OPHI Document title: ophi/scenarios for how the license should work
Version: @@@
Date: 11/5/2003
Status: Draft
Document: openphi.mit.edu/.... for
Please send any comments on the document to Marshall Van Alstyne
Author of this version: Licensing group
For more information check the Open Process Handbook Initiative at: http://ccs.mit.edu/ophi/

Scenarios for licensing arrangements for the
Open Process Handbook Initiative

This document offers roughly a dozen scenarios for use and development of the Process Handbook. Each scenario illustrates a different potential use and indicates the desired payment offered in exchange for access. It is intended as the basis of discussion and design of an actual license.

1) Private Company/Private Use – a firm wishes to use the product for its own purposes but does not want to disclose how it is using the product or what derivative work or content it has created.

Compensation: The buyer pays the standard licensing fee for using the open platform and keeps the subsequent content and development private into perpetuity. The buyer also receives support.

Rationale: In this case, the firm returns nothing to the community and so compensation takes the form of payment.

2) Private Individual/Private Use – a person wishes to use the free product for his or her own purposes but does not want to disclose how he or she is using the product or what derivative work or content he/she creates.

Compensation: An individual user is free to use the software as he / she wishes. No access is provided to the paid portions of the product and there is no support.

Rationale: Since anyone is free to download the free version, an individual user is encouraged to experiment and also to encourage others to try the software.

3) Private Company/Temporary Free Use/Long-term Private Use – a firm wishes to try the software and experiment with it. After adopting, the firm wishes to keep changes to the product and content private.

Compensation: The product is initially free of charge. An employee of the company is free to experiment on an individual basis. As long as nothing is transferred within the company, no charge is incurred. As soon as transfer occurs (after 2 transfers), the licensing fee must be paid (or the Extensions created need to be made publicly available). Note that multiple individual users within the firm are restricted from exchanging files until the software is licensed. Support is provided upon paying the license.

Rationale: It is desirable for firms and individuals to try before they buy. Restricting free use to a tiny subset of individuals permits trial but limits the exchange value of multiple users until the firm has returned something of value to the community.

4) Derivative Functional Work / Fully Open Code – a person or firm enhances the basic software and makes the full value of their enhancements available to the community.

Compensation: There is no charge and the person or firm is free to use the open platform and their enhancement in any way they wish.

Rationale: In this case, the developer of an enhancement has contributed something back to the community. Product enhancement is acceptable in lieu of payment. All such contributed code will remain part of the open code base. Note that since they open all their enhancements and there are no sales, it really does not matter what their minimum contribution is. This can be enforced via copyright.

5) Derivative Content Work / Fully Open Code – This is the same as above only the content produced with the software, not the software itself, is derivative.

Compensation: As long as the content is open, there is no charge and the person or firm is free to use it as they wish.

Rationale: Again, value is returned to the community so in-kind contributions are made in lieu of compensation. Attaching conditions to the content might not depend on copyright but more can depend on patent. The test for transferring content binds at the point when content is transferred to any party other than the person who produced it and one “reviewer”. The threshold for sharing to more parties will be 2 people.

[issue to discuss: How do we define “content produced with the software”? Consider the following cases:

(a) Joe User creates a minimal skeleton of content using the PH editor (lots of “bare” entries with only a name and links to other (private) websites. Then he creates lots of new content on those private web pages. In this case, only the skeleton entries need to be shared. Is this what we want? It doesn’t seem ideal, but it’s probably okay.

(b) Sally User creates elaborate content that links to the PH entries, but doesn’t change the PH entries themselves. She doesn’t have to share anything. Is this what we want? Probably.]

6) Derivative Functional or Content Work / Fully Open Code + Consulting – a person or firm enhances the basic software and makes the full value of their enhancements available to the community then also offers a non-software fee-for-service such as support or consulting. In the case of Linux, RedHat would be an example.

Compensation: There is no charge and the person or firm is free to use the open platform and their enhancement in any way they wish.

Rationale: The developer is contributing value back to the community in code as well as expanding the user base.

7) Private Company or Individual / Closed Code or Private Sales – This is the case of a value-added reseller or VAR. A firm or individual takes the open platform and extends it to launch a new product or service.

Compensation: The fee is a standard percentage of the total sales of any product or service built on or from the open platform. This fee rises the longer the enhanced offering is kept private.

Rationale: Since the VAR depends on the open platform and has not opened their own enhancement, they need to provide compensation in proportion to the value they receive, which increases the longer they keep their enhancement private. The percentage rises over time to encourage subsequent enhancements to also become open. A firm that objects to the published percentage may seek to negotiate a different percentage but is otherwise bound by the published pricing levels.

8) Derivative Functional or Content Work / Partially Open Code – a person or firm enhances the basic open platform and makes only part of their enhancement value available for free.

Compensation: A royalty percentage can be negotiated on a case by case basis. This percentage will not be more than the fully closed case and can be considerably less. As always, it also rises the longer the enhancement remains private.

Rationale: In this case, the developer of an enhancement has contributed something back to the community. Product enhancement is acceptable in lieu of payment. All such contributed code will remain part of the open code base. Note that if a firm contributing the full value of their enhancement, there would be no question of a minimum return. The contributions must be useful, nonobvious, and of sufficient value to be worthy of inclusion in the open platform code base. Failing this, firms must pay a standard royalty fee on non-software services. This can be enforced via copyright.

9) Enabled Non-Derivative Work/Offered for Sale – a firm or individual has developed independent software that infinges the PH patents. (In this case, it doesn’t matter whether or not they used the original software or content:. Patent law still applies..)

Compensation: This software is subject to all the same terms as software or content that directly uses the PH software or content. License for free use is automatically granted if the user makes the software freely available to others. Otherwise, the user must pay a standard royalty or license fee.

Rationale: Although the intent was to avoid royalty by creating separate code, and this would normally be feasible under copyright, the Process Handbook is also governed by US and international patents. Thus any works that infringe the patents can be enjoined. This kind of user would still be expected to contribute something back to the community.

10) 3^rd Party Consultant or Contractor/Private Use – a firm or individual has been hired to develop content or functional enhancements from the basic product. The enhancements are created, transferred to the client, and kept proprietary.

Compensation: The client or party contracting for the enhancements pays a standard licensing fee. The consultant pays no fee. Other payments between the client and consultant are their own arrangement.

Rationale: Since no value from the enhancements is returned to the community, compensation takes the form of straightforward licensing.

11) Google Case / Unrestricted VAR access – a firm indexes part or all of the online open platform and makes this index available to others for free. Alternatively, a company like Google, offers any other value adding service with unrestricted access to their offering no matter how it builds on the open platform.

Compensation: There would be no charge for any such value adding services so long as third party access is completely free and open.

Rationale: Bringing the software to the attention of a broader community is one of the ways of contributing value to the community. Adding value-adding services also contributes value to the community. It would not matter that a search engine company (or analogous service) makes indirect money from advertising or other two-sided network effects (e.g. selling access for one party to eyeballs of another, matching buyers and sellers, or pairing content creation and content consumption). Presumably, such a company would need to offer enough value that it would be feasble to charge other indirect parties. This should be encouraged.

12) Derivative Functional or Content Work / Offered at prohibitive price – a firm or individual has created a derivative work which it wants to keep private. In order to avoid the licensing fee, the firm opts instead for the royalty option, but offers the work at such a high price that it is never purchased. The firm must still declare in advance its intended Proprietary Period for selling the derivative work.

Compensation: If no sales are made by the end of the Proprietary Period, the licensing fee would apply retroactively plus an x% penalty if no sales are made within the period.

Rationale: This simply encourages firms to make the honest choice in either paying the fee or paying the royalty in exchange for access to the software. It also encourages reasonable price setting from the users' perspective which benefits everyone in the long run.