[kde-usa] Discussion with SFC lawyer

[Steve Hay]

I've removed the board from my response, just to reduce chatter back
and forth from them.  Your conversation below was a rather interesting
one.

One thing that struck me is that a lighter-weight presence here might
be advantageous from a cost perspective. I do not know the legalities,
but what if there is a simple way to just forward all contributions to
the EV? This would be a rather lightweight non-profit and could
probably be run at a smaller than 5% cost. Just a thought. I have a
family friend who does consultancy work with non-profits (his
particular speciality, as I understand it, is to swoop in and fix
non-profits whose financing has been completely screwed up). I can ask
him his opinion on the matter.

Steve

On 5/25/12, Jeff Mitchell <mitchell at kde.org> wrote:
> 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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