There is no doubt that this will tie the first licensee, but for Open Source Software to remain free it is essential that these terms also attach to licensees who are further down the chain. Accordingly, a great deal of ink has been spilled by open source lawyers and academics trying to come up with some theory to create a contractual nexus between the originator of the software and later users. For example, one often hears asked the question of whether the General Public Licence creates a ius quaesitum tertio [a right on the part of a person who is not a party to the contract to sue on the contract] in favour of the first licensor, the "grandfather".

The Profile Software case at first sight has nothing to do with anything except the good old-fashioned use of copyright to make sure that software remains locked up, yet, hidden within it is the seed of an answer to the grandfathering problem.

The background was that Coranta Corporation had a call centre software suite known as "Profile" which was designed to be tailored to individual customers' requirements. It enjoyed modest success and was licensed to a number of companies. Then, in an all-too familiar turn of events in the software industry, Coranta got into financial difficulties and went into liquidation. The liquidator sought to dispose of the Company's principal asset, the intellectual property in the Profile software. This did not prove difficult as one of the customers, MGT plc, was willing to buy the intellectual property and each of the other existing customers, including Becogent, were content with taking a fresh Licence. A new licence was necessary because the liquidator was not prepared to go on providing support, so an extended licence was required to allow the customers to arrange their own support, for which purpose they were each provided with  the source code.

The way in which the arrangement was given effect to was, first, for the liquidator (with the full knowledge and consent of MGT) to grant the new licences to the other customers, and, since there was to be no more support, the Liquidator also handed over the source code to them. Immediately thereafter, the liquidator granted an Assignation of the IPR in favour of Profile Software, a wholly-owned subsidiary of MGT.

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