Volume 2012 – Issue 1

The federal courts have struggled to define the role that prior third-party settlements should play in determining damages for patent infringement. Although the use of such evidence is governed by the Federal Rules of Evidence, appellate and district courts have failed to reach consensus regarding the appropriate application of these rules. Most recently, in ResQNet v. Lansa, the Federal Circuit noted that the most reliable evidence of damages for infringement may be a license that emerges from a previous settlement. This decision prompted a flurry of new rulings by district courts regarding the admissibility and discoverability of evidence of previous third- party settlements. These rulings have made matters worse: although these decisions reflect an admirable attempt at clarifying the scope of Rule 408, they have wrought confusion on patent practitioners as new splits across the federal districts, and even within single districts, including the Eastern District of Texas, have emerged.

This confusion suggests that we need to take a fresh look at the relevant governing evidentiary principles. Our examination reveals that Federal Rule of Evidence 408 precludes the admission of any settlement-related evidence for the determination of damages. However, such evidence is nevertheless discoverable. This disconnect between the discoverability and admissibility of settlement-related evidence leaves something to be desired—especially when considered together with several features unique to patent litigation. In particular, the rise of nonpracticing entities (or “patent trolls”), an increased reliance on expert testimony, and new studies on bench and jury trials undermine the traditional policy rationales that underlie Rule 408. Although prevailing law suggests that settlement-related evidence should play only a limited role in patent damages calculations, this examination of Rule 408’s underlying policies suggests that the Advisory Committee to the Judicial Conference and Congress ought to reconsider the continued viability of the Rule.

Unauthorized access to online information costs billions of dollars per year. Software vulnerabilities are a key cause of these losses. Software currently contains an unacceptable number of vulnerabilities. The standard solution notes that the typical software business strategy is to keep costs down and be the first to market, even if that means the software has significant vulnerabilities. Many endorse the following remedy: make software developers liable for negligent or defective designs. This remedy is unworkable. We offer an alternative based on an appeal to product-risk norms. Product-risk norms are social norms that govern the sale of products. A key feature of such norms is that they ensure that the design and manufacture of products impose only acceptable risks on buyers. Unfortunately, mass-market software sales are not governed by appropriate product-risk norms; as a result, market conditions exist in which sellers profit by offering vulnerability-ridden software. This analysis entails a solution: ensure that appropriate norms exist. We contend that the best way to do so is a statute based on best practices for software development, and we define the conditions under which the statute would give rise to the desired norm. Why worry about creating the norm? Why not just legally require that software developers conform to best practices? The answer is that enforcement of legal requirements can be difficult, costly, and uncertain; once the norm is in place, however, buyers and software developers will conform to best practices on their own initiative.

Imagine that Microsoft discovers that its profitable program, Microsoft Word, contains lines of code borrowed from a free and open source software program. Further imagine that as a result of this oversight, all users of Microsoft Word now have a license to freely distribute, reproduce, and modify Word, and Microsoft is required to provide the source code to users in order to facilitate such actions. This is the exact scenario envisioned and feared by many corporations today. It is also the reason why the GNU General Public License (“GPL”), the most popular free and open source software license in the world, is also the most feared. The license contains a viral “copyleft” provision, which requires that all derivative works of a GPL-covered work that are distributed be licensed under the GPL or a compatible license. Copyleft can eviscerate the value of proprietary software by granting all users of the software the freedom to modify, distribute, copy, and reproduce the software.

Much uncertainty shrouds the copyleft clause and its twin triggers of distribution and derivative works—so much so that attorney Lawrence Rosen likened public reaction to the GPL to the early days of the AIDS epidemic.1 While scholars have explored derivative works under the GPL, the topic of distribution has not been thoroughly discussed. This Article seeks to fill the void by offering a comprehensive overview of both distribution and derivative works. It advocates applying copyright law’s limited publication doctrine to distinguish between limited publications that should not trigger copyleft and distributions to the public that should trigger copyleft. Courts developed the limited publication doctrine to mitigate the effects of authors losing their copyrights by publishing without notice. The doctrine provides a useful framework for concluding that scenarios such as cloud-computing and outsourcing should not constitute distributions. The Article next analyzes whether situations such as static linking, dynamic linking, use of Linux kernel modules, and intermingling software in a virtual cloud computing environment create derivative works. The Article offers advice for using free and open source software without infecting proprietary software, and seeks to be a practical guide that enables individuals and companies alike to take advantage of the benefits of free and open source software with ease of mind—and without fear of infection.