Open-source software and the demise of copyright.

• Author: Bobko, Patrick K.

1. COPYRIGHT, SOFTWARE, AND THE CURRENT DEBATE

   1. Introduction

      The scope of copyright protection for computer software reflects a variety of economic considerations. The chief goal of copyright law is to provide an economic incentive for creative efforts.(1) The principal tool by which copyright promotes authors' creative efforts is the grant of exclusive rights to their works for a limited period of time.(2)

      Due in part to the competition in the software market, the complexity of computer software, and the law's ill preparedness to deal with the preceding two factors, "the state of copyright law with respect to computer software has been in flux since the early 1980's and is still not settled."(3) In particular, the law has yet to accurately identify the non-literal aspects of copyright-protected computer programs, and that failure has precipitated a spirited debate.(4) Participants in the debate can generally be classified according to the scope of protection they believe copyright affords a computer program's non-literal elements.(5) Both academics and industry participants have noted the importance of the debate over the scope of copyright protection for software; in fact, some commentators have stated that its outcome would determine the future of the international software industry.(6)

      With the emergence of open-source software ("OSS"), some of the debate over copyright protection has taken a new focus. Although OSS depends upon copyright protection for its continued existence, the economic incentives of OSS are not the traditional economic incentives assumed by copyright law because they do not arise out of a monopoly of the copyrighted material. As a result, copyright law plays a diminished role in OSS.(7)

      Part I of this article examines the economic foundation of the commercial software industry and its reliance upon copyright law, highlighting the current debate concerning the appropriate level of software protection for a program's non-literal elements. Part II examines OSS and its impact on the information industries with particular emphasis on its freedom from market pressures and technical superiority over its proprietary counterparts. This article concludes that although some copyright protection is required to perpetuate the open-source movement, OSS' emergence has substantially mooted the current debate over the appropriate level of protection for a program's non-literal elements.

   2. Introduction to Copyright Law

      The Copyright Act(8) protects all "original works of authorship [when they are] fixed in any tangible medium of expression."(9) Copyright protection provides an author limited, exclusive rights over his work,(10) and confers on him certain enumerated privileges(11) that extend to a work's literal and "non-literal" aspects.(12) The "non-literal" aspects of copyrighted works that have been afforded protection are "the plot outline of a movie, the structure, sequence and organization of a computer program, or even the `total concept and feel' of a song, a television show, or a greeting card."(13)

      A copyright owner has the ability to reap commercial rewards for his work.(14) The owner's exclusive right to his work includes the ability to prevent the making of derivative works.(15) A copyright owner can sue the maker of an unauthorized derivative work for infringement of the original.(16) "[I]n order to qualify for a separate copyright as a derivative work ... the additional matter injected in a prior work ... must constitute more than a minimal contribution."(17)

      Generally, the contribution to the existing, copyrighted work must render the derivative work distinguishable in a meaningful manner to avoid infringement.(18)

      Copyright does not protect ideas, but only the author's original expression of those ideas.(19) For example, in the seminal case of Baker v. Selden,(20) the Supreme Court denied the author of a copyrighted book exclusive rights to the system of bookkeeping that his text explained.(21) In repudiating the author's claim, the Court distinguished protectable expression from unprotectable ideas.(22) The Court noted, "whilst no one has a right to print or publish his book, or any material part thereof, as a book intended to convey instruction in the art, any person may practise and use the art itself which he has described and illustrated therein."(23)

      Baker was a harbinger of difficulties to come. Each generation has seen the emergence of new technology that further blurs the line between idea and expression.(24) Distinguishing between ideas and expression has been a point of consternation for the courts that have been asked to do so, and as Learned Hand stated, "[n]obody has ever been able to fix that boundary, and nobody ever can."(25)

      Computer programs have once again challenged the courts to distinguish between idea and expression, confirming Hand's pessimism about the ability to find a solution to the problem.(26) The ubiquity of computers and the Internet make the practical implications of the legal debate and consequences attendant to its resolution greater than ever before.(27)

   3. Selling Software

      Traditional copyright law was ill equipped to accommodate the sale of computer software at the dawn of the Information Age.(28) Software developers in the late 1960's and early 1970's were consultants who generally worked for individual clients and wrote specialized software for their particular clients' needs.(29) Typically, the programmer would retain the rights to his work and permit the client to use the program under a licensing agreement.(30) The terms of each license were usually negotiated individually with each client and contained provisions that required the client to keep the software confidential and limited use of the software.(31) Licenses thereby enabled the programmer to widely distribute his work while protecting his proprietary interests.(32)

      In particular, programmers are interested in protecting their software's "source code," the literary work to which copyright protection formally adheres.(33) Source code describes "the collection of instructions a computer programmer writes [which] tells a computer what to do."(34) The essence of any program can be understood by anyone who has the technical wherewithal to reverse-engineer the object code, a process that converts it into subject code.(35) Because software has a relatively short commercial life span, the code should remain confidential and proprietary so that the author's program can retain its value.(36)

      A computer program's code, like a painting or a poem, is the product of the programmer's ingenuity, skill, and creativity.(37) It reflects a careful balancing of various competing interests, as well as consideration of the resulting program's size, elegance, and ease of use.(38) Accordingly, "[t]here are as many ways to approach the task of writing a program ... as there are programmers."(39) A program's value resides in how it balances the various concerns and ultimately how well it meets the user's needs.(40) Computer programs are the end result of an intensive, meticulous process, and "the products in question [are] derive[d] entirely from the creative energies of authors practicing a craft."(41) The process of "[c]ommercial software design is ... a rigorous, capital-intensive activity,"(42) and developers rely on copyright to protect their investment in the resulting product.(43)

   4. Economics and Software Development

      Software,(44) unlike other goods, has "a distinctive cost structure: producing the first copy [of a program] is often very expensive, but producing subsequent copies is very cheap.... The fixed costs of producing information are large, in other words, but the variable costs of reproducing it are small."(45) Because competition tends to drive prices to the level of marginal costs, information goods can easily turn into low-priced commodities, making it impossible for companies to recoup their up-front investments and eventually bringing about their demise.(46)

      Additionally, the fixed development costs for producing software are sunk costs that cannot be recovered if the product is commercially unsuccessful.(47) Generally, unsuccessful software has very little, if any, tangible salvage value.(48) Alternatively, the variable costs associated with software development remain relatively constant no matter how many copies of the software are made.(49) Unlike many other goods, the cost of producing an additional unit of software is almost negligible.(50) The unique cost structure attendant to the production of software "offer[s] vast economies of scale: the more you produce, the lower your average cost of production."(51) The lions share of software development costs are incurred up front, and the developer does not incur additional costs regardless of the number of copies made.(52)

      The half-life of commercial software is measured in months, and a developer must establish and protect a market niche if he hopes to recoup his development costs(53) If a companys software does not achieve a unique place in the market, it is forced to compete on the price, and if forced to "reduce its prices to a level near its marginal production costs ... that company will never be able to recoup its big up-front investments. It will, in time, face economic doom."(54) The large start-up costs inherent in software development and the ease with which competitors can copy software have forced companies to zealously guard their software source code.(55)

      The traditional model of software development is based upon two premises: 1) developer time is paid for by selling the software; and 2) the price software will fetch at market is proportional to its value as an economic tool.(56) Microsoft is the most famous practitioner of this method of software development,(57) and it is the focus of this article.

      1. Developer Time Is Paid for by Selling Software

         As discussed above, the costs associated with marshalling...