[kde-usa] Discussion with SFC lawyer

[Jeff Mitchell]

Hello,

A few days ago I had a discussion with the SFC's new general counsel, as
a result of an email I sent to Brad Kuhn asking for follow-up. It proved
fairly insightful as to why we would, or wouldn't, want to go with SFC
or SPI.

He played down the patent threat, but indicated what other kinds of
services the SFC offers over SPI. I'm CCing both kde-usa and the Board
on this email; I'm guessing that the information below is enough detail
for the Board to at least find a preliminary direction to head.

Essentially, a lot of the services are things we already have at least
some access to via the e.V., but the Board may consider it worth the
investment to have those services from legal counsel that is more versed
in North America.

Conversation is pasted below:

Tony: well, at a high level, Conservancy's relationship w/ KDE would be
unique, in that KDE already has a corporate home in Germany.  In every
other instance, Conservancy is the sole corporate home for its member
projects.  So, we'd have to create a new structure to accommodate KDE.
Jeff: I thought that necessity got dropped last April
Tony: I should note that Conservancy's Evaluation Committee has grown
since KDE's application was first submitted (I'm one of the new
members), so we're revisiting this and a few other issues
Jeff: Originally we'd wanted to be able to accept donations here in the
U.S. but send those to Germany so they'd be in the e.V.'s accounts
Jeff: but last April in talks with Brad we decided to drop that
Jeff: and AFAIR doing so removed any need for special treatment
Tony: So, what would you want the US entity to handle?
Jeff: Accepting donations, and using them to pay for legitimate expenses
(travel/accommodation for contributors, conference fees, etc.)
Tony: So, from your perspective, none of the money received by the US
entity would be transferred back to the e.V.?
Jeff: I guess the answer is: if it's problematic to do so, then I do not
think that is a requirement
Jeff: actually, I guess there is an easier answer
Jeff: if there is an imbalance between contributors and funds, would we
be able to use funds from the U.S. entity to fund non-U.S. nationals to
go to relevant conferences?
Jeff: for instance, we're been somewhat assuming that the U.S. entity
would be responsible for the Canadian and Mexican developers that we have
Tony: Well, before we get into the specifics of how the funds would be
spent: are there any other services that you'd want the US entity to handle?
Jeff: That's actually part of the reason that I wanted to have a chat
with Brad/you in the first place
Jeff: which is that Brad has told me of the patent protections that the
SFC offers
Jeff: but on your web site it says that it covers *some* contributors
Jeff: I think in general I'd like to know what other services the SFC
can offer
Tony: oh, you mean liability protection for individual developers?
Jeff: because for *just* funds handling, I know the SPI is an alternative
Jeff: yes
Jeff: that's certainly an attraction of the SFC, but we'd like to know
the details of it
Jeff: and if you guys have other advantages over SPI/other services it'd
be nice to know what those are
Tony: Well, I don't know if I'd phrase it as an "advantage."  We don't
view SPI or other fiscal sponsors as competitors.  Conservancy offers a
more extensive service plan than, say, SPI, but we also ask for a larger
percentage of donations to cover the expenses for those services.
Jeff: Sure, we totally understand that
Jeff: But I'm just not clear on exactly what those services are beyond
the personal liability protection
Jeff: and in terms of the personal liabiliy protection, exactly what
that covers, and who
Tony: re: liability:  to clarify, Conservancy doesn't cover *some*
contributors; rather, Conservancy provides *some* coverage to
contributors.  That coverage is limited primarily to patent litigation
exposure.  To be honest, I wouldn't recommend that you view that as a
major factor in your decision, as individual FOSS contributors are not
likely to be targets of patent suits.
Tony: Now, if a FOSS developer is, say, looking for liability protection
against violating an employee agreement, that would likely fall outside
of the scope of what Conservancy could handle.  We'd have to view that
on a case-by-case basis
Tony: In terms of other services:
Tony: Conservancy provides legal support to projects:  contract
negotiation, TM  portfolio management, advisory services re: licensing
issues, etc.
Jeff: Regarding the patent suits -- there's one thing that concerns us
on that front which is that some of the KDE developers are starting to
put KDE software into (currently small-scale) commercial devices
Jeff: Do we think it's likely that we'll get sued? Certainly not
Tony: Is that commercialization activity taking place on behalf of the
project?
Tony: i.e., is it a device being marketed by KDE?
Jeff: No, although it's being marketed by some KDE developers
Tony: or by an individual and his/her corporation?
Jeff: Individuals...not sure if they've formed a corporation
Jeff: Presumably
Jeff: I don't expect the project itself to ever dabble in commercial
activities
Jeff: KDE, that is
Jeff: in fact, we can't
Jeff: since we're already a non-profit in one country, and trying to
become a non-profit in the U.S.
Tony: Conservancy's liability protection can't extend to cover startups,
even if those startups are led by members of the project.  From
Conservancy's perspective, individual developers are volunteers - what
they do in their day job (run a startup, work for big corp X) is outside
of the scope of what we can cover
Jeff: Right
Tony: So, that kind of commercialization activity would not be
considered a volunteer activity under Conservancy's auspices
Jeff: and we're not really interested in extending protection to them
Jeff: But what we were thinking was simply that by having KDE software
in commercial devices, if some competitor or troll wanted to try to stop
that activity, they could go after the contributors who wrote that
software originally and hold the copyright on it
Jeff: in other words, that they might go after the upstream, rather than
the downstream commercialization effort
Jeff: We are not lawyers, our worries might be totally off-base  :-)
Tony: As a practical matter, a competitor or non-practicing entity isn't
going to sue individual developers or Conservancy - we don't have any
money, and we'd all make for a bad litigation narrative (e.g.,
patent-holder is suing a bunch of volunteers and a non-profit).
Jeff: Bad narrative and no money, but could be a denial-of-service (or
rather an attempt to put a gag order on further development)
Jeff: or does that not happen?
Tony: From a legal perspective, if a patent holder were to do something
this stupid, Conservancy can and would work to protect the developers at
risk - provided that the suit was focused solely on those developer's
volunteer work, and not their downstream commercialization activities in
their day job
Tony: I haven't heard of it in this context.  A patent holder can stifle
distribution (especially when its commercial distribution), but it's
much harder to stop an individual developer from writing code in his/her
bedroom.
Jeff: Okay
Jeff: Good to know
Tony: In terms of other services:  Conservancy also assists projects in
putting together fund raising plans, e.g., requests to fund specific
software development initiatives.  And, we also provide TM and copyright
enforcement (including GPL compliance and enforcement) to those projects
who request it from us.
Jeff: Okay
Tony: As I'm sure Bradley has told you, Conservancy needs support from
its member projects to cover the overhead associated with providing
these services
Tony: So, we ask projects to contribute 10% of their revenue stream back
to Conservancy
Jeff: Yes, we're quite aware of that
Tony: ok
Jeff: That's part of what we're trying to figure out, exactly what the
extra 5% over SPI gets us, so we can decide if it's worth it
Tony: understood
Jeff: Also when I had talked to Brad in August, the SFC hadn't decided
if it was going to be 9%, 10%, or some other number
Jeff: so we wanted to clarify that
Tony: Given that you already have a corporate home (albeit in Germany)
that can provide some of these services (or, perhaps, retain counsel on
an as-needed basis), SPI might be a better fit for you.
Jeff: Perhaps -- I think we'll need to do some checking -- they might
feel it's worth the money to have help navigating those waters in the U.S.
Jeff: since they don't have much experience here
Tony: From Conservancy's perspective, we'd have to work out how to
co-manage stewardship over KDE with Germany.  I don't know if we can
simply divvy it up by geography (especially if you want to include
Canada and Mexcio)
Tony: understood
Jeff: I see -- I guess we didn't think that would be much of an issue,
because we figured that companies and individuals would have a
preference where they wanted to donate
Tony: Well, it's not just a question of which entity would collect funds
(although that would be part of it), it would be a question of governance.
Jeff: But I assume you're also talking about things like trademark
management
Tony: well, that's for one
Jeff: Can you elaborate at all? In Germany we're a full non-profit so
there's a full governance setup, I'm not sure what the SFC's charter or
status requires
Tony: I'd also say that, in general, Conservancy's fiscal sponsorship
agreement grants Conservancy the right to step in and make decisions on
behalf of a project if it were necessary to protect our non-profit
status.  We rarely exercise it, but we need the ability to protect
Conservancy (and by proxy, all of the other member projects) if one
project were to go "rogue."
Jeff: Yep, we're aware of that
Jeff: (Amarok, which I am a part of and which is affiliated with KDE, is
a Conservancy member)
Tony: oh, good.  So you have more context, then.
Jeff: Yes
Tony: So, we'd have to work out how that interacts w/ the German
corporate home for KDE.
Jeff: Sure

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